Expert Perspective by Grahall’s OmniMedia Editorial Board

In his article for the Huffington Post (Wall Street CEO Pay Problems Worsened By New Regulations, Report Says) William Alden writes that “…one of the primary forces encouraging greater risk [and setting off the ‘Great Recession’] was the way that executives at major banks were compensated: Aggressive moves that made stock prices soar in the short-term triggered hefty bonuses, and even when those same moves led to longer-term disasters, the chieftains got to keep the money, leaving taxpayers on the hook for the losses.  A new regulatory framework and much talk of lessons learned was supposed to have changed all that, putting the fortunes of the bank chiefs on the line, and tying their pay to the longer-term health of their companies.”

Alden refers to a report  issued by the Council of Institutional Investors, an association of public and private pension funds (Wall Street Pay) which suggests that the new regulations have done little to reduce risk since the changes simply result in companies increasing stock payouts in lieu of cash bonuses.  The “…council report concludes that simply focusing on boosting stock as a percentage of overall compensation inadequately protects against excessive risk-taking by banking executives.”

We agree, sort of. 
Continue reading “Fixing Executive Compensation: It’s Not a Simple Job” »

Expert Perspective from Grahall’s OmniMedia Editorial Board

Executive compensation and what is seen as near gluttonous bonus payments during a time when the average American is more likely hurting than not has been a recurring theme in the media.  The Institute for Policy Research has completed its 2009 study of CEO pay titled CEO Pay and the Great Recession that compares for those companies that are the top “layoffs leaders” for the 17 month period, November 1, 2008 to April 1 2010, with the total compensation paid to each CEO for the year 2009.

There are a couple things that aren’t well articulated in either the report or the article covering it by Roland Jones for msnbc.com (CEOs lay off thousands, rake in millions) by Roland Jones.
Continue reading “Rail Against the Chief” »

Expert Perspective by Grahall’s OmniMedia Editorial Board

In his article for Business Week How to Handle CEO Pay Before Dodd-Frank Hits Bill George subtitles his article “Financial reform will bring unintended effects.” And then goes on to outline “six policies that should be rigorously followed, including in bad times when boards are more prone to bend the rules for those in their top ranks.” On the surface, George’s ideas seems reasonable but lets dive down a bit deeper into them and see what the unintended consequences might be of these directives.
Continue reading “It’s Not Easy to Make Executive Compensation Truly Effective” »

Expert Perspective by Grahall’s OmniMedia Editorial Board

Being the top paid CEO in the automobile industry might not be much to crow about in our world of TARP bailouts and Japanese dominance, but for Ford CEO Alan Mulally, his take home pay is significantly greater than his U.S. and Japanese counterparts.  A  June 29th article for Auto in the News titled Ford CEO Mulally Gets Paid More Than Top Three Japanese Execs Combined  tells us that: “As the only Big Three automaker that didn’t get a bailout and fall into bankruptcy… [Ford’s CEO] Mulally has been an integral part of the Blue Oval’s ongoing turnaround, and as a result his efforts are reflected in his salary.  In 2009, Mulally reportedly earned $17.9 million in cash and bonuses. This officially makes him the world’s top-paid auto chief.”

Perhaps these seemingly huge paychecks are part of our national culture of “rock stars” where entertainers, athletes and, maybe even CEOs are paid because they are the product.  No question that a company’s CEO isn’t your average “Joe”, and it is clear that Mulally is, if not “the product” per se, he has become at least a hero of sorts for the Ford Motor Company.
Continue reading ““Cleanliness is next to Fordliness.” – Aldous Huxley, Brave New World” »

Expert Perspective by Grahall’s OmniMedia Editorial Board

Eric Dash writes in his June 8, 2010 article for the New York Times: (Fed Finding Status Quo in Bank Pay)
“…many of the bonus and incentive programs that economists say contributed to the worst financial crisis since the Great Depression remain in place… In many cases, risk managers do not have full access to the compensation committee of the banks’ boards.

No question that these large banks are complex environments.  In fact that complexity may well have contributed to the “the worst financial crisis since the Great Depression” as Dash described it.   Where there are complex environments, it makes the most sense to bring all the specialists together to examine and analyze circumstances and determine where problems might exist or arise.
Continue reading “The New CSI: Compensation Strategy Investigation” »