Activist Funds Put Executive Pay Formulas Under Microscope

Big shareholders for years have grumbled about the rise in executive pay. Now, activist investors are taking up the compensation cause, focusing less on how much corporate leaders earn and more on whether they deserve what they get.

Case in point: Shutterfly Inc., where an activist hedge fund is seeking three board seats at the online photo retailer at a shareholder vote set for Friday. The founder of Marathon Partners Equity Management LLC said once the fund "started peeling back the onion" on Shutterfly's pay plans, it found "a compensation scheme that had run amok."

By Liz Hoffman, By Dow Jones Business News,  June 11, 2015, 05:51:00 PM EDT

Read more:  http://www.nasdaq.com/article/activist-funds-put-executive-pay-formulas-under-microscope-20150611-00976#ixzz3f3nQOlf4

Penn State Tops Public College Compensation Survey

Pennsylvania State University’s former president Graham Spanier last year received compensation valued at $2.3 million, including the transfer of a life-insurance policy, more than the leader of any public university, a Chronicle of Higher Education survey found.

A tenured faculty member on administrative leave, Spanier stepped down as president in 2011. He was later indicted on charges including conspiracy and perjury in what prosecutors said was a cover-up of ex-football assistant coach Jerry Sandusky’s sexual assault of boys. Spanier has pleaded not guilty in the pending case.

by Michael McDonald, Bloomberg Business

June 7, 2015 — 5:37 PM EDT Updated on June 8, 2015 — 11:52 AM EDT

Read more here.

Caterpillar wins shareholder vote on executive pay

Shareholders of Caterpillar Inc. approved the company's executive compensation plan but a large minority voted against those policies.

A spokeswoman for the company said preliminary results showed 66% of the shares voted were in support of the compensation plan in a nonbinding vote at the company's annual meeting.

Proxy advisers Glass, Lewis & Co. and Institutional Shareholder Services Inc., along with the union-affiliated CtW Investment Group, had urged shareholders to vote against Caterpillar's compensation policies. A CtW spokesman said the vote turned up substantial opposition to the compensation plan. Typical support for pay plans is above 90%, he said.

By James R. Hagerty, MarketWatch

Published: June 10, 2015 10:22 a.m. ET

Read more here.

Corporations Are Going Green by Linking Executive Pay to Energy and Emissions Targets

Back in 2005, when GE chief executive Jeff Immelt launched Ecomagination, an initiative to pedal plant-friendly technologies to the market, he famously quipped “green is green.” But despite Mr. Immelt’s pitch, the conventional wisdom has stubbornly remained that what’s good for the planet is going to hurt in the pocketbook.

Things might finally be shifting. From the data crunched for this year’s Newsweek Green Rankings, we found an interesting trend within executive compensation packages that challenges this assumption. For instance, for the first time since we have been tracking executive pay-links to green, the majority of the 500 largest listed companies — both in the U.S. and globally — linked at least part of their executive bonus payout to green factors like energy use and greenhouse gas emissions. In the U.S., 53 percent of companies tie executive bonuses to green performance targets; globally, the number is 69 percent. A decade ago, less than 10 percent of companies linked pay to environmental factors.

-BY  TOBY A.A. HEAPS  6/4/15 AT 10:53 AM, NEWSWEEK

read more here.

Tech Companies Fly High on Fantasy Accounting

Technology shares have been powering the stock market recently, outperforming the broader stock indexes by wide margins. The tech-heavy Nasdaq 100, for example, is up 19 percent over the last 12 months, almost twice as much as the Standard & Poor’s 500-stock index, which has risen 10 percent.

Investor enthusiasm for all things tech is understandable, given the disruptions the industry is bringing to so many businesses and the potential profits associated with that upheaval.

But there’s a more troubling aspect of the current exuberance for technology stocks: the degree to which so many of the popular companies with premium-priced shares promote financial results and measures that exclude their actual costs of doing business.

By  GRETCHEN MORGENSON, The New York Times

Read more here.

Valeant VP’s $50.6 Million Pay Second to Apple Among Non-CEOs

Valeant Pharmaceuticals International Inc. paid Executive Vice President Ari Kellen $50.6 million in 2014, giving him the second-highest pay of any newly hired non-chief executive in the U.S.

The package is part of Valeant’s strategy to reward new hires when they walk in the drugmaker’s doors. Kellen’s pay trails only Apple Inc.’s Angela Ahrendts among U.S. executives at publicly traded companies whose 2014 compensation has been reported, according to summary compensation table data compiled by Bloomberg. Ahrendts, who was hired as Apple’s new sales chief after serving as CEO of Burberry Group Plc, received $73.4 million in 2014.

-Bloomberg Business by Caroline Chen and Alicia Ritcey, April 10, 2015

Read more here.

SEC takes a step toward finishing hotly demanded CEO pay rule

The 2010 Dodd-Frank bank reform law mandated the agency make a rule to require public companies to disclose the ratio of CEO pay to the median paid employee. It took three years to come out with a proposal, and after 22,860 comments, it’s still working on a final rule.

The SEC staff has now published an analysis by the agency’s Division of Economic and Risk Analysis that considers the impact of various methods of calculating the required disclosures. That development comes just two days after Senator Elizabeth Warren, the Massachusetts Democrat, called out the delays in finalizing the rule while harshly criticizing the overall performance of SEC Chairwoman Mary Jo White.

-By Francine McKenna, Published: June 5, 2015

Read more here.