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Executive Compensation, Trends, Executive Compensation Survey, Plans
Executive Compensation Introduction
Updated January 2011
The issues surrounding executive compensation – and especially CEO pay -- have been the topics of much discussion in Board Rooms, at Annual Shareholder Meetings and in the media, After a decade of intense debate, efforts to control executive compensation ((under Federal Law) took center stage when the U.S. Department of the Treasury issued interim final rules for reporting and recordkeeping requirements under the executive compensation standards of the Troubled Asset Relief Program (TARP) in January 2009. For the first time, the Federal government was taking a role in setting the compensation at private corporations. The actions resulted in an appointment of an Executive Compensation Czar within the Treasury Department to review compensation packages for companies receiving Federal assistance.
The effort did not stop here; further regulations are to follow with the enactment of the Dodd -Frank Financial Reform Legislation adopted in the Spring of 2010. This comprehensive package of “reforms” is now the focus of new regulations (that have to be developed implementing rules of the road). Unless the 112th Congress repeals parts of the law dealing with exec comp, the Federal government will have some kind of role in the issue. This has been welcomed by activist investors concerned about executive compensation policies and practices, especially at under-performing companies with outsized exec compensation.
In the worst cases, the focus of executive compensation packages has been upon corporate boards that are accused of being unrealistic, indifferent and in collusion with CEOs. What became the worst criticism was the revelation that too many agreements did not tie compensation with company performance.
“Say-on-Pay” became the rallying cry of shareholder groups and social and proxy activists as the hammer and anvil were hot and ready for hammering out reform. The Securities and Exchange Commission enacted rules for publicly-held companies to finally give a voice to shareholders through the proxy process on executive compensation. While the votes are not binding, they do serve to create an atmosphere of greater transparency and accountability of corporate boards to their shareholders.
Still the debate over the rules goes on; matters related to CEO compensation will continue to be the focus of this section. Whether you are located in the “C” suite or are a Corporate Secretary, Board Member, Investor Relations professional, shareholder or activist, Hot Topics Executive Compensation should be a daily stop for news, commentary and research.
Note: The Editors form no judgment about the level of pay and specific compensation of Chief Executive Officers and others in the “C” Suite. The purpose of this section is to fully air the issues surrounding exec compensation issues at shareholder-owned companies.
How much should a CEO or the top executive officers of a publicly-owned corporation be paid? What is a “fair” compensation? Especially when corporations are laying off thousands of workers and outsourcing work to distant lands? When the middle class is under attack – see CNN Lou Dobbs’ commentary on this? The issue of exec comp has become a burning question with an array of forces on all sides of the issue. When the stock market is doing well and “all boats are rising,” the issue is not as much in focus as when companies (or a single firm) is underperforming and the executive compensation is seemingly out of whack. Out of control. Disproportionate to performance. Unrelated to reality. And other battle cries by investor activists, public officials, journalists, advocate organizations, etc.
Consider the case of Home Depot, where the share price fell as the CEO’s pay package rose. Saying goodbye to the CEO, Mr. Nardelli, cost HD more than $200 million. Consider the exiting of the Wonderful Wizards of Wall Street, and their departure comp packages – totaling in the hundreds of millions’ of dollars – as the wreckage they’ve left behind (in the form of sub prime disaster loan portfolios) causes real pain on Wall Street, and on Main Street. We still don’t know the damage they caused with their financial wizardry – but the carnage is felt when home foreclosure rates increase dramatically, as they have over the past year.
So – what is a fair price for the Top Man (and a tiny handful of Top Women)? You’ll find news, commentary, research and other useful content here in this Hot Topic subsection of Accountability Central, as well as in various content sections and subsections. (See Corporate Governance, Shareowner Activism, Socially Responsible Investment, and other silos.)
Consider this as you formulate your own positions on the pay issues:
Enough highlights and commentary – we invite you to follow the often-heated discussions and public debate on executive compensation here in the pages of Accountability Central.
“…People will be accountable and responsible…”
President Barack Obama – on CEO Comp – February 4, 2009
Latest on Executive Compensation
December 8, 2017 Struggling Toys R Us Plans To Pay Executives Millions In BonusesSource: NPR
A bankruptcy judge has granted struggling retailer Toys R Us permission to pay millions of dollars in bonuses to executives after the company argued it was necessary to motivate its top brass during the critical holiday shopping...
November 21, 2017 Executive Compensation in the Firing Line Under Tax Bills: Section 162(m) $1 Million Deduction LimitSource: Lexology
he Tax Cuts and Jobs Act H.R. 1 passed by the US House of Representatives on November 16 and the Senate Finance Committee’s “Modified Mark” released November 14 would make sweeping changes to the tax treatment of executive...
November 13, 2017 Wall Street bonuses may jump 10 percent this year: reportSource: Reuters
Wall Street bonuses may climb as much as 10 percent this year, in the first meaningful jump for the industry since 2013, according to a closely watched report.
November 9, 2017 Changes on the Horizon for Executive Compensation?Source: National Law Review
the House Bill would make dramatic changes to the landscape of executive compensation for for-profit and tax-exempt non-governmental employers.
November 1, 2017 Pay gap between CEOs and workers is wideningSource: Scoop
The gap between CEO compensation and worker income is widening, according to new University of Otago research.
Compensation rates for corporate directors at the largest U.S. public companies have jumped nearly 20% in the past five years. That’s nearly twice the salary increase of the average American.
Source: Washington Post
n the world of executive compensation, one idea has long been considered gospel. Chief executive pay, companies say, is tied to the returns they produce for shareholders, and the "pay for performance" concept is used to defend...
October 2, 2017 Equifax board considers clawing back executives' compensationSource: Fox Business
Equifax (EFX) could announce in coming days that it will claw back compensation from some top executives over its massive data breach, a person familiar with the matter said.
September 29, 2017 The CEO Compensation DivideSource: Open Minds
In an increasingly complex market, competing for executives with those less common leadership skills is necessary for a successful, sustainable organization.
September 28, 2017 Wharton Tops 2017 List Of America's Best Business SchoolsSource: Forbes
The Wharton School was the first graduate school of business established in 1881 when iron miner Joseph Wharton donated $100,000 to U Penn to found a “School of Finance and Economy.”
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