Archive for September, 2009

Wall Street Needs More Skin in the Game

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Published in The Wall Street Journal September  30, 2009 by Peter Weinberg

The debate about bonuses and Wall Street pay rages on, and for good reason. Compensation is a complex issue that is essential to managing systemic risk. The asymmetrical structure of pay packages—a “heads I win, tails I win less” approach—was wrong. But overly prescriptive government intervention to solve the problem poses its own challenges and might not help us get the incentives right, either. So what can we do?

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CEO pay immune from reality

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Published in Management Issues September 20 , 2009 by Brian Amble 

Between 2007 and 2008, the US stock market fell by 37 per cent and 2.6 million American jobs disappeared. Amid the economic chaos, the vast majority of companies performed far worse in 2008 than they did 2007 and many of their staff suffered the consequences.

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Even Most Directors Think CEO Pay is Too High

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Published in Business Week September 30, 2009 by Jena McGregor

A majority of directors—the people who actually make decisions about CEO pay packages—believe CEO pay packages need trimming. In a significant shift from its 2006 survey, fifty-nine percent of respondents to a University of Southern California Marshall School of Business survey released earlier this month said there should be decreases in executive benefits and perquisites. Another 52% said retirement packages were too high, while a full 73% felt severance pay should be reduced. In 2006, just a minority of directors agreed with these statements (23%, 25% and 32%, respectively).

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Where you stand is based on where you sit

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expert perspective telescopeExpert Perspective by Grahall’s OmniMedia Editorial Board

In July 2009 the SEC released proposed changes to Proxy Disclosure rules  to, (in addition to other goals) “enhance the compensation and corporate governance disclosures registrants are required to make about… potential conflicts of interest of compensation consultants that advise companies.” 

The SEC invited public comment with a deadline for submission of mid-September, 2009. Well over 100 comments have been surfaced on the SEC’s web site to date among them, of course, are letters from consulting firms: Watson Wyatt, Towers Perrin, Pearl Meyer, Deloitte Consulting, Buck Consultants, and Grahall, among many others.  (To peruse the list and read the letters click here.)  For a summary of Grahall’s letter to the SEC click here

Without a doubt, the issue of conflict of interest is of paramount concern to consulting firms, and particularly to multi-service firms such as Watson Wyatt, Towers Perrin, Mercer and Hewitt (the “Big 4”, if you will, of that genre).  In its September 15, 2009 letter to the SEC (click here to read), Watson Wyatt has outlined a clever way to minimize the perceived impact of conflict of interest and “joins with three other multi-service human resources consulting firms (Towers Perrin, Mercer and Hewitt Associates) in making this recommendation”.  
Continue reading “Where you stand is based on where you sit” »

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Did Bankers’ Pay Add to This Mess?

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Published in The New York Times September 27, 2009 by Mark Hulbert

Proposals to cap the compensation of bank C.E.O.’s have gained traction lately as a means of heading off another financial crisis.  World leaders at the G-20 summit meeting last week in Pittsburgh agreed in principle to reform executive compensation, with the goals of reducing risk-seeking behavior and avoiding a future global credit shock.

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SEC may revamp executive pay calculations

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Published in The Pittsburgh Post-Gazette September 27, 2009 by Len Boselovic

Measuring executive pay is an inexact science that can produce widely different calculations of what the highly compensated crowd makes. The rationale for using one equation over a plausible alternative eludes the visceral sensitivities of many of executive compensation’s most strident critics.

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US bank CEO pay dwarfs rest of world

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Published in The Star Online September 26, 2009 

You wouldn’t know it by his pay stubs, but Jiang Jianqing heads the world’s largest bank.  Jiang, chairman of Industrial and Commercial Bank of China, made just US$234,700 in 2008. That’s less than 2% of the US$19.6mil awarded to Jamie Dimon, chief executive of the world’s fourth largest bank, JPMorgan Chase & Co.

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CEO pay at US firms little changed during turmoil: survey

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Published in Google September 25, 2009 by AFP

Chief executives at US corporations largely maintained their salaries and benefits during the economic and market turmoil of 2008, a survey by a shareholder rights group showed Thursday. The Corporate Library said its survey of 2,700 publicly traded firms showed median annual compensation for chief executive officers declined by 0.08 percent in 2008. This indicates “that the link between CEO pay and firm performance remains very weak,” said a report from the corporate governance organization.

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Goldman Sachs May Boost Pay, Give More in Stock, Citigroup Says

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Published in Bloomberg September 25, 2009 by Christine Harper

Goldman Sachs Group Inc. may pay employees more this year because of the firm’s “phenomenal” results, though a larger portion will come in restricted stock to help align compensation to long-term profit, according to Citigroup Inc. analysts.

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U.S. “pay czar” Feinberg using formulas, not caps

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Published in Reuters September 25, 2009 by Steve Eder

President Barack Obama’s “pay czar” said on Friday he was using formulas and data analysis to determine executive compensation rather than relying on pay caps. Kenneth Feinberg, appointed in June to decide compensation packages for the highest-paid personnel at companies that received U.S. government bailouts, said his team of 15 people is reviewing pay data submitted by seven firms that needed extraordinary assistance, a group that includes Citigroup Inc, Bank of America Corp, and American International Group Inc .

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