CEO pay still high, but no longer a runaway train

Seeking to raise profits, the board of Mylan NV two years ago authorized an aggressive bonus program for its top executives if they could meet certain targets. Last year, when they beat those targets, the stock soared – briefly – and chief executive officer Heather Bresch saw her pay rise to $18.9 million, double what she got in 2013.

But one reason profits rose was that the pharmaceutical company doubled the price of its popular EpiPen, used to treat allergic reactions. When consumers started complaining, the stock fell back to earth and the company has scrambled to meet those concerns while scrutiny from Congress ratchets up.

By Laurent Belsie, Staff writer SEPTEMBER 5, 2016 , The Christian science monitor

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May to Outline U.K. Plans to Rein In Excessive Executive Pay

U.K. Prime Minister Theresa May will outline plans this fall to clamp down on “excessive” executive pay, after one of her lawmakers last week criticized high compensation levels for FTSE 100 bosses as “socially divisive.”

“To restore greater fairness, we will bring forward a consultation this autumn on measures to tackle corporate irresponsibility, cracking down on excessive corporate pay and poor corporate governance,” May told a news conference on Monday after the Group of 20 summit in Hangzhou, China. The proposals will also include giving employees and customers representation on company boards.

By Eddie Buckle  @EddieBuckle
September 5, 2016 — 8:47 AM EDT, BLOOMBERG
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Most companies not planning on better pay raises next year

Lower unemployment rates usually lead to a rise in salaries. But even as unemployment hovers near a six-year low, U.S. companies say they have no plans to make increases to the money they set aside for pay raises next year.

The finding is based on a survey of 461 companies commissioned by the Conference Board, which provides data on business trends. According to the report, companies plan to raise their budgets for pay increases by a median of 3% in 2017, the same rate as in each of the last six years.

THE WALL STREET JOURNAL, Market Watch, Dalilah Buzz,  Aug 2, 2016 4:53 p.m. ET

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Here’s the Surprising Truth About How Much the Average CEO Earns

There’s been a lot of attention recently devoted to the outsized compensation packages some CEOs of well-known companies make. In fact, one recent studyfound that CEOs of the biggest U.S. companies earn, on average, a whopping $16.3 million annually. Apiece.

That’s crazy. But it’s actually not the norm. According to new research from Glassdoor.com, the median salary for an American chief executive today isn’t seven or eight figures — it doesn’t even crack the million-dollar mark. Rather, the average person with CEO on his or her business card makes a comfortable if not outrageous $177,800 a year.

• Martha C. White

Aug. 1, 2016, TIME MONEY

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UK's top shareholders to propose executive pay shake-up

Some of the UK's largest shareholders and senior directors at FTSE firms will this week demand a radical re-think in the way chief executives and top company earners are paid.

In a report to be published on Tuesday, leading UK corporate figures including the CEO of Legal and General, Nigel Wilson, and the chair of the Investment Association, Helena Morrissey, are expected to argue the current method of pay-setting is flawed, and propose overhauling the dominance of the long-term incentive plans (LTIPs) in determining top pay packets and bonuses.

The report comes after another AGM season of high-profile rebellions at what shareholders deemed excessive levels of pay in company boardrooms. It is also particularly timely given prime minister Theresa May's promise to reform corporate governance. In her short time in office she has already signalled plans to force companies to publish pay ratios, put employee representatives in the boardroom and pay closer scrutiny to foreign takeovers.

CITY A.M., Jake Cordell, Sunday 24 July 2016 6:48pm

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Pay Gap Widens Between Finance Execs, Rank and File

The gap between the pay of finance executives and rank-and-file workers widened once again in 2015, according to the annual compensation survey from Grant Thornton and the Financial Executives Research Foundation (FERF).

Among 363 respondents with titles including CFO, corporate controller, vice president of finance, director of finance/accounting, and chief accounting officer, the average base salary was up 4.0% from 2014.

Various sources had estimated that the average salary bump for all workers last year would be 3.0% to 3.1%. “If I were a finance executive and got a 4% raise, I’d probably be happy about it, comparing it to what the overall labor market is doing,” says Tom Thompson, FERF’s research director.

By David McCann June 24, 2016 | CFO.com | US

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Pay for Performance Takes a Balanced Approach

Companies primarily use equity to retain and incentive executives, as well as align their visions with longer-term strategic goals and shareholder return. A number of factors have influenced the way companies grant equity to their executives, particularly the emphasis on pay for performance in the wake of the Dodd-Frank Act and implementation of Say on Pay. As a result, about 80% of S&P 500 companies grant performance-based equity to their CEOs, according to Equilar’s  2016 CEO Pay Trends report.

For more information on Equilar’s research and data analysis, please contact Dan Marcec, Director of Content & Marketing Communications at dmarcec@equilar.com. Felicia Wong, Equilar Project Manager, authored this post. June 20, 2016

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HR Basics: How To Cope When You Have A Compensation Department Of One

Over the last few years, we have seen a rise in attention to the all too common, “HR Department of One.”

These Jacks-and-Jills-of-all-trades, (and master of many), must be the policy maker, recruiter, trainer, confidant and much more for many companies. Often, we talk about “compensation departments and compensation professionals” as if every company has one or both.

But, what if, as is often the case, a company has NO compensation professional on staff? Or, what if the company has a great compensation analyst with little or no training in executive compensation, sales compensation or some other important specialty?

By Dan WalterJuly 28, 2015TLNT

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Shareholders rejecting fewer pay packages this year — report

Shareholders voted their shares on average 91% to ratify executive compensation in advisory say-on-pay voting so far this proxy season, said a Willis Towers Watson report released Wednesday, reflecting 1,501 companies in the Russell 3000 stock index from Jan. 1 through June 3.

At 24, or 1.6%, of the companies, a majority rejected the pay packages in the non-binding voting.

By contrast, in all of last year, 61, or 2.8%, of the companies failed to receive a majority vote in support of the executive pay, although overall shareholders also approved pay at a 91% average level, based on 2,143 companies in the Russell 3000 reporting results.

“We look at changes in support year-over-year that might indicate some level of concern,” said Brian Myers, executive compensation consultant at Willis Towers Watson, in an interview. Since the beginning of the say-on-pay voting requirement in 2011, “the trend … in support has been around 90%,” Mr. Myers said. “I don’t think there are any surprises.”

BY BARRY B. BURR | JUNE 8, 2016 3:31 PM | UPDATED 3:35 PM, pENSIONS & INVESTMENTS

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How new OT laws affect compensation for recent grads, employers

This will affect many lower level food service and hospitality management positions classified as exempt under the FLSA, says Kager. If the positions are to remain exempt, employers will need to raise compensation to the new minimum. This alternative may be appropriate for jobs that will be required to work substantial overtime. If a compensation increase to the new minimum is not feasible, employers will reclassify the positions as non-exempt and be required to pay overtime for hours worked over 40 in a week.

Deciding the appropriate action will entail a comparison of the two alternatives based on historic hours worked. This could have an additional effect on employees.

“There may be psychological issues to consider if employees have their positions changed from exempt to non-exempt, requiring good communication about the change,” says Kager. “This could be considered by some employees as a demotion.”

College Recruiter, June 03, 2016 by Matt Krumrie

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200 Highest-Paid CEOs 2016

he New York Times recently published its coverage of the annual Equilar 200 study, which analyzes the highest-paid CEOs at U.S. public companies*. The 2016 Equilar 200 marks the 10th consecutive year of a partnership with The New York Times to deliver data on top-paid executives. 

The introductory page of this feature shows the Top 10 highest-paid CEOs. Below that, there is a link to the full list of the 200 highest-paid CEOs in an interactive chart that allows you to sort by pay, change in compensation year over year, company revenue and total shareholder return (TSR) to see how pay aligns with company performance and shareholder return. You may also download that information in an Excel sheet by filling out the form to your right.

EQUILAR, The New York Times, May 27, 2016

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CEOs who earn their keep... and those who don't

Executive pay has become an issue that increasingly dominates political discourse, corporate boardrooms and annual shareholder meetings.

Boards of directors say they pay executives for performance, tying benchmarks such as earnings to both short-term incentives (usually cash bonuses) and long-term incentives (like stock and option awards).

Shareholders don’t always buy it. About 3 percent of the Russell 3000 companies — an index that measures the performance of the largest 3,000 publicly held U.S. companies based on total market capitalization — failed to win approval of advisory “say on pay” votes both this year and last year, said Joe Kager, managing consultant at The Poe Group Inc. in Tampa. “The message shareholders are sending is there is misalignment of pay for performance,” Kager said.

Tampa Bay Business Journal
May 27, 2016, 6:00am EDT
Margie Manning and Chris Erickson

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Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees under the Fair Labor Standards Act

On May 18, 2016, President Obama and Secretary Perez announced the publication of the Department of Labor’s final rule updating the overtime regulations, which will automatically extend overtime pay protections to over 4 million workers within the first year of implementation. This long-awaited update will result in a meaningful boost to many workers’ wallets, and will go a long way toward realizing President Obama’s commitment to ensuring every worker is compensated fairly for their hard work.

U.S. Department of Labor, Wage and Hour Division (WHD), Final Rule: Overtime

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Opinion: Tesla’s Elon Musk is doing for executive compensation what he did for electric cars

It’s hard to think of a move that a corporation could make that should win the simultaneous applause of investors, Bernie Sanders and the ghost of neoconservative thinker Irving Kristol, whose “Two Cheers for Capitalism” was as aware of the limits of free enterprise as a modern right-winger can be.

But Tesla Motors Inc.’s TSLA, +1.91% compensation plan for CEO Elon Musk is a good one for the company’s shareholders and workers. The Musk That Roars stands to get $1.6 billion worth of stock options by 2022. But the plan so brilliantly balances Musk’s incentives to do well and do good that it’s Ben & Jerry’s Vermont-style corporate governance — with zeroes on top.

MarketWatch, Published: Apr 25, 2016 9:52 a.m. ET By TIM MULLANEY

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EMC Vs. Dell Top Executive Compensation: How Do They Compare?

Dell and EMC executives talk a lot about how well the two companies will fit together once their proposed merger is finalized, but there is one area where things don't really line up: executive pay.

EMC's top executives make vastly more than privately held Dell's. Being publicly traded makes a big difference -- EMC execs get millions in stock awards as part of their pay. The company detailed the 2015 pay packages of top executives recently in its annual proxy filing with the U.S. Securities and Exchange Commission.

CRN, byMatt Brownon April 18, 2016, 3:17 pm

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Investors Lose When Executive Compensation Goes Awry

When executive compensation incentives are not aligned with creating shareholder value, you risk having executives whose goals are not aligned with investors. The consequences of such misalignment are behavior like what we have seen with Valeant Pharmaceuticals (VRX), whose stock is down 68% year-to-date, and whose internal controls may get a qualified opinion by their auditor. Valeant is not the only company with misaligned executive incentives. There are many others.

Forbes, APR 15, 2016 @ 02:57 PM
David Trainer, Contributor
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Dodd-Frank and Executive Compensation – Part 1: Status Update

It’s been over five years since the signing of the Dodd-Frank Wall Street Reform and Consumer Act (“Dodd-Frank”) and we are still waiting for the U.S. Securities and Exchange Commission to finalize rules on several provisions related to executive compensation. Below is a summary of the current landscape of Dodd-Frank as it relates to key executive compensation provisions. Over the coming months, we will be posting a series of blog posts addressing some of the nuances of these provisions. 

Written by Alexander K. Song

AKSong@mintz.com

212.692.6237

See more at: http://www.natlawreview.com/article/dodd-frank-and-executive-compensation-part-1-status-update#sthash.FzWDafyu.dpuf

Tempur Sealy Executives Receive $81 Million Award Valued at Zero

Tempur Sealy International Inc. used a rarely applied rule to make an $81 million stock award to five top executives without recording its value, reducing their reported compensation for last year.

The award will pay out if the mattress maker exceeds a financial target -- a feat the board calls "not probable" -- or if the executives are let go after an acquisition by a third party, according to a proxy statement filed on Monday. The board didn’t include the $81 million in the compensation table for executives, citing a rule that lets companies value equity awards based on the probability their performance criteria will be met.

By Anders Melin, @melinanders, March 23, 2016, Bloomberg Business

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UPDATE 1-Activist investors want new United Airlines chairman before shareholder vote

The two hedge funds that have launched a boardroom fight with United Continental Holdings Inc on Tuesday called on the airline to immediately appoint one of its two new board members as chairman, according to a regulatory filing.

The funds asked that either James Whitehurst, former chief operating officer of Delta Air Lines Inc, or Robert Milton, former CEO of Air Canada, be appointed chairman before shareholders vote on a slate of six other directors that the funds proposed two weeks ago, the filing said.

United has yet to announce the date of its annual meeting when new board members can be elected.

Reporting by Jeffrey Dastin in Washington; Editing by Bernard Orr, Mar 23, 2016, Reuters

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With Board Member Who Won’t Leave, Valeant Is at Mercy of Bylaws

Valeant Pharmaceuticals International Inc.’s former chief financial officer and current board member Howard Schiller has been accused by the embattled drugmaker of misconduct, and yet the one thing the company can’t get him to do is quit.

Schiller’s unusual step of refusing to resign from the board, despite Valeant’s request that he do so, could lead to fractures among directors. Valeant’s bylaws specify that board members can be removed by a supermajority vote of other directors if he or she “ceases to be qualified to act as a director of the company.”

By: Cynthia Koons, @CynthiaLKoons and Carol Hymowitz, March 21, 2016, Bloomberg Business

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Major companies working to eliminate their gender pay gaps

On the heels of Internationals Women's Day, Salesforce, an American cloud computing company, announced its plan to combat gender pay differences in the company.

According to the Executive Vice President of Global Employee Success, Cindy Robbins, the company made an internal pay audit for 17,000 employees, spending about $3 million to make salary alterations for close to 6% of its workers. This major announcement was made in a blog post on Salesforce after the company extensively analyzed its employees' salary.

"Moving forward, Salesforce plans to monitor and review salaries on an ongoing basis — making equal pay a part of our company's DNA," Robbins said.

In addition to the company's plan to eliminate the pay gap, Salesforce will also establish training courses for the women in the company, which will help them become more qualified for advancement opportunities.

Mar 14th 2016 4:29PM, AOL.COM

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MarineMax executive pay swells in 2015

In recognition of improved performance and an effort to compete with salaries paid by similar firms, a Clearwater recreational boat dealer increased pay packages for its top executives, jumping between 41 and 59 percent.

William McGill Jr., chairman, president and CEO, was the highest-paid executive in the fiscal year that ended Sept. 30. at MarineMax(NYSE: HZO). He received $2.07 million in total compensation, up 53.4 percent from the previous year.

McGill's salary increased 4.5 percent, to $575,000, and he received nearly $725,000 in cash incentives and $769,000 in stock awards, both tied to performance.

Margie Manning, Tampa Bay Business Journal

Dec 24, 2015, 10:59am EST Updated Dec 24, 2015, 12:42pm EST

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Apple’s bold compensation plan has the company and CEO Tim Cook facing a challenging year

Back in the summer of 2013, facing a modest shareholder revolt, Apple CEO Tim Cook did one of the more remarkable things I’ve seen in years of writing about corporate compensation:

He volunteered to rewrite the rules for the restricted stocks units he had already been granted.

He was under no obligation to do so. But shareholders had seen the company’s stock cut almost in half over the past year and were getting nervous. There was lots of thumb-sucking over whether Apple could still innovate under the leadership of the man who had replaced Steve Jobs.

CHRIS O'BRIEN JANUARY 7, 2016 2:49 AM

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Regulations Limiting Executive Compensation and Administrative Costs of State-Funded Providers Upheld by Appellate Division, Second Department

On December 30, 2015, the New York State Appellate Division, Second Department issued a decision in Agencies for Children’s Therapy Servs., Inc. v. N.Y. St. Dep’t of Health,1upholding the regulations promulgated by the Department of Health (“DOH”) pursuant to Executive Order 38 limiting executive compensation and administrative costs for certain State-funded providers.2  The Court’s decision resolves a lower court split within the Second Department3 by reversing the Supreme Court, Nassau County’s prior ruling that adoption of the regulations had exceeded DOH’s statutory authority and violated the separation of powers doctrine, and upholding a Supreme Court, Suffolk County decision that found Executive Order 38 and the regulations to be constitutional.  Previously issued Clients & Friends Memoranda discuss the regulations and litigation challenging them in greater detail.4 

Cadwalader, Dec 31, 2015

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