June 30, 2010
While the entire exec comp field has been under a lot of scrutiny in the past couple of years, perquisites (“perks” to most of us) have been a particularly hot issue. Now that we’re nearly two years away from the beginning of the Great Recession, we were interested to see how companies are addressing the public outcry over perks. The answer? They’re paying attention, all right. The median value of CEO perks in the Fortune 100 declined 28.3 percent from 2008 to 2009, a drop that looks even bigger when compared to the 2.3 percent drop from 2007 to 2008. Over 34 percent of companies mentioned the elimination of some perquisites in their 2009 proxy statements, compared to 29.2 percent in 2008.
A few of our other findings:
- Tax gross-ups take a hit: Tax gross-ups, the practice of corporations paying the taxes incurred by CEO perks, declined 0.8 percent in value and 9.4 percent in prevalence from 2008 to 2009. 16 companies eliminated them altogether. But gross-ups aren’t gone yet: 50 percent of Fortune 100 CEOs still received them in 2009.
- Aircraft perks less prevalent, worth less: The median value of perks related to the personal use of corporate aircraft by CEOs fell 18.3 percent from 2008 to 2009, while the prevalence of these perks decreased from 79.2 percent in 2008 to 66 percent in 2009. This was a sharp turnaround from the 2007-2008 cycle, when aircraft-perk value rose 28.9 percent and prevalence rose 4.5 percent.
- Values of two popular perks rise in 2009: Accumulated pension benefits remained significant, with 64.9 percent of CEOs receiving them and a median value increase from $10.7 million in 2008 to $12 million in 2009. The value of nonqualified deferred compensation plans also increased, from $3.6 million in 2008 to $3.8 million in 2009; 78.7 percent of CEOs receive them.
To see detailed data and sample disclosure statements from multiple companies, click here to request the full 42-page report.
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January 13, 2010
As we discussed last week, the new SEC disclosure regulations taking effect this 2010 proxy season have put many people in the hot seat. Tasked with overseeing corporate compliance with the new rules and managing board discussions on executive compensation and risk, General Counsels have also been thrown into the spotlight.
Inside Counsel‘s January cover story drove home that point and referenced some of Equilar’s research on General Counsel pay. Check it out here: Sense and Recompense: Executive Compensation in the Crossfire.
General Counsels play a key role in keeping companies out of trouble, advising on the legality of practices and the pay structures currently under surveillance, yet little has traditionally been revealed in proxy filings about their compensation. Just how much do General Counsels make, and how are they paid?
In our newly published report, In-Depth Top General Counsel Compensation: An Analysis from Equilar’s 2009 Top 25 Survey, we looked at data from nearly one third of Fortune 1000 companies across a representative sampling of industries. Of those, 80 percent of survey participants reported a total of 275 General Counsel positions; providing us insight across industries, regions, company size, and other factors.
We analyzed compensation, changes in pay, and perquisites. Some key findings were pretty straightforward:
- The higher you are, the more you make. Median income for General Counsels reporting directly to the CEO is $1.3 million, 45.7% higher than those further down the corporate hierarchy.
- Bigger companies pay more. Median General Counsel pay at companies with more than $20 billion in revenue was $2,325,181, nearly three times the median pay at companies with less than $5 billion in revenue.
- How much you make depends on where you are. General Counsels at companies located in the Midwest or South census regions were paid less than their peers in the Northeast or West census regions (in line with median household income distributions released by the US Census Bureau).
Some findings took us by surprise:
- Industry matters for pay. Despite relatively low median revenue, companies in the Technology, Media, and Telecommunications industry paid their General Counsels more than any other industry. General Counsels in the Energy, Utilities, and Materials industry received less pay than their peers, even though their median revenue was highest.
- And for perks. Although they make higher median pay, General Counsels working in Technology, Media, or Telecommunications companies are less likely than their peers in other industries to receive perquisites.
The complete report is provided to all Equilar Knowledge Center subscribers. Non-subscribers can request a copy of the report by visiting Equilar’s Executive Compensation Reports section.
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July 28, 2009
Equilar’s latest Compensation Insights newsletter includes a short article on how companies have gone about defining and analyzing the potential for excessive risk taking in their executive compensation programs. In light of the SEC’s recently proposed compensation disclosure rules, identifying excessive risk is an issue companies of all sizes are wrestling with. Below is an excerpt from our latest newsletter:
"…one might be hard pressed to even find a definition of excessive risk. With this in mind, our analysts scanned proxy filings to find interesting examples of companies that recently made changes to their compensation programs as a result of analyzing the intersection between risk and compensation.
Our review of recent proxies identified several key questions that companies have considered as they examine issues of excessive risk. These questions include:
- Are we over using stock options?
- Do our incentive plans promote short-term thinking?
- Do we have the right mix between short and long-term goals?
- Do large maximum bonus opportunities promote risk taking?
- Are we using overly aggressive performance goals?
- Do our bonus plans focus on too narrow a set of goals?
- Do we have the right mix between fixed and variable compensation?"
In addition to our article on defining excessive risk, the July 2009 Compensation Insights newsletter includes access to our latest report on CEO benefits and perquisites at Fortune 100 companies. It shouldn’t come as a surprise that a report on CEO perks is often one of our most widely read. A copy of the report can be requested here.
If you are interested in automatically getting updates, subscribe to our executive compensation newsletters by clicking here.
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July 9, 2009
The past few weeks have offered no shortage of groundbreaking news in our industry. Last week, we received word that Towers Perrin and Watson Wyatt would merge in a $3.2 billion deal. Later, the SEC voted unanimously to move forward with proposals for new compensation disclosure rules. And just yesterday, reports surfaced that the White House would soon "clamp down on potential conflicts of interest between compensation consultants and corporate executives." With the full extent of our economic slump now well understood, it is clear that we are entering a new phase: one of overhauls to the regulatory system and further rethinking of the role for compensation consultants.
With so much industry-shaking news swirling about, we set out to provide some clarity on the state of the executive compensation consulting landscape and the new SEC rules in the July 2009 edition of our Executive Compensation Trends newsletter. It was quite interesting to see the changes in market share for the leading consulting firms in 2008. Needless to say, if the proposed legislation is ultimately passed, we should expect even greater changes on the horizon. To learn more about these issues, and to read our article on financial planning perquisites for Fortune 100 CEOs, click here.
Interested in more Equilar research and news? Subscribe to our Executive Compensation Trends newsletter here.
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December 6, 2007
Since my last posting on perks, we came across two more interesting ones that I wanted to share. FYI, for those who are or hope to become a board member some day. Enjoy!
Rare Hospitality International – “Non-employee directors also receive an allowance of $400 per fiscal month for dining at the Company’s restaurants, and an allowance of $1,000 per fiscal year for dining at restaurants of the Company’s competitors. Non-employee directors also receive a $1,000 allowance for charitable donations (which fall under the IRS-defined ‘Donations/Contributions’ category), and a $2,000 allowance for public relations (which do not fall under the IRS-defined ‘Donations/Contributions’ category), both per fiscal year.”
EGL Inc – In the footnotes to the Director Compensation Table, this company gives its directors an opportunity to replace their retainer for service with airplane usage: “The Annual Retainer is due upon election at the Annual Meeting of the Shareholders and qualification to serve. Each independent director may elect to take the annual retainer in cash, restricted stock award, or a combination thereof. Any amount elected in the form of restricted stock will be at a 15% premium of the corresponding cash amount. For example, if a director elected to take the annual retainer entirely in the form of restricted stock, such director would receive $28,750 in restricted stock rather than $25,000 in cash. Alternatively, each independent director may have, in lieu of their annual retainer, up to 25 hours per year of personal usage of the EGL-owned airplane 25 hours per year of personal usage of the EGL-owned airplane subject to the plane’s availability.”
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