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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
February 4, 2015 Salaries of CEOs to rise over 10% this year: Hay GroupSource: News Nation
Salaries of top executives are likely to see double digit rise this year with compensations of CEOs and Managing Directors expected to grow by 10.2 per cent and of those in senior management by 10.5 per cent.
February 3, 2015 Study finds executive compensation clawback provisions do not eliminate possible earnings manipulationSource: Lexology
Academics in Hong Kong have found that companies that have adopted executive compensation clawback provisions tend to substitute one type of earnings manipulation for another, and that this trend is more pronounced in companies...
February 2, 2015 What entitlement looks like: CEO pay edition
Daily Kos - The organization I work with, the îAs You Sowî Foundation, is issuing a report in a few weeks,on the 100 Most Overpaid CEOs: Executive Compensation at S&P 500 companies. The report is designed to...
January 30, 2015 Banks to increase base salaries by under 3 percent in 2015 -survey
Reuters - Salary increases across banks, insurers and other financial services firms are expected to be between 5-8 percent in emerging markets, 2-3 percent in North America and 1.5-2 percent in Europe, according to a survey of...
Source: NY Times
Last week, we learned that Timothy D. Cook, Apple’s chief executive, was paid $9.2 million for 2014. Jamie Dimon of JPMorgan Chase made $20 million. The Starbucks chief Howard Schultz took home $21.5 million. And Viacom said that...
January 26, 2015 How to protect executive compensation amid falling oil pricesSource: Bizjournal.com
Many oil and gas executives with compensation that includes company stock options have already seen that portion of their compensation vanish as share prices fall in response to falling oil prices.
January 26, 2015 Oracle executive pay row
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January 23, 2015 JPMorgan CEO Dimon's new pay package similar to year before: WSJSource: Reuters
JPMorgan Chase & Co (JPM.N) Chief Executive Officer Jamie Dimon is expected to receive a total pay package for 2014 that is similar to the $20 million he was given the year before, the Wall Street Journal reported, citing people...
January 20, 2015 Executive Pay: Stop Rewarding ShortsightednessSource: Newsweek
Fresh winds are blowing through both boardrooms and MBA programs these days, stirring up debate about the fundamentals of doing business. Some of the key questions on the minds of executives weren't even on the syllabus when I...
January 15, 2015 2014 Executive Compensation Survey of Privately-Held CompaniesSource: Digital Journal
Compensation Resources, Inc. (CRI) recently released the results of its 2014 Executive Compensation Survey of Privately-Held Companies. The purpose of this study was to obtain compensation data of twelve key executive positions...
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