As we adjust to the new SEC disclosure regulations and reflect back on the storms that lead up to the current economic climate, we are left to wonder – what is in the forecast for 2010? While market uncertainties make it tough to predict what will happen next in the world of executive compensation, one thing is for sure: All companies are exploring new ideas and practices to help them comply with stricter regulations, avoid excessive risk taking, and keep their shareholders happy.
Our newly published report, 2010 Executive Compensation Outlook, provides a follow-up to the companies studied in our 2009 Executive Compensation Outlook Report and explores trends and practices likely to affect us this year.
Some of the things we encountered:
- Salary reinstatements are on the rise. Of the 40 executive salary reductions we studied at the end of 2008, nearly a quarter have been reinstated.
- Incentive compensation is changing. Performance awards are being amended to provide longer performance periods, some firms have put relative measures in place, and others have adjusted threshold, target, and maximum level.
- Companies are getting creative with equity compensation. Performance-based awards are being amended to become time-based, option terms are being extended to give stocks a chance to rise, and some companies are adding more restricted shares and stock units to their equity mix.
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 or the individual report page here.
No tags for this post.
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.
, Executive Compensation
, general counsel
, top legal officer
Congratulations, we made it out of 2009! That’s the good news. The bad news is that 2009 means a whole lot for 2010. I previously wrote about the key new SEC regulations impacting executive compensation disclosure. In our Executive Compensation Trends newsletter, we highlight a new report called Preparing for Proxy Season: The New SEC Regulations. This new report pulls together summaries of the key topics, along with plenty of disclosure examples that should help everyone get an early jump on their proxy preparations.
Some of the highlighted topics and findings include:
- Relationship between Compensation and Risk: Companies are now required to provide more detailed information of existing compensation policies – including those of non-executive officers – if these policies pose a financial risk to the company. Based on an analysis of S&P 1500 companies, 235 companies disclosed the phrase “excessive risk” in their CD&A for 2009, compared to only two companies in 2008.
- Board of Director Risk Management: The new regulations call for additional disclosure about the board’s role in the company’s risk management process. At present, many companies mention the board and its relation to risk management within their proxy filings, but do not typically provide specific information on how the board, or its committees, manages risk.
- Company Leadership Structure: Under the new rules, companies are required to disclose whether they have chosen to combine or separate the principal executive officer and board chair positions, and why. An analysis of 1,251 S&P 1500 companies updated for fiscal years ending between April 2008 and March 2009 indicates 56% of companies have a CEO-Chair, of which 59.9% have a lead director.
- Say on Pay: Although not a topic covered in the new SEC regulations, we are seeing a growing trend in say-on-pay practices, partly as a result of regulations stipulated by the Troubled Asset Recovery Program (TARP). In 2009, there were over 300 votes relating to say-on-pay. This number includes adoptions of a vote on executive compensation policies, shareholder proposals requesting adoption of such policies, and actual votes on a company’s pay practices.
The complete report is provided to all Equilar Knowledge Center subscribers. Non-subscribers can request a copy of the report by visiting the Executive Compensation Reports section of our website.
Tags: disclosure requirements
, Executive Compensation
, sec regulations
, sec rules