Tag: Compensation

CEOs, Boards Forgo Cash Retainers in Liquidity Squeeze

Companies are taking steps to shore up balance sheets with more cash on hand by drawing on credit facilities, suspending dividends, cutting spending and in some cases eliminating cash payments to CEOs, executives and board members as employees deal with business shutdowns.

At such companies as Boeing, Booking Holdings, Darden Restaurants, Delta Air Lines, Kama Corp., United Airlines Holdings, Sabre Corp. and Steelcase, executives and some board members have decided to cut base salaries and board cash retainers, and in some cases executives will go unpaid until the end of the year. The compensation cuts provide relatively small amounts of liquidity for companies and are likely intended to send a message to employees who are unpaid and uncertain.

Coronavirus Caps Years of Rich Pay for Many CEOs

Chief executives of large U.S. companies rode a more than decadelong bull market to a string of record pay days.

Now, the stock market’s coronavirus-fueled swoon could wipe out hundreds of millions of dollars from executive pay packages and prompt a recalibration of how CEO compensation is set.

The potential losses highlight the flip side of stock-based compensation, experts say. The rout, which has destroyed trillions of dollars in market value for millions of retirees and investors, also is taking a chunk out of the equity awards that lifted many CEOs’ pay to all-time highs in recent years.

For 143 CEOs of S&P 500 companies, the median compensation in 2019 was $13 million, up from $11.2 million for the same group in 2018 and on pace to set a record if the pattern holds for the 2019 data, according to a Wall Street Journal analysis.

The Journal analysis uses total compensation, including salary, bonus and stock awards as they are valued in securities filings and provided by MyLogIQ, a research and data firm.

Bank of America Keeps CEO’s Pay at $26.5 Million

Bank of America Corp. greenlighted a $26.5 million pay package for its top executive in 2019 after the bank’s shares marked their best run in years.

Brian Moynihan is set to receive compensation that matches the preceding year’s package. His pay includes a $1.5 million base salary and $25 million worth of restricted stock, the bank said in a regulatory filing Friday.

His 2019 earnings put him slightly below other Wall Street chiefs like JPMorgan Chase & Co.’s James Dimon, who made $31.5 million, and Morgan Stanley’s James Gorman, who made $27 million.

In 2018, Mr. Moynihan was the 10th highest-paid among the 75 CEOs in the S&P 500 financial sector, according to a Wall Street Journal analysis of pay data from MyLogIQ LLC.

Interim CEOs: How the Top Temp’s Pay is Set

When a CEO exits unexpectedly, the vacancy leaves room for someone to step up and prove his or her worth to the company.

Their worth, as it turns out, is about $1.6 million, on average, for an “interim CEO-ship” among those in the Russell 3000, according to public company intelligence provider MyLogIQ.

There have been 140 interim CEOs named over the past six years, and many of them were paid handsomely to step into their temporary roles, with median pay at just under $1 million — although the total comp was far lower than the $4.8 million median pay that permanent CEOs make annually in the Russell 3000.

As with pay trends for permanent CEOs, there are a number of factors that comp committees consider when determining comp for the interim CEO.

SEC Enforcers Listening to All Sources, Including Activists

Insurance underwriter Argo Group has been asked by the SEC to hand over documents related to perks awarded to its executives.

The SEC inquiry into Argo’s disclosures on executive perks, which was first reported by Bloomberg, comes after a proxy fight with Voce Capital earlier this year, and could indicate that activist investors have the ear of the SEC.

“The takeaway for boards is that the SEC listens to information from all sources,” says Brad Mroski, managing director at AlixPartners and former assistant chief accountant in the SEC’s Division of Enforcement. “The better the fact pattern is laid out, the more actionable it can be by the SEC.”

Amid #MeToo Scandals, Alphabet Lawyer Is Highest-Paid Legal Chief

Top legal officers are becoming increasingly valuable to corporations, at least according to the rising number of digits in some of their compensation packages.

Pay for the general counsel (GC) and chief legal officer role reached a five-year high, according to data released last month from compensation consultancy Equilar and executive search firm BarkerGilmore.

This latest research “brings to light the expanding role of the GC and the increased compensation associated with their seat at the table,” said BarkerGilmore managing partner John Gilmore in a statement.

Eyeing Lawsuits, Boards Tighten Limits on Director Pay

Boards are continuing to adopt limits on the amount of compensation directors can earn in a year to protect against pay lawsuits alleging breach of fiduciary duty. However, as more suits have progressed, some boards are implementing new limits that appear to be trending lower than those adopted previously, and a few boards have even reduced existing limits.

For instance, the Synaptics board had previously adopted a $750,000 limit that applied to equity grants awarded to directors in a fiscal year. Starting in 2019, however, the $750,000 limit will now apply to cash and equity paid to directors. Similarly, the Alnylam Pharmaceuticals board adopted limits in 2016 covering the maximum number of shares of common stock that could be awarded to directors in initial and annual stock option grants. In 2018, the board reduced the number of options grants to directors and implemented new, lower limits based on the reduced options grants and adopted an aggregate limit covering the maximum number of shares that could be awarded to the full board.

Viacom and CBS Executives to Earn Big Bucks in Merger Deal

The merger of Viacom Inc. and CBS Corp. will be lucrative for the top executives of both companies.

Viacom Chief Executive Bob Bakish, who will become president and CEO of the combined company, ViacomCBS, has signed a new contract ending four years after the deal closes. The contract lists salary, bonuses and other incentives worth about $31 million a year, roughly 55% higher than Mr. Bakish’s total compensation in the most recent fiscal year, the company said in a securities filing.

Acting CBS Chief Executive Joe Ianniello, who will be chairman and CEO of CBS at ViacomCBS reporting to Mr. Bakish, will receive a payout of about $70 million when the deal closes. That payment resulted from a provision in his old contract at CBS that entitled him to a lump sum if he wasn’t named CEO of the combined company in the event of a merger.