Published in The Wall Street Journal October 12, 2009 by Mark Maremont
Executives Receive Unusual Awards During Negotiations in Spate of Large Mergers
Numerous companies have awarded stock options to their top executives while engaged in negotiations to be acquired, according to academic research and a Wall Street Journal review of company filings.
Archive for October 12th, 2009
Newsfeeds
Reducing Incentives for Risk-Taking
Published in The New York Times October 12, 2009
It is now widely accepted that compensation structures in financial firms should be devised to avoid excessive incentives for risk-taking and that doing so requires tying executive compensation to long-term results and preventing cashing out of large amounts of compensation on the basis of short-term results.
Newsfeeds
Most Companies Not Ready to Restore Executive Pay Cuts
Published in SHRM October 12, 2009 by Stephen Miller
Most U.S. companies are not planning to restore executive pay cuts or freezes made during the economic crisis anytime soon, according to a survey by consultancy Watson Wyatt. As they prepare for continuing increased public scrutiny of executive pay, many are avoiding further short-term changes and focusing instead on long-term shifts toward better pay-for-performance and assessing their compensation programs within the context of risk management.
Expert Perspective
Go Ahead Cap My (Non Performance Based) Pay
Expert Perspective by Grahall’s OmniMedia Editorial Board
According to The Wall Street Journal’s Greg Hitt and Janet Adamy in their October 2, 2009 article “Insurance Executive Pay Curbed in Health Bill” in “… responding to charges that expanding health insurance coverage would enrich insurance companies. … Democrats on the Senate Finance Committee approved an amendment that would limit the tax deductibility of compensation for insurance executives to $500,000 a year. The limit would apply to executives at companies that get significant business generated by the bill’s mandate that nearly all Americans must have insurance. Under current law, businesses can deduct up to $1 million a year in non-performance based compensation for executives.”
Is this limit a big deal, or not? It certainly sounds significant since it cuts the current limitation in half. But, frankly, it doesn’t represent a “cap” on compensation. It is simply a cap on the deductibility of executive “non-performance based pay.”
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Expert Perspective
“You first, my dear Gaston”
The Top 10 Ways to make the world of CEO pay a better place
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Expert Perspective
Same Dances in the Same Old Shoes – The Eagles
Expert Perspective by Grahall’s OmniMedia Editorial Board
As Bloomberg’s Peter Eichenbaum shares (in his September 24, 2009 article “American Express Plans to Reverse Compensation Cuts“) “American Express Co., the credit-card issuer that repaid the U.S. bank bailout program, plans to reverse compensation cuts imposed seven months ago because the economic outlook has improved. Annual merit increases and contributions to retirement plans will resume in January, and a 10 percent salary reduction for managers in the senior vice president ranks and above will be rescinded, according to a memo from Chief Executive Officer Kenneth Chenault to employees.”
That announcement likely put smiles on the faces of many American Express employees. And as a public relations move it might also have eased some investors’ minds with its suggestion that American Express’s financial outlook has improved. But we wonder if the “same dance in the same old shoes ” really is the right step for American Express? Is the company missing a great opportunity?
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Expert Perspective
The Secret Formula
Expert Perspective by Grahall’s OmniMedia Editorial Board
Reuter’s journalist Steve Eder wrote in his September 25, 2009 article “U.S. ‘pay czar’ Feinberg using formulas, not caps” that “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.” We expect that this came as a great relief to many executives in the TARP companies.
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