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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
July 23, 2013 White Paper Urges Fix to CEO Pay Loophole to Protect Economy and Save Taxpayers BillionsSource: PR Web
The last three decades have seen a dramatic increase in pay for corporate executives while workers’ wages have only stagnated. What accounts for this disparity, especially in the wake of a massive financial crisis that many of...
Source: Washington Business Journal
Is CEO pay soaring or deflating? It depends on who you ask. Consider Friday's headline from my deep dive on CEO pay at Greater Washington's largest public companies: "The sky's the limit: Fueled by a surging stock market, median...
Public companies would be required to disclose how much more their chief executives are paid than rank-and-file workers under a rule to be proposed next month by U.S. securities regulators, according to two people familiar with...
July 18, 2013 The Five Highest Base Salaries In CEO America
Forbes - Thereâs been a lot of publicity lately for CEOs earning $1 in base salary â the likes of Larry Ellison at Oracle Oracle, John Mackey at Whole Foods and Meg Whitman at Hewlett-Packard Hewlett-Packard, though...
July 18, 2013 Why We Should Stop Subsidizing Sky-High CEO PaySource: Huff Post
Almost everyone knows CEO pay is out of control. It surged 16 percent at big companies last year, and the typical CEO raked in $15.1 million, according to the New York Times. Meanwhile, the median wage continued to drop, adjusted...
July 17, 2013 Cadwalader to Hire a Top Adviser on Executive PaySource: NY Times
Months after hiring a prominent deal maker as deputy chairman, the law firm Cadwalader, Wickersham & Taft has lured in another prominent lawyer to help bolster its business.
Source: Think Progress
Jon Corzine, the former chief executive of bankrupt financial firm MF Global, received an $8 million pay package in the year his company plummeted into bankruptcy and faced a shortfall in customer funds totaling $1.6 billion.
Proxy advisory firm Institutional Shareholder Services (ISS) is urging shareholders of McKesson Corp (MCK.N) to vote against the re-election of four directors, citing the firm's persistent problems in addressing shareholders'...
Source: Bloomberg TV
In "This Matters Now," Adam Parker, Chief US Equity Strategist at Morgan Stanley, discusses executive compensation and accounting. He speaks on Bloomberg Television's "Bloomberg Surveillance."
Source: Washington Post
Pay for the chief executives of Washington’s largest public companies declined in 2012 compared to the year before, as compensation increasingly shifted to favor stocks over cash. Among the 89 highest-paid chief executives, total...
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