Microsoft Shareholders OK Huge CEO Pay Package

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Advanced Micro Shareholder Sues Over New CEO’s Stock Grant

An Advanced Micro Devices Inc. (AMD) investor accused company directors of violating an executive-compensation plan by giving new Chief Executive Officer Lisa Su more than 6 million shares as part of her pay package.

Su, tapped to run the troubled computer chipmaker last month, was awarded more than 6.4 million AMD shares in violation of the company’s pay plan, which limits such awards to 3 million shares per year, shareholder Thuan Hong said today in a Delaware Chancery Court lawsuit.

By Jef Feeley  Nov 24, 2014 9:07 PM, Bloomberg

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What’s a CEO Really Worth? Too Many Companies Simply Don’t Know

The pay that CEOs and other executives receive is not aligned well with company performance, primarily because companies and boards lack the tools to accurately measure how much success executives are actually having in their jobs, a new study concludes.

The new report, from the nonprofit Investor Responsibility Research Center Institute and consultancy Organizational Capital Partners, set out to determine how well executive compensation among S&P 1500 companies was aligned with company performance and shareholder returns. “The expectation was that the analysis could usefully serve as a marker in the ground,” the firms wrote in its report, “and yet what it uncovered was unexpected.”

IRRCi is a research firm that was formed after its parent was sold to Institutional Shareholder Services. OCP is a corporate consultancy operating in the U.S. and Europe. You can read the full report here.

By PAUL VIGNA, The Wall Street Journal

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More Transparency, More Pay for C.E.O.s

“It’s very seldom that publishing compensation accomplishes much for the shareholders. No C.E.O. looks at a proxy statement and comes away saying, ‘I should be paid less.’ ”

Warren Buffett made that contrarian argument earlier this year, at the annual meeting of Berkshire Hathaway, about the steady push for companies to disclose compensation in increasingly specific detail in the name of transparency.

It was an intriguing, counterintuitive point, but largely anecdotal.

Now, a study by three professors at the University of Cambridgemay help prove Mr. Buffett’s assertion.

The study shows in devastating detail how compensation consultants — which use the increasingly available public data on compensation to advise boards on how much to pay chief executives — are helping to ratchet up the pay for the nation’s top executives.

By ANDREW ROSS SORKIN, 

NOVEMBER 10, 2014, New york times

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The Best-Performing CEOs in the World

The knock on most business leaders is that they don’t take the long view—that they’re fixated on achieving short-term goals to lift their pay. So which global CEOs actually delivered solid results over the long run? Our 2014 list of top performers provides an objective answer.- Adi Ignatius, Harvard Business Review

See the list here.

Berkshire's Buffett: Coke pay plan makes 'great sense'- CNBC

Warren Buffett, the billionaire chairman and chief executive officer of conglomerate Berkshire Hathaway Inc , praised Coca-Cola's altered executive compensation plan on Thursday.
"I think the new plan makes great, great sense," Buffett told cable business channel CNBC, referring to Coca-Cola's new guidelines to limit the executive compensation plan, starting next year.
"I think it’s remarkable what Coke did," said Buffett, whose Berkshire Hathaway is the company's biggest shareholder with a 9.1 percent stake. Referring to Maria Elena Lagomasino, chair of Coca-Cola’s compensation committee, Buffett said, "I tip my hat to her."
Buffett said he felt as good as ever about his investment in Coca-Cola. He told CNBC earlier this year he had abstained from a shareholder vote on its controversial equity compensation plan when it came up for renewal in April, even though he considered it excessive. -(Reporting by Sam Forgione in New York; Editing by Jeffrey Benkoe) Thursday, October 02, 2014

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eBay and PayPal CEOs to Be Well Compensated Post-Breakup

Executives who will take over as CEOs after eBay breaks up into two publicly-traded companies next year will be well compensated, according to filings with the SEC. eBay announced the breakup on Tuesday and said current eBay Inc. CEO John Donahoe would step down after overseeing the split.
Dan Schulman was named President of PayPal on Tuesday. Filings show he earns an annual base salary of $900,000 with a target bonus of 175% of his base salary. After the spin-off, his salary will increase to $1 million with a target bonus of 200% of his new base salary. - By Ina Steiner EcommerceBytes.com


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O-Care executive compensation provision raked in millions

An executive compensation reform provision in ObamaCare has generated millions of dollars in savings since last year, according to a left-leaning think tank.The Institute for Policy Studies released a report Wednesday that found limiting tax deductions for executive pay at health insurance companies resulted in $72 million to U.S. coffers from the top 10 publicly held firms alone.
“This $72 million in savings from limiting pay-related deductions for just 57 executives is the equivalent of the cost of dental insurance for 262,000 Americans or the average annual health insurance plan deductible for 28,000 people,” the authors of the report wrote. “If the Obamacare executive pay tax provision applied to all major U.S. corporations, not just to health insurers, U.S. taxpayers would save $50 billion over the next 10 years — and deliver a major blow against CEO compensation business as usual,” they added. - By Ferdous Al-Faruque - 08/27/14 The Hill

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Florida pension fund says no to executive pay at Bloomin', TECO, Roper

Amid the record number of proxy votes cast by the State Board of Administration of Florida at corporate shareholder meetings this year, three votes stand out.
The SBA, which manages the assets of the Florida Retirement System and other funds, said no on advisory votes on executive pay at three of the biggest public companies in Tampa Bay.
Failure to closely tie pay to performance was the reason behind the no votes at Bloomin’ Brands Inc. (NASDAQ: BLMN) and at Roper Industries Inc. (NYSE: ROP), said Jacob Williams, corporate governance manager. - Margie Manning, Quality and Content Editor- Tampa Bay Business Journal

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Performance Pay Up, Options Down

Though not surprising, the latest research on executive compensation confirms companies are moving away from stock options and toward more performance awards as stockholders, shareholders, boards and the public cast ever-skeptical eyes on pay for pay's sake, not tied to actionable goals.

 

The latest analysis of compensation and benefits for CEOs at 240 companies in the Standard & Poor's 500 from New York-based Mercer shows use of performance awards continues to climb. Performance shares, used by 41 percent of those companies in 2011, became a majority practice in 2013, used by 51 percent of respondents.

At the same time, the prevalence of stock options continued to fall in 2013, with just 25 percent of S&P 500 CEOs receiving option grants, down 10 percentage points since 2011.

 

"In practice, performance awards are more closely aligned to explicit financial or operational outcomes than stock options," says Ted Jarvis, Mercer's global director of data, research and publications. That said, though, "the performance measures and associated goals must reflect the company's strategic objectives for performance shares to be meaningful incentives." -Kristen B. Frasch, Human Resource Executive Online

 

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McKesson CEO's $292 Million Golden Parachute Faces a Proxy Fight

If McKesson (MCK) were sold tomorrow and Chief Executive Officer John Hammergren were fired, he’d be eligible to walk away from the medical-products company with $292 million in severance pay—almost half of it in restricted stock and option awards that were intended as incentives to keep him on the job.

His tenure has been good for McKesson shareholders. Since Hammergren took the CEO post in early 2001, the company’s shares have soared by 541.4 percent, compared with a 59.4 percent rise in the Standard & Poor’s 500-stock index through last week.

McKesson’s board has rewarded him, in part, with a golden parachute that’s one of the largest among current CEOs, says Aaron Boyd, director of governance research at Equilar, which tracks executive compensation. Corporate goodbye gifts for CEOs have drawn increasing scrutiny since former General Electric (GE) CEO Jack Welch stirred outrage with a $417 million retirement payout more than a decade ago. Since the 2008 financial crisis, shareholders have more frequently taken action to challenge such packages, Boyd says. -By Dawn Kopecki, Bloomberg Businessweek

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Landmark Apartment Trust execs get pay hikes

Top executives at Landmark Apartment Trust of America Inc. have fatter paychecks after signing new employment contracts with the Tampa-based REIT. Joseph Lubeck, executive chairman, will get a base salary of $675,000, while Stanley Olander, CEO and chief financial officer, will get a base salary of $625,000, under the employment agreements signed July 21, a filing with the U.S. Securities and Exchange Commission said. That’s a big increase from the $250,000 salary Lubeck received in 2013, when his total compensation was $1.9 million, including a $250,000 bonus and nearly $1.4 million in stock awards, according to the company’s most recent proxy filing. Olander’s total compensation last year was $905,551, including $300,000 in salary, $300,000 in bonus and $300,000 in stock awards, the proxy said. Margie Manning, Tampa Bay Business Journal


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Paying up: Hiring a new CEO from outside can be pricey

The search for a new CEO presents Target Corp. with a tricky paradox. In recent years, shareholders have grown more agitated over the big compensation packages that CEOs of giant companies typically receive. Target itself nearly lost a say-on-pay vote last year, with only 52 percent of share­holders backing its policies. But to attract the right person, analysts think Target may well have to offer its next leader an even better package than ousted CEO Gregg Steinhafel received. Many observers are hoping for an outsider who can breathe new energy into the retailing giant, which has struggled with declining U.S. sales, a botched launch into Canada and a high-profile data theft just before Christmas. Patrick Kennedy, Adam Belz and Kavita Kumar , Star Tribune

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New Ford CEO gets $5.25M pay package

"On his first day on the job, newly minted Ford Motor Co. CEO Mark Fields has beengiven a 13% bump in his salary, sweetened bonuses and a return to his practice of using a private jet for travel.

Fields will see his salary go from $1.54 million as chief operating officer to $1.75 million as CEO, according to documents Ford filed Wednesday with the Securities and Exchange Commission." -  Alisa Priddle, Detroit Free Press

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New Report Shows Decreased Shareholder Support for Executive Compensation

The Wall Street Journal (June 26) cites the latest edition of ProxyPulse, a joint publication of Broadridge Financial Solutions Inc. and PwC's Center for Board Governance, in reporting that shareholder support for executive compensation plans has declined this year at mid-cap, small-cap, and micro-cap companies. According to the newspaper, ProxyPulse analyzed 2,788 shareholder meetings held between Jan. 1 and May 22 and determined that "say-on-pay proposals failed to receive majority support at 72 companies compared to 54 companies in 2013." Mary Ann Cloyd, head of PwC's Center for Board Governance, remarks, "This trend points to the significant pressures boards still face around executive compensation." The report further shows that average support levels for executive pay plans climbed from 89 percent to 91 percent at large-cap companies.


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More Midsize Companies Failing Say-on-Pay Votes

"Shareholders casting executive compensation 'say-on-pay' votes suddenly got tougher on midsize companies this year," reports the Wall Street Journal (June 26, Chasan). Around 5 percent of midsize companies with market values between $2 billion and $10 billion have failed to obtain majority support at annual meetings this year. That is more than twice the 2 percent in the previous proxy season, a review of nearly 2,800 annual meetings by Broadridge Financial Solutions Inc. and PricewaterhouseCoopers shows. "After paying close attention to the say-on-pay votes at the biggest firms over the past few years, shareholders may be 'increasing the spotlight' on the smaller firms in their portfolios," reasons Chuck Callan, senior vice president of regulatory affairs at Broadridge, which processes proxy votes for thousands of firms each year. Even though say-on-pay votes are non-binding, companies are required to conduct them regularly under the 2010 Dodd-Frank Act. Failures are often considered a black mark by corporate directors.

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CEO Behind Hilfiger Overpaid by $8 Million, Crystal Says

Shareholders of PVH Corp. (PVH), owner of the Tommy Hilfiger and Calvin Klein apparel brands, voted today in favor of Chief Executive Officer Emanuel Chirico’s compensation plan. Pay expert Graef Crystal says he’s overpaid.

About 97 percent of votes cast at New York-based PVH’s annual meeting approved the company’s executive pay plan for last year, spokeswoman Dana Perlman said in an e-mail. Chirico received $18.4 million in the year ended Feb. 2, about 70 percent more than what Crystal calculates as his going rate, or the pay he should receive based on his company’s size, total return versus the Standard & Poor’s 500 Index (SPX) in its fiscal year and his tenure as chief executive. - Laura Marcinek, Bloomberg

To contact the reporter on this story: Laura Marcinek in New York at lmarcinek3@bloomberg.net

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Great Men, great pay? Why CEO compensation is sky high.

According to data released this month by executive-salary tracker Equilar, the 200 most highly compensated U.S.-based CEOs in 2013 received an average pay package of $20.7 million — including salary, cash bonuses, stock-based awards and other benefits. Each of those 200 executives took home more than $10 million in total compensation. At the top of the chart, Cheniere Energy’s Charif Souki pocketed $142 million, Mario Gabelli of GAMCO Investors was awarded $85 million and Oracle’s Larry Ellison took home $78 million. In the 1950s, the ratio between chief executive remuneration and that of a typical worker in the company was about 20 to 1. Today, the ratio between the pay of Fortune 500 chief executives and that of the average employee in these organizations exceeds 200 to 1. - Nancy F. Koehn, The Washington Post


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REITs Cede Ground on Executive Pay

"Executive compensation at real-estate investment trusts continued to rise last year, but at the slowest pace in five years as companies focused on making pay packages more shareholder-friendly. Overall compensation rose 2.2% last year, down from a gain of 6% in 2012, according to FPL Associates LP, a real-estate focused compensation consultancy based in Chicago. The gain last year was the weakest since 2008, when total compensation fell 16% during the real-estate bust." ROBBIE WHELAN, Wall street journal

Write to Robbie Whelan at robbie.whelan@wsj.com

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Using Dodd-Frank to Curb Executive Excess

"Proxy season is the magical time of year when shareholders cast their votes on corporate governance. Since 2011, the ‘Say on Pay’ provision of Dodd-Frank ensured those votes would include an up-or-down non-binding voice in executive compensation packages. If that sounds toothless, well, hardly anyone is even getting gummed. According to Equilar’s say on pay tracker, most companies’ executive compensation plans passed with 90-plus percentage majorities. Consulting firm Semler Brossy reports that just 36 companies—2.1 percent of their tally—have failed their votes so far this year. " - Posted by Catherine Ruetschlin on June 6, 2014, Demos

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Median CEO Pay Crosses $10 Million in 2013

The Houston Chronicle (May 27, Sweet) cites a new Associated Press/Equilar pay study in reporting that "the median pay package for a CEO rose above eight figures for the first time last year." Researchers found that the head of a Standard & Poor's 500 company earned a record $10.5 million -- up 8.8 percent from $9.6 million in 2012. In recent years, companies' boards of directors have tweaked executive pay in response to critics' calls for CEO pay to be more attuned to company performance. Many have cut back on stock options and cash bonuses, which often rewarded executives even when a firm performed poorly. "Boards of directors have placed more emphasis on paying CEOs in stock instead of cash and stock options," the Chronicle concludes. "The change became a boon for CEOs last year because of a surge in stocks that drove the S&P 500 index up 30 percent." Ken Sweet, @kensweet, AP Business Writer

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New List Shows the Top 25 Companies for Pay and Perks

"Google, Costco, and Facebook top a new Glassdoor survey of companies with great salaries and benefits," reports USA Today (May 26, Kelly-Barton). Also according to the poll, 39 percent of American workers say they believe they are under-compensated for their work. At the same time, 57 percent of the workers surveyed said it's up to employers and not government to address the issue. "The top items on their wish list are better pay policies, clearer top-down communication, and greater transparency about pay," notes the newspaper. The survey's results are based on a year's worth of verified feedback from U.S. employees who use Glassdoor, a career community website. While the list features companies that compensate their staffers well, what stands out are the often creative benefits -- everything from flex-time to work-from-home options to pet insurance. Of the top 25, the tech sector placed a dozen of its companies on the list. According to USA Today, "pharmaceutical and biotechnology make up the second-largest group with three representatives: Genentech, Amgen, and Pfizer. Costco, at No. 2 on the list, is the only retailer to make the chart." Casey Kelly-Barton, The Motley Fool

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REIT Governance: The Capital of Transparency

When it comes to corporate governance, the relationship between boards and investors boils down to putting some faith in the directors and management, contends Clifford Smith, chairman of Home Properties Inc. (NYSE: HME) and professor of finance and economics at the Simon Business School at the University of Rochester. Charles Keenan, REIT.com


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Doubling Down on CEO Pay

"In an era of what many perceive as outsize executive compensation," reports the New York Times (May 15, Gelles), "it's not unusual for a successful public company to lavish its chief executive with a multimillion-dollar pay package." When there are two chiefs, as is the case with Chipotle Mexican Grill, the paydays for both often end up being supersized. Chipotle paid its co-CEO Steve Ells $25.1 million in cash and stock in 2013 and its other co-CEO Montgomery Moran $24.4 million. Each man individually made more than the CEOs of such bigger companies as AT&T, Boeing, and Ford Motors. Since 2011, Ells and Moran have each made over $100 million on top of their salaries via a complex mix of stock awards. "Now the pay packages and unusual co-chief executive arrangement are drawing scrutiny from investors," notes the Times. "At Chipotle’s annual meeting in Denver on Thursday, shareholders will vote on two measures related to the company’s executive compensation." The first proposal would ratify the current compensation plan, while the second would increase the number of shares available for future grants to executives.

With Executive Pay, Bosses and Boards Need Sensitivity Training

"Here's what I do know: We often look at executive jobs and think, "Hey, I could do that!" But really, you can't. In fact, CEOs often miss the mark, and as a result, CEO turnover is actually quite high--14.2 percent in 2011 for the largest 2,500 companies. We can all tell in retrospect that someone did a bad job, but predicting going forward is much more difficult." Suzanne Lucas,  @REALEVILHRLADY, Inc.

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Blue Ocean Leadership

"It’s a sad truth about the workplace: Just 30% of employees are actively committed to doing a good job. According to Gallup’s 2013 State of the American Workplace report, 50% of employees merely put their time in, while the remaining 20% act out their discontent in counterproductive ways, negatively influencing their coworkers, missing days on the job, and driving customers away through poor service. Gallup estimates that the 20% group alone costs the U.S. economy around half a trillion dollars each year." - W. Chan Kim and Renée Mauborgne, Harvard Business Review

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How to Talk to Your Employees About Compensation

"A recent survey by compensation research firm PayScale finds that 73 percent of company leaders do not feel "very confident" in their managers' ability to effectively communicate with employees about salary issues, the Harvard Business Review reports." Will Yakowicz  @WillYakowicz, Inc.

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Pay for Performance? It Depends on the Measuring Stick

"But pay for performance is only as good as the metrics used to determine it. And as a recent study shows, some metrics — including the most popular — are downright ineffective at motivating executives to create shareholder value." Gretchen Morgenson, The New York Times

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Sykes turns up the heat on board of directors

"The letter becomes effective if a director fails to get enough votes for re-election at the meeting – a majority, or one more than 50 percent, for uncontested elections – and if the board decides to accept the resignation." Margie Manning, Tampa Bay Business Journal-- Read more here.

Investor criticizes Coca-Cola management's compensation

"According to the company, the actual dilution of the program is expected to be less than some calculations because of the share repurchase program and the fact that some equity awards may not be earned or may be canceled, terminated or forfeited. This is noted in Coke's proxy." Sara Eisen, @saraeisen,  CNBC-- Click here to read more.

Citigroup’s Proxy Details Link of Pay to Performance

"Indeed, Citigroup’s 2014 proxy report, which was released on Wednesday, has some intriguing disclosures on pay that allow outsiders to partially weigh the degree to which a large institution is using compensation to hold its senior executives accountable." Peter Eavis, New York Times