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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
April 17, 2019 Goldman Sachs Cuts Employee Pay By 20% To Avoid Profit LossSource: IB Times
The world’s largest investment bank reduced employee compensation and benefits by 20 percent to $3.26 billion, outstripping the decline in companywide revenue. The reduction in pay and benefits comes to $90,780 for each of the...
Source: Yahoo Finance
Among the large banks, Citigroup has the highest CEO pay ratio when measuring the top executive’s pay to the median employee’s salary. JPMorgan Chase comes in second place with a pay ratio of 381:1. Bank of New York Mellon and...
April 11, 2019 Here’s what Jamie Dimon and other bank CEOs said are the biggest risks to the economy right nowSource: CNBC
The leaders of the biggest U.S. banks have a message for Congress: take a closer look at the ballooning markets for student and corporate loans.
March 29, 2019 Investors should vote against top HSBC executives' pay- PIRCSource: Reuters
Pensions & Investment Research Consultants (PIRC), which advises pension funds and others on how to vote at companies’ annual general meetings, said HSBC Chief Executive John Flint’s potential bonus amount was...
Source: Ars Technica
Google has given raises to thousands of men after an analysis of Google's pay structure found that the company would otherwise be underpaying those men relative to their peers, The New York Times reports. The analysis also led to...
February 25, 2019 Here’s one ranking of the 25 most overpaid CEOs in the S&P 500Source: MarketWatch
Nonprofit shareholder advocate As You Sow is taking aim at rising CEO pay in a report published Thursday that ranked CEOs in order of most “overpaid,” while pointing out large American fund managers like BlackRock,...
February 22, 2019 Income inequality is rising so fast, data can’t keep upSource: LA Times
Wages at the top of the U.S. income distribution continue to rise much more rapidly than wages for everyone else, according to an analysis of the latest federal data by the Economic Policy Institute, a progressive think tank.
February 8, 2019 More millennials are demanding these workplace perksSource: CNBC
The search for better workplace benefits is among the three top reasons why younger employees change jobs, according to new data from LaSalle Network, a recruiting firm.
February 4, 2019 Female Pay Discount Doesn’t Go to the Very TopSource: CFO
Among smaller S&P 1500 companies, male and female CFOs earn about the same pay (including base salary, annual incentive target, and long-term-incentive grant values), according to an analysis by Willis Towers Watson.
January 18, 2019 Jamie Dimon gets a raise to $31 million after JPMorgan's record yearSource: CNN Business
The company's board of directors approved a $31 million pay package for 2018 that includes cash and stock awards, according to a public filing. That's 5% more than the banker received last year.
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