Expert Perspective
by Edie Kingston
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March 8th, 2010
Expert Perspective by Grahall’s OmniMedia Editorial Board
As the heath care debate continues so does the press coverage. Reed Abelson says in his February 26th 2009 article in The New York Times (“The Cost of Doing Nothing on Health Care”) “…health policy analysts and economists of nearly every ideological persuasion agree [that without health care reform] …The unrelenting rise in medical costs is likely to wreak havoc within the system and beyond it, and pretty much everyone will be affected, directly or indirectly.”
The cost of health care is high and going higher without reform.
Continue reading “Health care spending – use it, don’t abuse it” »
Filed under: Expert Perspective
Tags: Health Care Reform
Expert Perspective
by Edie Kingston
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March 8th, 2010
Expert Perspective by Grahall’s OmniMedia Editorial Board
Recently, The Kellogg School of Management at Northwestern University’s Camelia Kuhnen addressed several pressing issues in executive compensation. Grahall’s editorial Board thought it would be interesting to canvas our team of Top Consultants to provide our thoughts in addressing the same questions posed by Bloomberg BusinessWeek.com’s Patricia O’Connell on the subject of “Executive Compensation and Public Outrage” (Business Week February 24, 2009).
The questions below have been selected from O’Connell’s interview with Ms. Kuhnen, but the answers are from Grahall consultants with a total of combined experience of more than 200 years designing executive compensation programs for literally thousands of public and private U.S. companies in various stages of development.
Q – “What do you think about the state of exec comp? It was a big issue a year ago, and people were expecting a lot of reform.”
In our authoritative research of top named officers in 1,000 public companies there is a significant correlation of pay to the size of the company and to performance measured over seven different variables in 95% of companies. This strongly suggests what we’ve long suspected – that typically, executive compensation programs are generally very effective and appropriately linked to financial performance.
Continue reading “Those Who Can, DO!” »
Filed under: Expert Perspective
Tags: Executive compensation
Expert Perspective
by Edie Kingston
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March 1st, 2010
Expert Perspective by Grahall’s OmniMedia Editorial Board
Julie Connelly’s February 09, 2010 article in Corporate Board Member “Transparency Time for Compensation Consultants’ Own Compensation” really got our Editorial Board talking.
Connelly says: “[The] Fury over excessive executive compensation is beating up on the pay consultants too.” We agree, and found our conversation ranging from the criteria to select an executive comp consultant to whether comp consultants or their firms might find themselves as defendants in shareholder lawsuits over excessively risky behavior that might be seen to be encouraged by executive compensation programs.
The SEC’s new rules around disclosure have driven many public companies to avoid any suggestion of conflict by finding an independent compensation consultant, despite the fact that, as the article points out: “Doing other business for the company when you consult on executive compensation hasn’t been outlawed… It just has to be disclosed.”
Most public companies do not want to raise any suspicion of conflict, and most multi-service firms do not want to have the fees their clients pay for services disclosed. (According to the Hewitt letter to the SEC the argument against fee disclosure is something about it being “Proprietary pricing data [which] represents critical market intelligence [that] … competitors could use to potentially underbid us for existing and potential projects.” And, gosh, we guess Hewitt wouldn’t want to give their clients that kind of an advantage!)
At one time, hiring a multi-service firm for compensation advice was about the safest choice a Board could make. It didn’t matter that the consultant often delivered the same cookie-cutter advice to every client. The mere presence of the multi-line was essentially considered a “seal of approval”, and the company could turn to shareholders and say: “We are doing it right”.
Now a new age has dawned
Continue reading “Caveat Emptor Updated” »
Filed under: Expert Perspective
Tags: Compensation Consultant
Expert Perspective
by Edie Kingston
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March 1st, 2010
Expert Perspective by Grahall’s OmniMedia Editorial board
In his article for GuruFocus.com “A Fix for Executive Compensation – The Reorientation of Director Intent” author, Karl (no last name) who “…is continually striving to learn more about investment”, says with regard to Director’s pay that: “The directors are paid egregiously in many cases” – with the notable exception of Directors of Berkshire Hathaway. Karl continues: “Berkshire Hathaway board members were paid $2,700 or $6,700 for the year ended December 28, 2008 depending on their duties.”
Karl suggests that “…director compensation to be stock only. And only stock that must be held for several years. Some sort of cap on this should be instituted. A maximum cash compensation should be extended to directors for expenses.” And he continues: “The proposed changes are not overly complicated or confusing.”
We agree with Karl in two regards:
1) He definitely needs to strive to learn more about investing and about the impact of director’s pay on shareholder value.
2) His proposed changes are not overly complicated; in fact, they are overly simplified.
Continue reading “Keep on Strivin’” »
Filed under: Expert Perspective
Tags: Board of Directors Pay
Newsfeeds
by News Monitor
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February 27th, 2010
Published in The Wall Street Journal February 27, 2010 by Dan Fitzpatrick
Retired Bank of America Corp. Chief Executive Kenneth Lewis left with about $83 million in pension and insurance benefits, stock and other compensation, according to a securities filing Friday. The filing by the Charlotte, N.C., bank also disclosed that the highest-paid executive at the nation’s largest bank by assets in 2009 was Thomas Montag, who got $29.9 million in total compensation as president of global banking and markets.
Link to full article
Filed under: Newsfeeds
Tags: executive benefits
Newsfeeds
by News Monitor
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February 26th, 2010
Published in Daily Finance February 26, 2010 By Sheryl Nance-Nash
If you want to stir up a hornet’s nest, just mutter two words: executive compensation. From the White House to Wall Street to Every Street USA, who gets paid how much is a topic of heated debate. Earlier this week came the announcement that Wall Street employees saw their bonuses increase by 17% to a collective $20.3 billion in 2009: During an economic downturn, a disparity in pay like that gets extra attention.
Link to full article
Filed under: Newsfeeds
Tags: Executive compensation trends
Newsfeeds
by News Monitor
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February 26th, 2010
Published in The New York Times February 26, 2010 by Reed Abelson
“Hands off my health care,” goes one strain of populist sentiment. But what if? Suppose Congress and President Obama fail to overhaul the system now, or just tinker around the edges, or start over, as the Republicans propose — despite the Democrats’ latest and possibly last big push that began last week at a marathon televised forum in Washington.
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Filed under: Newsfeeds
Tags: Health Care Reform
Newsfeeds
by News Monitor
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February 25th, 2010
Published in Business Week February 25, 2010
What fueled public outrage wasn’t how much execs got but how little the rest of us did, says Camelia Kuhnen of the Kellogg School of Management. The upside: increased shareholder activism Bonus season is well under way, and the public outrage that last year boiled over into protests at execs’ homes, criticism from the President, and demand for reform from an angry public seems to be at a low simmer now.
Link to full article
Filed under: Newsfeeds
Tags: Executive compensation
Newsfeeds
by News Monitor
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February 25th, 2010
Published in Business Week February 25, 2010 By Patrick McGurn
Many people can recite the first half of Louis D. Brandeis’ quote about the cleansing qualities of disclosure—”Sunlight is said to be the best of disinfectants….” Few bother with the rest of the sentence, in which Brandeis calls “electric light the most efficient policeman.” To her credit, Securities & Exchange Commission Chairman Mary Schapiro seems to have both sides committed to memory.
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Filed under: Newsfeeds
Tags: CEO Pay
Newsfeeds
by News Monitor
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February 24th, 2010
Published in The New York Times February 24, 2010
It’s about as official as it gets: the big money is back on Wall Street, Graham Bowley writes in The New York Times. Flush with record profits in 2009, investment banks and securities firms paid employees in New York City an estimated $20.3 billion in annual bonuses, according to a report released Tuesday by the New York State Comptroller. That was up from $17.4 billion for 2008. The tally, which is based largely on personal income tax receipts, provides a signpost for what has been one of the most controversial bonus seasons in Wall Street history.
Link to full article
Filed under: Newsfeeds
Tags: bonuses, short term incentives
As the heath care debate continues so does the press coverage. Reed Abelson says in his February 26th 2009 article in The New York Times (“The Cost of Doing Nothing on Health Care”) “…health policy analysts and economists of nearly every ideological persuasion agree [that without health care reform] …The unrelenting rise in medical costs is likely to wreak havoc within the system and beyond it, and pretty much everyone will be affected, directly or indirectly.”