External pressures to conform to generic pay standards and so-called “best practices” are undermining the ability of Compensation Committees to create differentiated compensation strategies that are grounded in their own company’s business needs and priorities. That’s bad for investors and employees alike. Continue Reading →
Tag Archives | pay
NextEra Energy, Inc. (NEE) is one of the stocks in my portfolio. Their annual meeting is coming up on 5/23/2013. ProxyDemocracy.org had collected the votes of three funds when I checked on 5/16/2013. I voted with management 69% of the time. View Proxy Statement. Warning: Be sure to vote each item on the proxy. Any items left blank are voted in favor of management’s recommendations. (See Broken Windows & Proxy Vote Rigging – Both Invite More Serious Crime) Continue Reading →
Union Pacific Corporation ($UNP) is one of the stocks in my portfolio. Their annual meeting is coming up on 5/16/2013. ProxyDemocracy.org had collected the votes of three funds when I checked on 5/13/2013. I voted with management 56% of the time. View Proxy Statement. Warning: Be sure to vote each item on the proxy. Any items left blank are voted in favor of management’s recommendations. (See Broken Windows & Proxy Vote Rigging – Both Invite More Serious Crime) Continue Reading →
SEC Is Pressed to Revamp Executive Trading Plans. Letter from CII (May 9, 2013) suggests excess profits of executives is not coincidental. They suggest the SEC provide “interpretive guidance or amendments” to existing rules to prevent potential abuses. Continue Reading →
Dow Chemical Company ($DOW) is one of the stocks in my portfolio. Their annual meeting is coming up on 5/9/2013. ProxyDemocracy.org had collected the votes of two funds when I checked on 5/3/2013. I voted with management 69% of the time. View Proxy Statement. Warning: Be sure to vote each item on the proxy. Any items left blank are voted in favor of management’s recommendations. (See Broken Windows & Proxy Vote Rigging – Both Invite More Serious Crime)
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Just announced at Coast Capital’s AGM on Tuesday night — the resolution to regain member control of director pay (which was opposed by the directors) passed with over 79% of the vote. Here are some links: Continue Reading →
Citigroup ($C) is one of the stocks in my portfolio. Their annual meeting is coming up on 4/24/2013. ProxyDemocracy.org had collected the votes of three funds when I checked on 4/21/2013. I voted with management 41% of the time. View Proxy Statement. Warning: Be sure to vote each item on the proxy. Any items left blank are voted in favor of management’s recommendations. (See Broken Windows & Proxy Vote Rigging – Both Invite More Serious Crime)
I generally vote against pay packages where NEOs were paid above median in the previous year but make exceptions if warranted. According to Bebchuk, Lucian A. and Grinstein, Yaniv (The Growth of Executive Pay), aggregate compensation by public companies to NEOs increased from 5 percent of earnings in 1993-1995 to about 10 percent in 2001-2003. Continue Reading →
On Friday, January 18th, The Conference Board Governance Center hosted a debate on Executive Compensation and the Utility of Peer Groups in collaboration with the University of Delaware’s John L. Weinberg Center for Corporate Governance. Latham & Watkins provided the venue for the program. Continue Reading →
Costco ($COST) is one of the stocks in my portfolio. Their annual meeting is coming up on 1/24/2013. ProxyDemocracy.org had collected the votes of four funds when I voted on 1/22/2012. I voted with management only 25% of the time. View Proxy Statement. Warning: Be sure to vote each item on the proxy. Any items left blank will be voted in favor of management’s recommendations. (See Don’t Let Companies Change Shareholders’ Blank Votes) Continue Reading →
How should your comp committee respond to the issue of conflicting pay numbers? Draw up the variant scenarios to see for yourselves how the “paydays” differ. In disclosing your proxy numbers, use the Compensation Disclosure & Analysis to make your case if it seems the disclosed pay level is not the same as realized pay (and prepare to defend any assumptions you use). Continue Reading →
Medtronic ($MDT) is one of the stocks in my portfolio. Their annual meeting is coming up on 8/23/2012. ProxyDemocracy.org had collected the votes of 5 funds when I voted on 8/18/2012. I voted with management 47% of the time. Continue Reading →
In say-on-pay’s second year, recommendations from proxy advisors have grown in significance for public companies. This week’s Behind The Numbers, from Equilar takes a look at firms that faced daunting negative recommendations by proxy advisors in 2012 and examines what those companies did to defend their pay practices. Continue Reading →
Aligning CEO pay with shareowner value is key for many. A new tool (at least new to me), the Compensation and Wealth Calculator, from the Stanford Graduate School of Business, Corporate Governance Research Program, allows users to see how the compensation of CEOs and other NEOs, which they have already received over the years in the form of stock and stock options, aligns with share price. Continue Reading →
It is common knowledge that people are not driven solely by the prospect of financial rewards. Yet, in business, motivational tools for top executives—particularly the CEO—almost singularly comprise financial incentives. In 1980, only 10 percent of the UK’s largest FTSE100 companies utilized incentive arrangements (in the form of cash and stock-based variable pay). Today, they are universally employed as a matter of best practice and variable Continue Reading →
Click here now to tell the SEC to require companies to disclose CEO-to-worker pay ratios. If you own stock, click here to get information on how to vote your shares on “say-on-pay” proxy proposals. Continue Reading →
That’s the title of a new report from ISS on the factors that contributed to significant investor opposition during last year’s say-on-pay votes at U.S. companies. From the summary: Continue Reading →
Apple (AAPL) is one of the stocks in my portfolio. Their annual meeting is coming up on February 23, 2012 (Thursday). This is one meeting I’ll be attending in person, both to vote and to move my motion to provide shareowners with a “say on directors pay.”
These are some relatively quick notes that I’m sharing from the Corporate Directors Forum 2012, held at the University of San Diego, January 22-24, 2012. This post may be a cryptic… incomplete sentences bt hopefully mor intelligible thN txt msgN or Tweets. Continue Reading →
UK Prime Minister David Cameron rejected a Labor Party proposal that an ordinary employee sit on a company board compensation committee, noting that having an employee on the committee would break an important principle of not having people on a remuneration committee who will have their own pay determined. Since when are boards setting the pay of ordinary employees? Continue Reading →
The stock market still has not recovered from the meltdown of 2008, and many companies have had severe reductions in their workforces, but CEO compensation of major U.S. companies rose 36.5% last year. Why is there this disconnect between stock market performance, mass layoffs and CEO compensation? What should boards of directors be doing to better align CEO Continue Reading →
Looking for work-life balance? Work from home (at least part of the time). Set your own pay – $1,000 per hour and up. No threat of layoffs or workforce cutbacks. Part-time hours and multiple positions available. Excellent way to supplement your retirement income. No application necessary…
The term “chemistry,” or your ability to work collegially with the other members, is often used in board searches, and it can make or Continue Reading →
Regis Corp shareowners overwhelming selected Starboard Value’s slate of three directors at the company’s recent annual meeting and they rejected management’s “say-on-pay proposal,” with 72% voting against.
According to Equilar, which tracks compensation data, Regis becomes just the 43rd company out of more than 2,982 shareholder votes this year to reject management’s compensation proposals.
Starboard Value’s pitch to shareholders went in depth on the Continue Reading →
Scott Cutler, EVP, NYSE Euronext, interviewed Linda Lamel, Compensation Chair, Universal American Financial Corp. for This Week in the Boardroom (video) 9/29/2011.
See also the AFL-CIO’s PayWatch and the Young Turks video. In 2010 the average worker saw a 2.6% increase in salary but a 3.6% increase in the Consumer Price Index. Meanwhile median CEO pay increased 27%.
The emergence of an oligarchy in this country will undermine our place in the world and ultimately our historic form of capitalism, which, in the past, was the route to the middle class for hundreds of millions of hardworking Americans.
The latest evidence of this struggle is the report from the Institute for Policy Studies which found that of America’s 100 highest-payed CEOs, 25 took home more in pay than their companies paid in federal taxes.CEO Pay: Class Warfare, Behind the (New York) Times, 9/2/2011.
Peter Day asks what’s wrong with corporate governance. Business leaders make a lot of fuss about corporate governance, but the scandals keep on coming. In this programme, Peter Day hears from some leading authorities who makes several observations concerning nonexecutive directors, ownerless corporations, and the need for shareowners to sit on the nominations committees, a stewardship proposal for shareowners, and ratcheting CEO pay even when a company isn’t paying the cost of its capital. The program, entitled Bad Company, hit a number of topics quite squarely. Well worth a listen.
Yesterday, the United States Proxy Exchange (USPX) released standards for shareowners to use in making say-on-pay voting decisions. “Say-on-pay” rules mandated by Dodd-Frank allow shareowners to express an opinion on executive compensation at annual meetings. But to make informed voting decisions, shareowners must first assess the compensation packages boards propose. That is not easy, since they tend to be very complex. Even sophisticated business professionals have a difficult time evaluating them, so how can average shareowners hope to do so?
This is not an idle issue. In the 2011 proxy season, institutional investors acted with breathtaking irresponsibility, collectively approving 98.3% of compensation packages. They did this as executive compensation continues to skyrocket. In 1965, CEO pay at large companies was 24 times the average worker’s wages. In 2010, that ratio was a staggering 343 to 1. Responding to the irresponsibility of institutional investors, John Harrington of Harrington Investments commented:
… if fiduciary duty, including ERISA, were truly enforced, lots of trustees, directors, administrators and managers would be in jail.
If shareowners — individual investors as well as small, medium and large institutional investors — do not start voting down the majority of compensation packages, we will have become part of the problem with executive compensation. A simple approach would be to vote against all executive compensation packages, but that would be self-defeating. If boards know compensation packages will be voted down no matter what they contain, they will have no incentive to make changes. Since say-on-pay votes are advisory, they would have no impact.
The USPX guidelines propose easy ways shareowners can review firms’ compensation packages and make reasonable say-on-pay voting decisions. The guidelines are predicated on the belief that some levels of compensation are so outlandish as to be unreasonable irrespective of a firm’s or CEO’s performance. The guidelines assist shareowners in deciding how and where to draw that line.
On November 11, 2010, the USPX released draft guidelines. We received many comments and we made several modest changes prompted by the feedback we received. Drafting the guidelines has been difficult. We have had to balance the inherent complexity of the compensation issue with the need for guidelines that are both simple and relevant.
The current guidelines apply only for compensation at large corporations. (Although during the 2011 season, I have been extending the logic of the Guidelines to small and medium corporations as well by voting down pay where NEO’s received more than median pay last year.) In future releases, we hope to extend the guidelines to small and medium corporations with more precise algorithms. In the mean time, we encourage shareowners to experiment with the guidelines and provide us with feedback on your own application and/or variation of our methodology. Please post feedback directly on the USPX website. Again, here is a direct link to the guidelines.
This Week in the Boardroom: 7/14/11 TK Kerstetter, President, Corporate Board Member; Scott Cutler, Executive Vice President, NYSE Euronext; and Stephen Lamb, Partner, Paul Weiss discuss the fact that losing a say-on-pay vote increases the likelihood of a shareowner lawsuit. See also Frivolous Say on Pay Lawsuits: Another Unintended Consequence.
This seems like a no-brainer to me. Over 98% of company say on pay votes passed. Isn’t it highly likely that those that fail such votes are more likely to be targeted? I think it is difficult for any company to truly show a direct link between CEO pay and performance. For those companies where Continue Reading →
Former Labor Secretary Robert Reich explain problems with the economy in less than 2 minutes, 15 seconds—and he did it with illustrations to boot. It’s great! Check it out.
And now, class warfare on the railroad. Apparently, this woman believes the norms of civility don’t apply to those who have attended graduate school:
Andrew Liazos, writing for CFO magazine, argues that a law enacted years ago in response to Enron poses new tax risk for deferred compensation in that Section 409A could inhibit desirable restructuring of executive pay in response to possible “say on pay” no votes.
A 2009 notice from the IRS granted special relief to TARP recipients, stating:
the application of 409A(a) in these circumstances would produce a disincentive for TARP recipients to comply with the Special Master’s advisory opinions and act in accordance with the public interest, severely diminishing the Special Master’s ability to fulfill his intended role and damaging the entire TARP program.
However, no such relief has been granted to other companies now that say on pay is Continue Reading →
Sometimes the comments are as informative as the original post. The United States Proxy Exchange asked for comments on their/our draft say-on-pay voting guidelines aimed at retail investors.
So far, that plea for help has attracted comments from growing list leading thinkers in the investment community. Thanks to each of you for taking the time to offer your advice. I’ll post some juicy tidbits to get readers thinking that no one should miss out on this opportunity to be heard. I encourage each of you to read the paper, the comments and to submit your own thoughts on the topic.
Please keep in mind, we are looking for guidelines that can help retail shareowners make intelligent decisions in a reasonable amount of time, such at 10 to 20 minutes. Second, while many of us agree Continue Reading →
Writing in the Harvard Business Review, Roger Martin from U. of Toronto explains that CEOs are rewarded for share price volatility not performance. (The Nasty Truth about CEO Pay, 6/3/2011) The financial crisis worked out great for them. Martin explains with great tables comparing the returns for a CEO, whose company performed with the averages, vs one that was able to steer through the storm.
Who is the more valuable CEO? Whose compensation should be higher? Should it be Thrill-a-Minute Tom, who saw massive volatility and a net loss of 6% over the period? Or should it be Steady Eddie, who avoided ups and down, protected investors’ capital Continue Reading →
Checking the Summary Compensation Table, it appears CEO/Chair Kent J. Thiry was paid more than $14 million. Using the United States Proxy Exchange (USPX) released draft guidelines, I voted against most pay packages over the median for large- Continue Reading →
Checking the Summary Compensation Table, it appears former CEO/Chairman James C. Mullen was paid more than $20 million and current CEO George A. Scangos was paid $9.4 million. Using the United States Proxy Exchange (USPX) released draft guidelines, I voted against most pay packages where the company paid more than the median $9 million last year. I also voted against Robert W. Pangia (Chair), Alexander J. Denner, Eric K. Rowinsky, and Lynn Schenk, since they served on the compensation committee. I voted for a pay advisory every year and in favor of declassifying the board, a management proposal.
The 2011 Annual Shareholder Meeting will be webcast live on Thursday, June 2, 2011 at 9:00 a.m. ET. To access the live webcast, please visit Biogen Idec’s Investor Relations section (investor.biogenidec.com). An archived version of the webcast will be available following the meeting.