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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
February 25, 2014 HSBC plans to sidestep EU bonus cap revealedSource: FT.com
HSBC became the first bank to reveal how it plans to sidestep a new EU cap on bonuses, hiking the fixed pay of hundreds of senior executives even as its profit growth fell short of analysts’ expectations.
February 20, 2014 BofA Said to Boost CEO’s Compensation 17% to $14 MillionSource: Bloomberg
Bank of America Corp. awarded Chief Executive Officer Brian T. Moynihan $14 million for last year, boosting his pay 17 percent after profit more than doubled. Moynihan received $12.5 million in stock grants for 2013, the firm...
February 19, 2014 Outrage Over Wall St. Pay, but Shrugs for Silicon Valley?Source: NY Times
Big paydays on Wall Street often come under laserlike scrutiny, while Silicon Valley gets a pass on its own compensation excesses. Why the double standard? Take Eric Schmidt, the former chief executive and current chairman of...
February 12, 2014 Is Intel’s executive compensation shift really a ‘cultural change’?Source: Inside Counsel
Intel Corp. may have called a recent executive compensation shift a “cultural change,” but the change may actually be a minor tremble as compared to a major earthquake
February 11, 2014 G.M. Reveals C.E.O.’s Pay Details to Counter Gender-Bias CriticismSource: NY Times
Mary T. Barra, chief executive of General Motors, will earn as much as $14.4 million in compensation during her first year on the job, the company said on Monday. The automaker made her compensation package public two months...
February 5, 2014 Microsoft names Nadella CEO, Gates out as chairSource: CNN
Microsoft has named Satya Nadella as its new CEO and announced that founder Bill Gates will step down as chairman of the company's board. Nadella is a 22-year veteran of Microsoft (MSFT, Fortune 500) who has been overseeing...
February 4, 2014 How to fix runaway pay on Wall Street'
Yahoo! Finance - Make no mistake. Itâs that implicit government guarantee and the deep balance sheet of loans and deposits at the traditional bank that allows brokerage arms at J.P. Morgan, Bank of America Corp ......
February 4, 2014 Intel ties pay for more executives to company performanceSource: BizJournal
Intel Corp. will tie compensation for 350 executives to company performance by requiring them to own a certain number of shares and linking more of their incomes to bonuses.
January 31, 2014 Explosive New Report: CEO Pay Skyrocketed 27% Last Year, Top 10 Earners Pocket More Than $770 Million Between Then
AlterNet - And there will be more to come. GMI, formerly known as îthe Corporate Libraryî, is expecting a rash of massive stock option bonuses as many firms awarded their top executives big option deals when the stock...
January 30, 2014 Roche to lead way on corporate governance crackdownSource: FT.com
Roche will become one of the first big Swiss companies to implement tough new corporate governance rules designed to remove the mismatch between executive pay and corporate performance.
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