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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
March 22, 2013 CFO Corner: Say on Pay Campaigning and the 97% RuleSource: Compensation Today
It’s proxy season and Say on Pay is once again on the minds of anyone involved in executive compensation. As of this past week, about 170 companies have reported their results and less than 2% have failed. When we are at the end...
Source: Huff Post
Here are three business facts: 1) corporate profits are exploding and the stock market is soaring but most of this wealth is accumulating only to the wealthiest Americans; 2) despite intensifying pressure to break up the big...
March 19, 2013 Brave or foolhardy? Challenging the EU bonus capSource: Reuters
LONDON - Any attempt by bankers to overturn in court the European Union's plans to cap their bonuses is unlikely to succeed, and could at best result in delays and relatively minor tweaks.
Forbes - While I would be unwilling to estimate the magnitude of the growth in CEO pay from 2011 to 2012, I am pretty confident about predicting that it will increase. I am even more confident about predicting a continued...
March 18, 2013 Europe moves toward Swiss-style executive pay curbs
Globe and Mail - âThere is often too much focus on pay at the expense of talking to companies more broadly about their strategy,â said Jennifer Walmsley, who deals with companies on issues such as executive pay at...
March 15, 2013 Citigroup pledges to tie executive pay to performanceSource: USA Today
Citigroup, long under attack from shareholders for overpaying key executives and underperforming on Wall Street, is overhauling its pay practices, the company said Thursday.
March 14, 2013 Do CEOs Make Much More In The U.S. Than Elsewhere?Source: Forbes
There has been a good deal of press coverage of the numbers of zeros in the paychecks of American chief executives. Many people, especially workers who have faced stagnant or lower wages in a tough economy, believe U.S. CEOs take...
March 13, 2013 NYSE CEO's Compensation Down 29% in 2012Source: Fox Business
NYSE Euronext (NYX) Chief Executive Duncan Niederauer collected 29% less in direct compensation last year as the Big Board parent's net income fell by roughly the same amount, according to a regulatory filing.
March 13, 2013 Executive pay: will we see changes this spring'
HRmagazine.co.uk - Recently a new set of 'Remuneration principles for building and reinforcing long-term business success' were jointly issued by îHermes Equity Ownership Servicesî, the National Association of Pension...
March 12, 2013 GE boosted CEO Immelt's compensation in 2012Source: Huff Post
General Electric says its Chairman and CEO Jeffrey Immelt received compensation for 2012 that was 80 percent more than his pay in 2011. The company, which makes products ranging from light bulbs to jet engines, gave Immelt a pay...
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