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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
August 29, 2014 How Obamacare is taking a bite out of CEO paySource: CBS News
Obamacare is known for overhauling how millions of how Americans buy health insurance, but it is also quietly having an effect on another key aspect of health care costs: executive pay.
August 28, 2014 Harvard Endowment Compensation Sparks Letter From AlumniSource: Bloomberg
A group of alumni that has previously criticized Harvard University for how much it pays its endowment managers is again finding fault after compensation more than doubled in three years at the investment arm.
Source: Yahoo News
When Washington eliminated corporate tax deductions on health insurance executive compensation above $500,000 under President Barack Obama's healthcare reform law in 2013, it generated more than $72 million in additional tax...
August 22, 2014 How Sudden CEO Deaths Help Us Understand Executive CompensationSource: Bloomberg/BusinessWeek
It’s easy to complain that corporate executives are overpaid. It’s harder to make a rigorous case for the idea: There’s no perfect metric to show how much executives are worth to a company, thus no great way to compare an exec’s...
August 20, 2014 U.K. bank hit with $300 million New York fineSource: CNN Money
Standard Chartered Bank will pay $300 million for not meeting the terms of a money laundering settlement with the state of New York.
August 19, 2014 Not Everyone is On Board With Executive Pay CommunicationsSource: FEI
A survey by compensation consultants Pearl Meyer & Partners found that while most outside directors said the level of internal communication regarding executive compensation was “just right” (88 percent), only about half of...
August 11, 2014 Pay for Performance Comes of AgeSource: CFO Magazine
In fact, it’s 2014 that is proving to be the year when pay for performance is settling in once and for all as an overriding theme in executive pay, according to Dave Hofrichter, executive compensation partner with Aon Hewitt.
August 8, 2014 United Financial Bancorp, Inc.'s Shareholders Overwhelmingly Approve Executive Compensation Plan, Re-Election of Board MembersSource: Global News Wire
United Financial Bancorp, Inc. ("United Financial" or the "Company") (Nasdaq:UBNK), the holding company for United Bank (the "Bank"), today announced that an overwhelming majority of their shareholders voted in favor of key...
August 5, 2014 The 17 Highest-Paid CEOs In Tech
The Business Insider - Marc R. Benioff, Chairman and Chief Executive Officer of Salesforce.com, speaks during a session at the annual meeting of the îWorld Economic Forumî (WEF) in Davos January 22, 2014. While some...
Companies that consistently deliver strong shareholder return tend to do a lot of things better than the also-rans. Could one of them be the way they compensate their executives? Probably, but at the least such enterprises pay...
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