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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
December 10, 2020 Opinion: San Francisco Puts Another Nail in Its Own CoffinSource: National Review
The fatal flaw of this bill and others like it lies in the idea that fair compensation should be defined by people other than those who have skin in the game — namely, a company’s principals, board of directors, and ultimately...
December 7, 2020 Deutsche Bank to link executive pay to sustainability goalSource: Yahoo
the policy will measure the volume of sustainable financing and investment that complies with environmental, social and governance criteria, and how the bank is ranked by rating agencies on sustainability, the newspaper said.
November 30, 2020 Editorial - As NY politicians eye new taxes on the rich, high earners eye the exitsSource: NY Post
The 660,000 New Yorkers (17% of income tax payers)who qualify as top earners generated more than 80% of NYC's income-tax revenue.
October 11, 2020 Is Your Executive Compensation Plan Undermining Your Mission?Source: Harvard Business Review
The coronavirus pandemic has now accelerated technological change and innovation across industries, especially in e-commerce and remote work. Adding to the turbulence, social forces and business dynamics have undercut shareholder...
August 31, 2020 Bankrupt Hertz seeks $5.4M in executive bonusesSource: Fox Business
ust months after Hertz Global Holdings Inc. shelled out $16.2 million in extra pay meant to keep executives from leaving as the coronavirus pandemic decimated the travel industry, the car rental company wants to pass out $14.6...
Daimler chief executive Ola Kallenius said that his company, as well as the car industry as a whole, are facing painful salary cutbacks due to the economic fallout caused by the COVID-19 pandemic.
Companies like Facebook and Twitter expect many employees to work far from headquarters after the pandemic. That calls for a change in corporate cultures.
April 2, 2020 The CR and Sustainability Salary Survey 2020Source: CSR Wire
The growing areas of corporate responsibility and sustainability have always been difficult to define, and the survey’s purpose is to provide a clearer view of how corporate responsibility and sustainability professionals fit...
November 12, 2019 ‘This is the most prosperous economy the world has ever seen’ says Jamie Dimon — and it’s going to continueSource: MarketWatch
“The consumer, which is 70% of the U.S. economy, is quite strong,” he said. “Confidence is very high. Their balance sheets are in great shape. And you see that the strength of the American consumer is driving the American economy...
October 11, 2019 Opinion: Ban billionaires? What progressive Democrats don’t understand about the economySource: MarketWatch
Democratic presidential contender Bernie Sanders says we should ban billionaires. It’s all part of the growing trend in the idea of wealth taxes that have become popular with some Democrats
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