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.
Our goal for this year’s Summit was to bring as many of our clients as possible to a single location for world-class education and unparalleled networking with leaders in the industry. Thanks to our great lineup of speakers and participants, I’m proud to say that it was a unanimous success. We had nearly 350 Equilar clients in attendance in Washington, and over 90% of them rated the event a 4 or 5 out of 5 on their feedback forms. In particular, attendees cited the unsurpassed quality of our speakers (nearly 60% gave us a 5) as the favorite part of the event. Thanks again to our all-star lineup of speakers for their valuable insights and to the participants for their candid questions.
The “Lessons Learned” panel at the Summit. From left: George Paulin (CEO, Frederic W. Cook), Ira Kay (Managing Partner, Pay Governance LLC), Doug Friske (Managing Principal, Towers Watson), Peter Chingos (Senior Partner, Compensation Advisory Partners), and Charlie Tharp (Executive Vice President for Policy, Center on Executive Compensation).
Another great addition to the Summit this year was the industry roundtables that we hosted on Day Two. Candidly, given that this was the first time that we hosted the roundtables, we were not sure how they were going to turn out. Thankfully, our clients felt that the networking and peer discussions were invaluable. We’re certainly looking to build on the success of our roundtables for next year, in the hopes of further uniting our unique community of clients.
I’d also like to thank our terrific sponsors, without whom this Summit would not have been possible. Our Diamond sponsor, E*TRADE, helped us host a great event on the first night. The Capitol Steps gave a hilarious and entertaining performance that certainly pushed the edge of the envelope for several of us in the room. (As an aside, though I would not consider myself a political junkie, I would highly recommend Game Change by John Heilemann and Mark Halperin. Amazing detail and insight on the 2008 election.)
But most of all, I’d like to thank President Obama, who took time out of his busy schedule to join us at the Hilton.
Just kidding. While the Commander-in-Chief was at the Washington Hilton on the second day, he unfortunately wasn’t there for our event. A nurses’ association happened to be hosting a conference at the same time. Despite the newspaper headlines, I guess health-care reform still trumps exec comp!
As always, we strive to continue to improve everything we do, and we welcome your feedback on the Summit. Please e-mail us at firstname.lastname@example.org to tell us what you liked and what you’d like to see changed for next year. If you didn’t get to attend the Summit and want to make sure that you don’t miss next year’s, please feel free to drop us a line as well. We’ll announce the date and location soon, so stay tuned! Thanks again for your support of Equilar and your help in making this year’s Summit a huge success.
Two weeks ago, we brought you our latest report on the state of CFO pay in the S&P 500, and today, we’re supplementing that information with similar reports on the S&P 400 and 600. The verdict: just like their counterparts in the S&P 500, small- and mid-cap CFOs saw a median total pay decrease in 2009, but they also saw their bonuses rise. The larger the company, the bigger the median total pay slide: large-cap CFO pay fell 3.1 percent, mid-cap pay went down 2.7 percent, and small-cap pay fell 0.64 percent.
The size of company also correlated with the size of the bonus increase: large-cap CFO bonuses rose 20.9 percent, mid-cap bonuses went up 14.8 percent, and small-cap bonuses rose 10.2 percent. One interesting exception: while the prevalence of bonuses grew for the large- and mid-cap CFOs, the number of small-cap CFOs seeing a bonus of any kind this year went down. Bonuses were strongly correlated to performance, but the risk-reward factor varied depending on cap size: large- and mid-cap CFOs in the top-performing quartile had significantly higher bonus increases than their top-performing peers at small-cap firms, and the bonus decrease for those who performed poorly increased significantly from large- to small-cap companies.
To see the full 20-page versions of the three reports, with detailed info on pay mix, pay by industry, and more, click the appropriate link to request a copy:
As risk management becomes a topic of increasing importance, more companies are turning to their CFOs for sound financial judgment. How is that affecting their pay? We studied 315 CFOs in the S&P 500, all of whom had been in place for at least two years, to find out.
The answers are mixed. Much like their CEO counterparts, CFOs in the S&P 500 saw both a drop in their total compensation and a rise in their bonus pay. Compared to the CEOs, however, CFOs have it a little easier: their pay slide was much smaller (3.1% versus the CEOs’ 7.9%) and their bonuses were significantly bigger (a 20.9% increase compared to the CEOs’ 8.5% jump).
A few other interesting tidbits from the report:
Bonuses were found to be responsive to performance: CFOs in the top-performing quartile of companies had a median bonus increase of 56.5 percent from 2008 to 2009, while those in the bottom quartile saw a median bonus decrease of 15.5 percent.
The more recent the filing, the higher the bonus: Companies with fiscal years ending from June to November 2009 paid a lower median annual bonus than those with fiscal years ending in December 2009 through February 2010, demonstrating the impact of the market rebound.
Conglomerate CFOs make the most: Conglomerate CFOs had the highest median total pay, at $4.6 million in 2009. The Consumer Goods industry saw the greatest pay growth, increasing 9.0 percent from 2008 to 2009.
Equity continues to constitute most of the pay package, but cash is gaining ground: Overall pay-package design remained fairly stable in 2009. Equity awards continued to constitute the largest portion of total pay, but declined slightly while cash compensation (the total amount of salary, bonuses, and “other” comp) rose slightly (from 37.6 to 44.4 percent of total pay).
There’s much more in our full 20-page report, including analyses of equity awards and grant-date values, and predictions for 2010 trends. To request the complete report, click here.
P.S. If you’ll be attending our 2010 Executive Compensation Summit next week, I hope you’ll find me at some point and say hello. I greatly value my relationship with each and every one of you, and look forward to hearing your feedback on the conference.