Tag: NEOs

You’ve Got a New CEO. How Soon Will Your CFO Leave?

Boards often devote plenty of time to succession planning and the compensation aspects of the CEO position, but a key piece involves the second in command. Even if the new CEO pick is the right choice, changes at the top can destabilize the C-suite, particularly if the CFO isn’t meshing with the CEO or feels left out of the transition process. Boards are increasingly being advised to develop succession planning processes for the CFO role that mirror the CEO’s succession plan to prepare for various eventualities.

So far this year, 17 CFOs have retired or resigned their positions after the appointment of a new CEO, according to data from public company intelligence provider MyLogIQ. The number was 26 in 2020 and 23 in 2019. The findings underscore the delicate and important dynamic between the two executives that may become strained. New CEOs often implement strategic shifts, particularly if they come from outside the company. Meanwhile, the CFO may have come in second place for the CEO position and could be harboring some bitterness. In addition, general communication and personality conflicts can also be a factor, former CFOs, board members and consultants said.

The Largest Equity Grants of 2020

A year that included both a market recession and a rebound, 2020 saw equity compensation for named executive officers increase by 3.7% at companies in the S&P 500, according to data from public company intelligence provider MyLogIQ.

While median equity comp was up for executives in 2020, financial performance was not. At S&P 500 companies, the median revenue shrank by 0.7% in 2020 compared with 2019, according to data from Farient Advisors. Median earnings per share at S&P 500 companies also decreased in 2020, down 1.3% from 2019, said Eric Hoffman, vice president and leader of information services at Farient.

Nonetheless, Hoffman said he expects equity grants for this year and 2022 to fall in line with the increases of the last several years as companies do their best to retain talent.

Jet Perks Decline in a Year Marked by Travel Lockdowns

Jet perquisite spending reached a three-year low last year as top employees sheltered in place due to the Covid-19 pandemic. S&P 500 companies spent $93,071 on average per company on jet perks for top executives in 2020, down from $116,805 in 2019 and $115,729 in 2018, according to data from public company intelligence provider MyLogIQ.

“Companies took the tack of traveling less due to the personal health risk that might be involved in sending employees all over the world, but worker compensation and reputational risk also played into the decision to curtail jet use,” said Erik Nelson, director of executive compensation at Willis Towers Watson.

However, some companies opted to use corporate aircraft more frequently to fly executives to business-critical meetings while others extended corporate jet use permissions to directors and executives who didn’t previously have access for safety reasons, filings show. Other companies prohibited personal use of the corporate jet in 2020, opting to save trips for business purposes only.

Sources said the pandemic opened the door for compensation committees to reevaluate the need for corporate jet travel — how often and who uses the jet and how much the board should allow executives to spend on personal and business flights using the company’s aircraft.

The Largest Executive Cash Payments of 2020

Last year was an unusual one for executive pay as the impact of the Covid-19 pandemic upended boards’ best-laid plans.

Many companies publicized decisions to cut executive salaries to show solidarity with laid-off or furloughed employees, while others converted cash payments to equity to preserve liquidity. Year over year, average cash compensation for S&P 500 execs was down 2%, according to data from public company intelligence provider MyLogIQ.

But not for everyone. In some cases, the turmoil wrought by Covid resulted in large cash payments to executives in the form of severance pay, conversions from equity to cash, retention bonuses and other comp vehicles. While many boards may have expected compensation practices to return to normal for 2021, it’s unclear whether the pandemic has truly subsided; the need to tap into otherwise unusual pay methods may not be in the rearview mirror yet.

 

Execs Who Jump the Line for a Vaccine Risk Backlash

A well-known SoulCycle instructor was met with backlash after getting the Covid-19 vaccine under the guise of an “educator.”

MTA board member David Mack is reported to have used his influence to help friends get the vaccine at a retirement home in Palm Beach. The unexpected arrival of 200 vaccines reportedly resulted in vaccinations for western Tennessee politicians, hospital executives’ family members and a florist, among others.

Meanwhile, a CEO in Canada chartered a private plane, allegedly breaking isolation requirements and misleading health officials, to get the Moderna vaccine for himself and his wife. The former executive, Rodney Baker, resigned from his role as the CEO of the Great Canadian Gaming Corporation amid the backlash.

…In the S&P 500, the average and median ages of chief executives, meanwhile, hover at around 58 years old, according to data provided to Agenda by MyLogIQ, a provider of public company intelligence.

U.S. Companies Revamp Bonus Plans as Pandemic Upends Forecasts

Companies are revising their plans for bonuses and other incentive compensation as the coronavirus pandemic upended financial forecasts and executives managed through a once-in-a-lifetime economic downturn.

The pandemic has had a disparate effect on companies’ balance sheets, leading to soaring profits in some industries, such as online retail and groceries, and steep losses in others, for example hospitality and travel.

Over a quarter of large U.S. businesses initially reduced executive salaries in the spring, according to Equilar Inc., a data provider. The cuts, at companies including Walt Disney Co. , General Motors Co. and United Airlines Holdings Inc., marked a reversal following several years of wage increases in the C-suite. But they were temporary, as many companies restored manager salaries in recent months.

Now, as companies are getting ready to pay out bonuses and other rewards for the past year, boards are contemplating whether it makes sense to assess executives based on goals and targets that were put in place in late 2019 and early 2020, when the outlook for their business was very different.

…Short-term incentives for senior executives at companies in the S&P 500 were mostly on the rise before the pandemic, according to data provider MyLogIQ.

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.

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.