Archive for the compensation news Category
Having knocked out CEO and CFO pay, Equilar’s third report in the C-Suite lineup focuses on the S&P 1500′s Chief Operating Officers. While the median CEO and CFO saw their total pay fall between 2008 and 2009, no C-Suite group has taken a hit like that given to COOs, who saw their pay go down in every industry. Even in the Utilities industry, where they’re paid the most, COO pay was down about three percent. Companies seem to be addressing some of the damage by awarding bigger bonuses: the median bonus was up 14.5 percent in 2009, from $350K to $400K. But with more than a third (34.9 percent) not receiving any bonus at all, 2009 hasn’t been a banner year for a good chunk of the COO population.
In general, the COO data for 2009 was consistent with what we’ve seen for CEOs and CFOs: pay down, bonuses up, pay-for-performance fairly intact, and 2009 equity awards making up for the majority of 2008 equity awards that are still underwater. One odd change: unlike every other study, where the first and second quartile of COOs by company performance saw bonus leaps, the second quartile in the COO study actually saw its bonuses go down 7.8 percent, while the third quartile’s COOs saw bonuses that rose 20.5 percent. Sounds like a few companies need to show a little more bonus love to their stronger-than-average performers– and a few other companies need to show a little less love to below-average execs. To request the full COO report, click here.
Reform-minded folk will be pleased at Equilar’s new data on CEO perks for the Fortune 100, which shows the median value of “other” compensation declining 28.3 percent from 2008 to 2009 (compare that to only a 2.3 percent drop from 2007 to 2008). The two most publicly reviled perks, tax gross-ups and personal use of corporate aircraft, were most likely to be cut; 34 percent of companies disclosed cutting at least one perk in ’09, and overall perk prevalence decreased five basis points in 2009.
But that doesn’t mean perks have completely disappeared. 50 percent of CEOs in the F100 still get gross-ups, and flexible perquisite accounts, which more or less shield a disbursement of “other” comp from targeted hatred, are on the rise (as is spending on security fees). 66 percent of CEOs still get to take rides on the corporate jet. All in all, the median perks package for a F100 CEO is still $249,632. The decline in perks may be a sign that Corporate America is listening, but that doesn’t necessarily mean they’re taking drastic action.
Equilar has just released its 2009 pay reports for S&P 400 and 600 CFOs, completing the trifecta begun two weeks ago with the S&P 500 CFO pay study. The most interesting part of comparing the three groups is that cap size has a small effect on CEO pay cuts, but a big effect on bonus increases. To wit:
Pay Decrease for CFOs in 2009
- Large-cap: 3.1 percent ($2.675 million median total pay)
- Mid-cap: 2.7 percent ($1.399 million)
- Small-cap: 0.64 percent ($840,903)
Bonus Increases for CFOs in 2009
- Large-cap: 20.9 percent ($536,250 median bonus)
- Mid-cap: 14.8 percent ($280,000)
- Small-cap: 10.2 percent ($145,457)
See a trend? CFOs of large-cap companies may have taken the biggest total pay cuts (which still weren’t all that big), but they recouped much larger bonus increases as a reward. Were it not for those pesky 2008 option grants, salaries would be flying pretty high. What’s more, this trend also plays out with the upside-downside of good and bad performance: on a percentage scale, large-cap companies’ CFOs see bigger bonus increases when they perform the best and smaller bonus decreases when they perform the worst. Smaller S&P companies may be under less scrutiny, but they’ve somehow absorbed the “pay for performance” rhetoric more quickly than their large-cap counterparts.
If one were to choose any executive hot seat in the S&P 500 right now, the Chief Financial Officer job might be the way to go. Though they make less overall than their counterparts in the CEO suite, CFOs have proven more resilient in terms of avoiding big pay drops and reaping bigger bonuses in these turbulent times. Equilar’s new study shows that CFOs’ median total pay only fell 3.1 percent (versus 7.9 percent for CEOs) while their bonuses jumped a jaw-dropping 20.9 percent (versus only an 8.5 percent boost for CEOs). The industries with well-paid CFOs include Conglomerates (the highest-paying, with median comp of $4.6 million) and Industrial Goods (which saw the biggest pay jump, rising 9 percent over 2008). Strangely, healthcare, the best-paying industry for small-, mid-, and large-cap CEOs, isn’t much of a hotspot for well-paid CFOs; total pay in that industry declined nearly 25% from 2008 to 2009.
CFOs are also benefiting from the same early-2009 stock grants given to their counterparts, where grant size was often inflated to make up for decreased stock price. Over 85 percent of those options are now in the money. To see all the data, request the report here.
The final chapter in Equilar’s cap-size CEO trilogy is out, and it looks like the CEOs of the smallest companies have taken some of the biggest hits. The S&P 600 is the only one of the three groups where bonuses were down in ’09– though median bonus value rose 3.3% for those who got bonuses, over 25% didn’t get any bonus, a 6.6% increase from 2008. Like the S&P 500, total pay is also down for the small-cap CEOs (the S&P 400 rose slightly), by 5.4%.
There’s also the question of stock: compared to their large- and mid-cap peers, small-cap CEOs are less likely to have options and more likely to have restricted stock. The share of their earnings that came in cash also shot up 8% between 2008 and 2009.
Ironically, the small-cap companies seem to be most enthusiastic about implementing the type of strictures to which the government would like to bring their big brothers around. In addition to the increased likelihood of restricted stock, bonuses correlate very strongly with performance for this group, with the top-performing quartile of companies raising CEO bonuses 71.1% and the bottom quartile docking them 32.6%.
You can get more information by requesting the full report here. If you’re interested in the S&P 500 and 400, go here and here.
Perquisites have been a lightning rod in the exec comp debate, and many companies are knocking them out altogether in an attempt to avoid criticism, as a Wall Street Journal article reports today in conjunction with their CEO pay study. Gross-ups were the biggest targets, with many CEOs seeing them cut or eliminated altogether. But some CEOs have avoided the perks axe: William Ford Jr. of Ford Motor Co. got a $900,000 bump in his security payouts over the past two years, presumably based on threats from auto-bailout naysayers (though Ford claims it’s a revision in how they report these figures).
Clawbacks also got some attention in the Journal piece: those who stay abreast of exec comp trends will remember that they rose from around 12% of the Fortune 100 in 2003 to a new high of 72.9% in 2009.
Expect plenty of pot-stirring next week in the aftermath of the New York Times Top 200 pay study, which is based on Equilar data and will be released on Sunday.
Dan Walter has a great new interview with Equilar CEO David Chun up at the EC Experts blog, primarily focused on the upcoming Executive Compensation Summit. There’s lots of interesting details here, from the industry-consultant tag-team roundtables to the educational forum WorldatWork will be holding for those looking to rise in the exec comp universe. It seems like there will be plenty of networking opportunities, as well as a focus on solutions, and the company is offering a $200 discount through mid-April.
Check out the interview, then see more details at the official Summit website.
The full Equilar Bonus Plan report is now out, and things have changed significantly with the addition of one week of new proxy data. While companies with fiscal year-ends in June-November had a 29% drop in CEO bonuses, those with FYEs in December had a 46.9% increase in their bonuses year-over-year. Our guess is that a lot of companies are beginning to come out of their recession-induced hiding places, and the overall bonus climate at the end of proxy season is looking increasingly rosy for the execs whose fiscal years ended in the past few months. Well, until the next round of media and politicians calling for their heads on a platter begins, anyway. Add to this the finding that financial-industry bonuses jumped from a median of $0 in \’08 to $576,294 in \’09, and the firestorm is practically visible from here.
That\’s not to say that every CEO is making off with beaucoup bonus bucks– 45.5% of them didn\’t take home a dime in bonuses, and as the report shows, many of those who did get a bonus got it in restricted holdings, equity, a mix of cash and equity, or performance-based awarding, rather than time-based. But with unemployment still high and unlikely to drop before proxy season\’s end, these December numbers seem like a bellwether of anti-bonus vitriol to come.
The advance teaser for Equilar\’s 2010 Bonus Plan Design report is out today, with plenty of statistics that should cheer populist revolutionaries and disappoint current or wannabe captains of industry. Total CEO bonuses fell 21.9 percent in FY 2009, though the numbers still aren\’t small: median bonus pay was a rather hefty $689,000 in 2009, though it was an even steeper $882,105 in 2008.
Unsurprisingly, the financial industry, much of it under TARP\’s house rules, took a big knock in the report, with median payouts declining 51.1 percent. The technology industry, however, took the dropoff crown: their bonuses fell 59.2 percent. The only unscathed industries were healthcare, which posted a 14.7 percent gain, and services, which posted a 20.8 percent gain.
So bonuses are definitely down, but hey, it could be worse: you could be one of the 26.1 percent of CEOs who received not a penny of bonus money in 2009. Yeah, we know. World\’s tiniest violin. But that\’s an 8.3 percent rise from 2008, which is pretty sizable.
At the end of the day, close to three-quarters of CEOs are still getting bonuses, most of them far larger than an average American\’s salary. But no matter how you feel about the President\’s and the SEC\’s position on the matter, you have to admit that their pressure is working– for the moment, anyway.
Request the full report here.
While a major post-recession trend has been the shifting of stock option grants to restricted stock, many Silicon Valley executives are still getting a fair amount of options, according to today\’s Wall Street Journal. Oracle\’s Larry Ellison leads the pack, with a whopping $57.4 million of options awarded in 2009. That\’s more than seven times the options granted to #2 on the list, Cisco CEO John Chambers. (We see many more yachts in Mr. Ellison\’s future.) Oracle also led the pack in total option grants given to executives, by a pretty wide margin.
In the third-place slot was NetApp, which awarded $7 million in options to new CEO Thomas Georgens. This is at least partially attributable to the new contract it had to work out when Georgens was appointed to the slot. Either way, it seems to be evidence that for some of the biggest Valley firms, restricted stock isn\’t looking as necessary anymore.
