Executive Compensation

CEO Pay? But wait….there’s always more

skyscraperThe Securities and Exchange Commission approved this week a rule that will require publicly traded companies to disclose the ratio of CEO pay to the average employee pay. This rule has been pending approval since Dodd-Frank legislation in 2010, and has been a source of continuing conflict and controversy.

Now I’m not generally on the political side that opts for income equality, because I believe that people should be rewarded based on their hard work and that in reality, you can never truly have income equality when jobs and work are not equal.  But this rule makes great sense to me. It might be because I’ve seen corporate compensation rationalization at work for too long. I have vented about executive pay before, and so I must again. (more…)

Executive Pay is STILL Excessive

In 1991, Bud Crystal released the book “In Search of Excess,” a scathing commentary on executive pay. I was a newly minted Compensation Consultant in a large financial institution at the time, and nowhere near as cynical as I am now. I read the book, but it didn’t really resonate; I worked primarily with non-executive pay.

Then I was asked to complete a market analysis on the total compensation of the CFO. I did all my research and analysis as I would do for any other position, and shared it with my boss. The market data and analysis I presented did not support increasing the CFO’s compensation.

Oops. Wrong answer. This was my introduction to creative analysis. The bottom line was, the CEO wanted to increase the compensation of the CFO, ergo, he needed support for that action.  I don’t exactly remember the particulars, but it went something like “a little credit” for his “other responsibilities,” tacking on a factor for his long service, and weighting the market data more heavily for a national presence rather than a regional presence, since “we were growing” and voila…the CEO got the justification he wanted. (more…)