Welcome

For the month of November, our three feature articles focus on topics that are increasingly relevant with stock markets in flux. First, we examine underwater stock options at Fortune 500 companies and the increasing prevalence of option exchange programs. Next, we shift to an analysis of clawback policies at Fortune 100 companies. Although we explore clawback policies on an annual basis, their inclusion in the recently passed financial sector rescue plan, makes our 2008 study especially interesting. Finally, we close with a brief look at how some companies are already addressing the potential for excessive risk taking by executives in their CD&A statements.

Feature Articles

Underwater Options and Exchange Programs
A review of underwater options at Fortune 500 companies

An Equilar analysis of outstanding stock option holdings reveals the following key findings:

• As of October 17, 2008, 90.3 percent of Fortune 500 CEOs held underwater stock options.
• Between the end of fiscal year 2007 and October 17, 2008, the median value of aggregate option holdings for Fortune 500 CEOs has declined by 63.0 percent.

Clawback Policies on the Rise
An analysis of compensation recovery policies at Fortune 100 companies

Equilar's new report on clawback policies at Fortune 100 companies reveals the following key findings:

• From calendar year 2007 to calendar year 2008, the prevalence of Fortune 100 companies with clawback policies increased from 42.1 percent to 64.2 percent.
• Additionally, in 2008, more clawback policies at Fortune 100 companies covered equity incentive compensation than cash incentives; 72.1 percent versus 67.2 percent, respectively.

Talking About "Excessive" Risk
Discussions of excessive risk in CD&As

A brief look at companies already addressing the potential for excessive risk taking by executives in their CD&A statements. Equilar clients can read the full risk story online.

Equilar in the News

Research and commentary from Equilar appeared in several articles in October. 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 and publications section of our website.

Clawbacks Are In Place And Ineffective October 28, 2008
"'A clawback policy at best is just one element in the toolkit that a company might employ to curb extensive risk-taking,' says Alex Cwirko-Godycki, Equilar's research manager who co-authored the study. 'It's not the catchall solution.'"
Managing Employees in a Downturn October 23, 2008
"A few [companies] are considering the controversial step of repricing or exchanging them. Compensation research firm Equilar reports that 23 companies have done so since the beginning of the year, including R.H. Donnelley and software maker VMware."
Even in HR, Women's Pay Lags Men's October 22, 2008
"Most human resource professionals are women, but last year 37 of the 50 highest-paid HR executives at Russell 3000 companies were men, according to a survey of 2007 proxy statements by Equilar, Inc., a California-based executive compensation research firm."
Insiders' Share Sales on Margin on the Rise October 20, 2008
"Already this month, there have been about $1 billion in sales by company insiders dumping stock to meet margin calls, as lenders' demands for the stock sales are known. According to Equilar, an executive compensation research firm in Redwood Shores, Calif., executives at three dozen companies have disclosed such sales since October."
Firms Try to Shore Up Incentive Pay October 10, 2008
"Compensation-tracker Equilar Inc. found more than 20 companies that implemented option exchanges so far this year, including home builder Toll Brothers Inc. and software company VMware Inc."
Interested in more media mentions from October? Click here.