Tag Archive for ‘Executive Compensation’
Pay packages for CEOs of U.S.-based companies continue out of control, writes columnist Gael O’Brien, with boards often succumbing to “fear-based” compensation practices that undermine the potential for collaborative leadership and sustainability. She notes new research which disputes conventional wisdom that CEOs can easily move to the next company if not paid well. “Tackling excessive CEO compensation,” O’Brien writes, “is the first step in creating a new normal.”
Corporate governance activist Robert AG Monks argues that American corporations today are like the great European monarchies of long ago. “Corporations have effectively captured the United States: its judiciary, its political system, and its national wealth, without assuming any of the responsibilities of dominion,” he writes. “Evidence is everywhere.”
The economic crisis, increased rules and regulations, and heightened scrutiny of boards’ roles have “corporate directors feeling pressure to be more effective in the boardroom,” according to an annual survey of directors of large companies by PricewaterhouseCoopers. Key concerns include executive compensation, risk management, strategy, succession planning, information technology security and fraud.
Advisory shareowner votes on executive compensation were the big story of proxy season 2011, the inaugural year for “say on pay” at most U.S. public companies. In the first half of the year, shareholders voted against proposals at some 37 companies. The Council of Institutional Investors, a leading advocate for say on pay, offers its analysis of the “no” votes and what they might say about current executive compensation practices.
A new study by researchers at Harvard Business School and London Business School concludes that companies which have voluntarily embraced sustainable business cultures with a substantial number of environmental and social policies “significantly outperform their counterparts over the long-term, both in terms of stock market and accounting performance.”
Stanford University professor David Larcker says context is critical in the choices that organizations make in designing governance systems and the impact those choices have on executive decision-making and the organization’s performance. “There is no question to us that ‘governance matters,’” he writes. “The fundamental challenge is to understand when and how it matters.”
Columnist Ann Charles says that in order to successfully integrate Corporate Social Responsibility into business, there’s a need to start changing the culture of Wall Street, and that change has to come from within. She shines a spotlight on some individual leaders who are working to change the rules of the game in the financial sector.
Columnist Gael O’Brien speaks with Joel Kurtzman about corporate culture, CEO leadership and the concept of a common-purpose organization. “It is difficult for a company to keep a sense of common purpose for longer than a decade,” he says. “It has to be nurtured or it goes away.” One company that has succeeded: American Express.
Cash bonuses paid to New York City securities industry employees declined by nearly 8 percent to $20.8 billion in 2010, as Wall Street firms shifted toward more deferred compensation and higher base salaries, according to an estimate released by the New York State Comptroller. For the average Wall Street worker, however, that still translated into a 2010 cash bonus of $128,530.
Among the December 2009 proxy rule changes approved by the SEC was a requirement that companies discuss and analyze risks that are reasonably likely to have adverse effect on the company’s reputation and/or sustainability. This means companies must not only identify the risks facing them but also determine the probability and severity if realized and how that relates to the company’s compensation policies and programs.