| Welcome |
| The March 2008 edition of Executive Compensation Trends revisits two issues which regularly appear in our newsletter. In fact, the first article on CEO bonus awards is an extension of our study from last month. With so much interest in the connection between pay and performance, we dug deeper into each of the elements that comprise overall bonus compensation. Next, we explore the topic of 10b5-1 stock trading plans which continue to rise in popularity despite increased scrutiny from the SEC and investors. |
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| Feature Articles |
| Performance-Based Bonuses Fall in 2007 |
An analysis of CEO bonus awards at billion-dollar companies |
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An Equilar analysis of CEO performance-based bonuses in 2007 reveals the following key findings: |
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Among 178 companies with annual revenues of more than $1.0 billion, the median value of CEO bonuses from annual performance plans covering 2007 fell by 18.6 percent. The prevalence of payouts fell from 77.5 percent in 2006 to 70.4 percent in 2007.
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However, overall CEO bonus payouts in fiscal 2007 grew by 1.4 percent over 2006. Overall bonuses include discretionary awards and cash payouts from annual and multi-year performance plans.
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Equilar clients can read the full CEO bonus story here.
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| 10b5-1 Plan Use Continues Grow |
Trends in Fortune 500 executive stock trading plans |
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An Equilar analysis of Section 16 officer 10b5-1 plan use reveals the following key findings: |
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From 2006 to 2007, the total number of Section 16 officers using 10b5-1 plans at Fortune 500 companies increased by 5.5 percent.
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In 2007, 31.8 percent of Fortune 500 companies had at least one Section 16 officer using a 10b5-1 stock trading plan, up from 28.7 percent of companies the year before. |
Equilar clients can read the full 10b5-1 story here.
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To learn more about the benefits of becoming an Equilar client, request a demo online or call (877) 441-6090.
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| Equilar on the Road |
Members of the Equilar research team will appear at the following events in April and May. To learn more, click on the links below to view registration and event details. For a complete list of past and future events, please visit the presentations section of our website.
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2008 Proxy Season Results
Hosted by The Conference Board
April 10, 2008
Coronado, CA
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Executive Compensation Conference
Hosted by The Conference Board
April 15-16, 2008
San Francisco, CA
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2008 Proxy Season Results
Hosted by Insurance Conference Group
April 29, 2008
Chicago, IL
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Insurance Conference Group |
Executive Compensation Conference
Hosted by The Conference Board
May 6-7, 2008
Chicago, IL
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Proxy Season Results and CD&A Best Practices
Hosted by Intermountain Compensation and Benefits Association
May 7, 2008
Salt Lake City, UT
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Total Rewards Conference
Hosted by WorldAtWork
May 20-23, 2008
Philadelphia, PA
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If you would like to learn more about incorporating Equilar research into your presentation or adding a member of our team to your panel, please write to info@equilar.com. |
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| Equilar in the News |
Research and commentary from Equilar appeared in several articles in March. To read more about the latest in compensation news, click on the links below. For a complete list of articles featuring Equilar research, visit the news & publications section of our website.
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Chenault Was No. 1 in 2007 Pay, Buffett Lowest
March 26, 2008
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"The pay increase was 12 percent from 2006. Pay ranged from a low of $175,000 for Warren Buffett of Berkshire Hathaway Inc. to the $56 million for Kenneth Chenault of American Express Co. Compensation data for this study was obtained from Equilar Inc."
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Meet Marvel's Newest Superheroes
March 26, 2008
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"Three directors made over $300K last year and one — Chairman Morton Handel — made more than the company's CFO did last year. Just to be clear, we're talking about cash fees here, which according to a study by Equilar have remained flat as companies shift to more performance-based compensation. At Marvel, adding stock awards makes the figures even higher."
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Board Adds Clawback for Director Pay
March 24, 2008
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"Arkansas Best has adopted a clawback for director compensation. That's according to research by Equilar. While clawbacks for executive pay have become more prevalent over the last few years amid shareholder pressure and an increasing number of restatements, such policies have been rare for director compensation."
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As Clawbacks Grow in Popularity, Specifics Vary
March 24, 2008
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"Equilar research finds that 42.1% of Fortune 100 companies had disclosed a clawback policy in 2006, up from 17.6% a year earlier, according to Financial Week. Shareholder pressure and a rash of restatements are adding pressure on boards to adopt the policies."
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What to Do With Bear's C.E.O.?
March 17, 2008
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"Mr. Schwartz has been paid handsomely for his services. From 1993 through 2007, he was paid more than $160 million, according to Equilar, an executive compensation research firm. Should he decide to leave, Mr. Schwartz is unlikely to receive the kind of big payout that is known as a 'golden parachute'."
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JP Morgan Pays $2 a Share for Bear Stearns
March 17, 2008
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"Mr. Cayne has taken home more than $232 million in salary, bonus and other pay between 1993 and 2006, the time period for which there is publicly available data, according to Equilar, an executive compensation research firm."
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Corporations Claw Their Way Into Investors' Good Graces
March 17, 2008
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"The most common trigger for these recoupment policies (77.5% of the adopters) is financial restatements and/or ethical misconduct or negligence, said Alexander Cwirko-Godycki, Equilar's research manager. 'The more prevalent these policies become, the easier it is for boards to make the case that they need to adopt their own,' Mr. Cwirko-Godycki said."
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All Told, the Price Tag for Citigroup's New Chief Is $216 Million
March 14, 2008
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"In practice, they were given multimillion-dollar deferred cash and equity awards in January. Mr. Kaden added $8.3 million to his $500,000 salary in 2007, according to an analysis by Equilar, an executive compensation research firm. Mr. Klein received cash and equity awards worth $19.3 million in addition to his $212,500 salary. Mr. Volk was paid $10.3 million of similar awards on top of his $212,500 salary."
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Visa CEO Could Make Millions In IPO
March 12, 2008
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"'When you consider that ... the CEO did not receive equity awards last year ... and that Visa's peers routinely grant equity on an annual basis, it is not surprising that Visa's board would approve substantial awards at the time of the IPO,' said Alexander Cwirko-Godycki, research manager of Equilar, a Redwood City executive compensation research firm."
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Top Option Grants, Stock Awards in February
March 11, 2008
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"According to Equilar, several grants of 'premium-priced' options were awarded in February, an increasingly common compensation practice. Awards are considered premium-priced when the exercise price of the grant is higher than the stock price on the grant date."
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WaMu's Executive Bonuses Ignite Backlash
March 10, 2008
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"Late last month American Express joined 40 other big companies with such a provision—more than double the number in 2005—that allows boards to recoup money doled out to employees if misconduct or negligence leads to a financial restatement, according to Alexander Cwirko-Godycki, research manager at Equilar."
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Boards Buck Trend by Cutting Their Own Pay
March 10, 2008
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"While director compensation continues to rise to reflect increased responsibilities, some companies are bucking the trend. Their reasons could have implications for other boards working to align their pay with corporate performance in a time of economic uncertainty. So the Equilar CEO Blog reports. Take Ford Motor and General Motors, for example. Both automakers reduced director pay by half in 2006, Equilar points outs. GM reportedly explained in its proxy that the move was tied to company turnaround plans."
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Board Independence at Western Banks
March 10, 2008
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"Over the past few years, boards in all industries have grown more independent with fewer affiliated directors and a greater prevalence of non-executive chairs and lead independent directors. In this article, we look at some of the numbers behind these trends and investigate how these pressures are affecting the boards of Western banks with assets under $5 billion." (Written by Equilar research analyst David Sasaki)
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Clawbacks Are Gaining Favor
March 7, 2008
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"Forty-two percent of Fortune 100 companies had clawback policies in a 2007 report by Equilar, an executive-pay research firm in Redwood Shores, Calif., although that was twice the portion from the year before. Clawback clauses are far less prevalent at smaller companies, says Equilar research manager Alexander Cwirko-Godycki."
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CEO Bonuses Down
March 3, 2008
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"For the 108 CEOs who have filed proxies and whose fiscal years ended after Aug. 31, 2007, bonuses were down a median 4.5%, compared with a 27.1% increase for the same executives the year before. The data represents a wide base of industries, says Equilar spokesperson Alexander Cwirko-Godycki, who expects the bonus fall to accelerate as the proxy season goes on and more financial-services firm chiefs weigh down the average."
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Director Stock Ownership Disclosure Climbing
March 3, 2008
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"The number of Fortune 250 companies disclosing stock ownership policies for their directors is on the rise, climbing from 70.6% in 2005 to 77.6% in 2006. That's according to a new study by executive compensation research firm Equilar that examines director stock ownership trends among the largest companies. The study's results reflect a growing push to align directors' interests with shareholders'."
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Reining In C.E.O. Perks
February 29, 2008
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"'There is no doubt there has been an increase in companies disclosing cutbacks in executive perks,' said Alexander Cwirko-Godycki, research manager at Equilar, a compensation research firm. The trend, added Cwirko-Godycki, started last year. 'In 2006, 16 Fortune 100 companies announced compensation cuts, whereas in 2005 only two companies made similar disclosures,' said Cwirko-Godycki. 'I would expect the number of cuts to increase this year.'"
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CEO Bonuses Declined in 2007
February 28, 2008
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"The amount that CEOs received as bonuses declined nearly 5 percent from 2006 to 2007, according to a study by Equilar, an executive compensation research and benchmarking firm. Almost 40 percent received smaller payouts than they did the year before. The survey of 108 companies with revenues over $1 billion and fiscal years ending on or after August 31, 2007, finds that the median CEO bonus declined by 4.5 percent from 2006 to 2007. For the same executives, bonuses had increased by 27.1 percent from 2005 to 2006."
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C.E.O. Compensation: Less Is More
February 28, 2008
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"In recent years, some people have complained that bonuses for chief executives have been based on a rather simplistic formula: You exist, you get. But a preliminary review of 2007 compensation deals found that the median value of C.E.O. bonuses - brace yourself - actually declined by 4.5 percent last year. Don't get too worked up. The study, published today by the executive compensation-consulting firm Equilar, notes that last year's drop was small compared with the 27.1 percent rise in 2006."
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| If you are interested in adding Equilar research and commentary to your next compensation or corporate governance story, please write to press@equilar.com. |
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| Citing Equilar Research |
To cite Equilar’s research in your next story, blog, presentation or newsletter, please refer to Equilar, as “Equilar, Inc., an executive compensation research located in Redwood Shores, CA."
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| EquilarInsight |
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Equilar is proud to
announce the release
of PracticesInsight,
a database of disclosure examples compiled from
over 5,000 proxies.
To learn more,
please call (877) 441-6090
or click the following link:
Request a Demo
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2007 Executive Stock Ownership Guidelines
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To learn more, please
click the following link: |
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2007 Director Stock Ownership Guidelines
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To learn more, please
click the following link: |
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To learn more, please
click the following link: |
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| New Blog Posting |
Insights on Executive Compensation Disclosure Trends
Equilar CEO David Chun shares interesting compensation trends and practices seen in the marketplace while offering independent and objective analysis. To read his recent entry about performance metric disclosure, please click the following link:
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| Careers at Equilar |
| Equilar is looking for strong candidates to fill key positions across all departments. To learn more about opportunities at Equilar, please visit our careers page by clicking on the link below: |
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