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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 25, 2014 A Question of What’s a Reasonable RewardSource: NY Times
Earlier this month, Coca-Cola sent out its annual report and proxy statement to shareholders. The red-and-white report was relatively predictable. Until you get to Page 85.That’s the page that stopped an analyst for David...
March 21, 2014 Time Warner Cable CEO due $80 million in Comcast dealSource: Philly.com
Just months into his job as head of Time Warner Cable Inc., Rob Marcus is set to receive a severance payment of $79.9 million in cash, equity, and benefits because he's selling the company to Philadelphia's Comcast Corp
March 19, 2014 Wells Fargo CEO among 2013's top-paid bankersSource: USA Today
Wells Fargo CEO John Stumpf didn't have the pay gains rival banking CEOs enjoyed last year, but he still out-earned them. Stumpf's 2013 compensation, valued at $19.3 million, was virtually unchanged from 2012, the company said...
March 18, 2014 Growth in compensation for U.S. CEOs may have slowedSource: Reuters
Big U.S. companies appear to have handed out smaller increases in compensation to their chief executives in 2013 than in 2012, mainly as a result of reduced grants of stock options, according to an early review of annual...
On February 26, 2014, U.S. Congressman Dave Camp released a comprehensive tax reform proposal that includes several provisions intended to limit or restrict executive compensation. Congressman Camp's proposal includes the...
Source: Triple Pundit
Proving that being green really can get you more of that other green stuff, Unilever CEO and leader in corporate sustainability Paul Polman received a £431,775 ($722,230) bump to his already hefty annual bonus in large part for...
March 13, 2014 Wall Street Bonuses Grew 15% in New York, DiNapoli SaysSource: Bloomberg
Wall Street’s bonus pool rose 15 percent to $26.7 billion in 2013, fueled by compensation deferred from prior years, according to estimates by New York state Comptroller Thomas DiNapoli. Employees took home an average bonus of...
Source: shington Business Journal
Deep in his annual message to shareholders, below the boilerplate language praising employees and touting accomplishments, M&T Bank CEO Robert Wilmers offers some blunt opinions about executive compensation and what caused the...
March 10, 2014 Bank of America CEO Pay Jumped 77 PercentSource: ABC News
Bank of America CEO Brian Moynihan saw his compensation jump 77 percent last year as the company's fortunes improved.Moynihan's total compensation was $13.1 million, according to an Associated Press calculation based on a filing...
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.
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