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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 9, 2018 Disney shareholders vote against CEO Iger's pay packageSource: CNBC
Walt Disney Co shareholders rejected an executive compensation plan that could reward Chief Executive Officer Bob Iger with up to $48.5 million a year over four years plus an equity grant worth about $100 million, in a...
March 7, 2018 2017 New Tax Law: Executive Compensation ReformSource: JD Supra
The Act includes a provision that eliminates the “performance-based” exception to the one million dollar limit on compensation deductions, and makes certain other important related changes.
March 2, 2018 100 Most Overpaid CEOs Report from As You Sow Shows Fund Managers Reluctant to Vote Against Exorbitant CEO Pay PackagesSource: The Business Journals
OAKLAND, Calif., March 1, 2018 /PRNewswire/-- Today's release of The 100 Most Overpaid CEOs: Are Fund Managers Asleep at the Wheel' from shareholder advocacy group As You Sow revealed that the largest fund managers displayed a...
February 27, 2018 As companies reveal gigantic CEO-to-worker pay ratios, some worry how low-paid workers might take the newsSource: Chicago Tribune
In recent weeks, a few public companies have begun disclosing a ratio, required for the first time this year, that compares the pay of their chief executive to the pay of their median employee. At industrial giant Honeywell, the...
February 16, 2018 Executive Compensation Is Out Of Control. What Now?Source: Forbes
CEO pay is today so out of kilter with average wages that the negative side effects – demoralization, destroying the sense of community that today’s high-performing organizations need – are beginning to outweigh the oft-stated...
February 14, 2018 Women's Wealth Gap: The Income GapSource: Benzinger
Benzinga is proud to introduce the Benzinga Women's Wealth Forum, a space where women can learn how to empower themselves through financial technology and be inspired by the stories of powerful women in finance
February 9, 2018 “Say on Pay” Hasn’t Gone A-Way Under Tax Reform, Reminds ISS*Source: Lexology
Internal Revenue Code Section 162(m) imposes a $1 million limit on the amount most public companies can deduct for compensation paid to any “covered employee.” The Tax Cuts and Jobs Act (the Act) significantly changes Section...
JPMorgan Chase & Co. ( JPM ) disclosed in a regulatory filing that the independent members of the Board of Directors approved Chief Executive Officer James Dimon's total compensation for 2017, in the amount of $29.50 million, an...
January 11, 2018 The Unfinished Business of CEO Pay Reform in the UKSource: Inequality.com
Are today’s bosses so much cleverer than their predecessors? Are they doing a much better job? Has the job of CEO got so much harder? Of course not. Top pay is a broken, rigged system. And even the lucky winners in this game...
Apologists for the many millions in compensation that America’s largest corporations regularly dole out to their top executives have essentially one basic, all-purpose go-to defense.
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