Posts Tagged ‘Board of Directors Pay’

Keep on Strivin’

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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.
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A Fix for Executive Compensation – The Reorientation of Director Intent

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Berkshire Hathaway board members were paid $2700 or $6700 for the year ended December 28, 2008 depending on their duties. This is in a day of 6 digit pay for board members. It is not uncommon to find director compensation nearing $200,000 at many companies.

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Compensation for Corporate Directors Rises Modestly in 2008

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Published in Business Wire September 16, 2009

With the country’s economy still battling to pull out of a recession, directors on the boards of America’s largest companies in 2008 realized modest changes in their annual compensation packages. According to an annual review by Towers Perrin of total director compensation at Fortune 500 companies, 2008 pay packages rose by a median of just 3% from 2007 rates — a modest increase compared to the median annual pay increases near 10% seen in recent years.

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They Work Hard for the Money

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Expert Perspective by Grahall’s OmniMedia Editorial Board

expert perspective telescopeIn an August 7, 2009 Cnet News article titled “Google ups director compensation awards” author Tom Krazit says: “in a filing with the SEC Friday, Google revealed that it will be breaking with tradition by deciding to pay directors not employed by the company $75,000 a year in cash and $350,000 a year in restricted stock grants.”

From its infancy in 1998 through its rise to the top of the Internet search engine food chain, the company has changed drastically; Google’s business strategy has evolved as its meteoric stock price growth has slowed.  Both these changes should have – and apparently did – engender a change to the Board compensation.
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Google ups director compensation awards

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Published in cnetnews.com August 7, 2009 by Tom Krazit

Google plans to start paying non-employee directors on its board in cash, just after tossing them a hefty restricted stock award.

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European investors balk at director pay

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Published in Financial Times June 1, 2009 by Kate Burgess and Richard Milne
Guy Jubb cannot remember when he last spoke out publicly at a company’s annual meeting – until this year, that is. Last month the head of corporate governance at Standard Life Investments travelled to The Hague from Edinburgh to look the board of Royal Dutch Shell “eyeball to eyeball” as he outlined his grievances at the oil group’s attitude to executive pay.

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In Defense of Director Pay

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Published in The Wall Street Journal May 4, 2009 by George Davis, Partner at Egon Zehnder International, an executive search firm.

As annual meeting season approaches – amid the continued outrage over executive compensation — another group now finds itself under scrutiny for its pay: Boards of directors.

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CFO Pay Drops as Bonuses Shrink

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Published in The New York Times May 5, 2009 by Cari Tuna

Lower bonuses dragged down chief financial officer compensation in 2008, according to a new study by compensation-research firm Equilar Inc.

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Executives Took, but the Directors Gave

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Published in The New York Times April 5, 2009 by Heather Landy

Little of the ire against outsize C.E.O. paychecks has been aimed at the people who signed off on them: corporate directors.

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As Firms Face CEO Pay Scandals, Directors Quit

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Expert Perspective by Grahall’s Garry Rogers

Two recent Wall Street Journal articles present a most interesting  contrast.  The first is an opinion piece dated December 4, 2008 titled “Since Enron, Little has Changed”; and the second is a news article dated November 21, 2008 titled “As Firms Founder, Directors Quit”, by Joann S. Lubin (journalist for The New York Times).  Let me summarize and quote from the articles.

· CEO compensation is screwed-up because too often Boards failed at the task of governance. Were these boards incompetent, uninformed, or simply intimidated by powerful CEOs? The answer is not entirely clear. Whatever the reason, the outcome was the same: they failed in their fiduciary duty to govern.

· Primarily because of excessive time demands, the number of Directors not standing for reelection is on the rise. So far this year, 46 outside directors who are CEOs or chief financial officers left the boards of 42 companies in three struggling industries — financial services, retail and residential construction. … During the same period three years ago, 31 directors with those titles left.

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