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CompensationStandards.com
The Consultant's Blog
July 1, 2008
The Murky
Crystal Ball: Reconsidering Executive Pay Design by Pearl
Meyer
As of
the market close on June 23rd, 40.3% of the Fortune 500 companies'
executive and employee stock options were out of the money by an average -
34.5%. It also appears that many of their incentive plans -
especially long term - are also underwater.
Looking ahead into
my murky crystal ball, I am increasingly concerned that our
current system of executive compensation is designed for an expanding
economy, increasing profits and a climbing stock market, rather than
businesses in difficult competitive shape relative to global competitors,
a floundering market and a profit squeeze.
Absent the rosy world to
which we have grown accustomed, can we continue to pay the same level of
"target compensation" tied to modestly rising base salaries for lower
levels of expected/target performance?
On the other hand, can we
force feed performance targets that may be unrealistic in view of current
business conditions and therby bring pay (and morale/motivation) down
relative to results produced? Clearly, substantive consideration of
the issues involved is needed.
Fortune.com
Postcards:
From the pinnacles of power by Fortune editor at large Patricia
Sellers
Power Point: Cherish your
name
June 20,
2008
"As an executive, you have two resources: your
name or reputation and your remaining years of productivity -- which is
a diminishing asset. Women squander both."
Pearl
Meyer, the veteran executive-compensation consultant, told me
this over lunch Friday. Women, she noted, tend to be lousy
negotiators of both pay and title. I told her I agree, though many
women are this way, I said, because we tend to care less than men about
rank and size and vertical power. Meyer herself,
flubbed big-time back in 2000 when she sold her company. On the day
she signed the papers to sell the business she started in 1989,
Meyer was shocked to learn that her name was part of the
sale. Now she's managing director of Steven Hall &
Partners and competes with Pearl Meyer & Partners, the firm
that bears her name.
Financial
Week
Workforce Management
Pensions for Execs Test
New Heights; Company Size and Performance Not the Biggest
Factors
June 16, 2008
When it comes to
executive pensions, the biggest packages sometimes are handed out at the
smallest companies.
In many cases, comp experts explain, executive
pensions are calculated using a formula that multiplies a CEO's years of
service by a portion of their average compensation during a certain time
period. Steven Hall, president of Steven
Hall & Partners, a New York compensation consultancy, said
companies tend to determine this average compensation level by looking at
three to five years of an executive's highest pay period - which can
include both base salary and annual incentives.
"Indirectly, this
can bring performance into the picture," Hall said.
"But pensions tend to be a reward for loyalty and
service."
Directorship
Thought
Leader: 'Golden Coffins' Come Back to Haunt Some
Companies
June 13, 2008
By Steven
Hall
In recent days, we have been inundated with
sensational coverage of lucrataive benefit packages to be paid to
executives or their estates upon their death. These so-called
"golden coffins" are generally contractually stipulated arrangements that
range from salary continuation and life insurance payments to accelerated
vesting of equity, often a big-ticket item for long-tenured
executives.
These arrangements are yet another
example of how times are changing in the world of corporate
governance. It does seem that some of the most striking examples
highlighted in recent media coverage are the result of legacy deals cut
years ago, when decidions were based on well-intentioned business or
estate planning goals which shaped such agreements.
It is a lost
opportunity if companies do not take advantage of the CD&A to explain
the rationale when such arrangements were made, why it made sense then,
and, perhaps most importantly, why it continues to make sense
now.
The Wall Street Journal
Companies
Promise CEOs Lavish Posthumous Paydays
June 10,
2008
You still can't take it with you. But some
executives have arranged for the next best thing: huge corporate
payouts to their heirs if they die in office.
Companies often say
one goal of their pay packages is to keep executives from leaving.
But "if the executive is dead, you're certainly not retaining them," says
Steven Hall, an executive-pay consultant in New
York.
Mr. Hall says death benefits have
become more controversial in recent years: "Shareholders say, 'Why
should we write a big check to a CEO who's been quite well paid all
along?' He should have bought life
insurance."
CNNMoney.com
Multiple
Trouble: Share-Ownership Targets Get Harder to
Hit
May 27, 2008
Stock-market declines
spell trouble for companies that require chief executives and board
members to hold a fixed dollar amount of shares: Some are falling
short of ownership targets.
While ownership targets aren't
mandatory, they score points with investors and corporate-governance
ratings firms and are common at large U.S. companies. Most ask
executives and directors to hold company stock equal to five times their
salary or retainer. Some aim higher, requiring CEOs to hold up to 25
times more in shares as they receive in annual pay.
"That's tough
to maintain in this environment," notes Pearl Meyer, co-founder of
Steven Hall & Partners, a New York compensation consulting
firm. "A number of companies have put compliance in
limbo."
FinancialWeek
Perks Wilting in
the Sunshine?
May 27, 2008
"Most boards
and comp committees are looking at perks and asking, "How does this
enhance an executive's performance or effectiveness?" said
Pearl Meyer, senior managing director at compensation consulting
firm Steven Hall & Partners.
"Most CEOs are already
getting paid a good deal of money, and it's really difficult to
rationalize expenses that don't increase shareholder
value."
New York
Times
SUITS
May 18, 2008
When it
comes to money matters, who better to steer professional women from common
mistakes than Pearl Meyer, the executive compensation
expert, or Alexandra Lebenthal, a third-generation investment
adviser?
One of the biggest errors women make, Ms.
Meyer said, is that they "undersell their value." Ms.
Lebenthal, meanwhile, cautioned that "even the smartest women, and even
those who have conquered compensation, still take a back seat when it
comes to investing."
Coincidentally, both Ms.
Meyer and Ms. Lebenthal have the distinction of knowing what it's
like to lose their names, professionally speaking.
When Ms.
Meyer sold the firm bearing her name to Clark Consulting in 2000,
she relinquished professional rights to her name, and co-founded a firm
named for her longtime business partner, Steven
Hall.
St. Louis
Post-Dispatch
As share prices stumble, options leave top employees
unsatisfied
May 14, 2008
Stock options are
great morale boosters when business is going well, but in a downturn they
have their dark side.
The dark side shows up when a company's stock
price falls far below the level at which it issued options to its
employees. Employees can become bitter, fixated on the pieces of
paper that were supposed to be a reward but now will probably be
worthless.
The options' existence can lead to increased turnover,
according to Pearl Meyer, a principal at compensation-consulting
firm Steven Hall & Partners in New York. A key employee
who leaves can have the satisfaction of tearing up the old, worthless
options while receiving new, valuable ones from his or her new
employer.
WIth the stock market down and the housing, financial and
retail industries mired in severe slumps, the under-water options problem
is widespread. At about forty percent of big U.S. companies,
Steven Hall & Partners says, the average option-exercise
price is below the current stock
price.
Treasury & Risk
New
Challenges Shape Pay Levels
May 2008
issue
These days, when Steven Hall sits
down with his clients to hammer out the structure of their executive
compensation plans, they take into consideration a new set
of factors: How it will look in the cold light of day on their
proxy statements. Thanks to the Securities and Exchange Commission's
new rules requiring more disclosure of top executive's performance goals,
including those of the CFO, a number of clients have started to think
twice about just how shareholders might react to their bonus plans,
according to Hall, president of Steven Hall & Partners, a
New York executive compensation consulting
firm.
Computer
World
Tech company CEO compensation raises
ire
May 11, 2008
"Executive
compensation is under attack and has been for a number of years," says
Nora McCord, a consultant at Steven Hall & Partners, which
specializes in executive compensation consulting.
The U.S.
Securities and Exchange Commission (SEC) has tried to compel companies to
be more transparent about how (and how much) their top executives are
compensated, implementing new rules in the past few years around what must
be reported.
For example, the SEC now requires companies to not
only disclose that a performance-based award is tied to revenue but also
to disclose the dollar amount of the revenue target.
This is one of
the more controversial new SEC regulations, McCord
says. "On the one hand, it's better for shareholders to know how
company resources are being spent and how executives are being
incentivized. But on the other hand, you run into situations where a
company might be giving guidance from an earnings management
perspective."
Still most companies accept the idea of making CEOs
and other top executives more accountable for their compensation,
McCord says.
"It's a continuum. We're still
not where some of the more activist shareholders would like us to be, but
we're moving in that direction," McCord says.
"The momentum is clearly on the side of more disclosure, greater
transparency and a more rigorous approach to executive compensation in
general."
Agenda
Disclosure of Performance Goals Up Sharply
April 28, 2008
The new disclosure rules take too much
discretion away from the compensation committee, says Steven Hall, managing director of Steven Hall &
Partners, an executive comp consultancy. The rules require
so much disclosure that the markets are alerted not only to a company's
specific targets but to whether an individual executive fell short of
meeting them.
"We are
concerned," says Hall, "that plans
will start being designed to provide the investment community and media
with positive input rather than provide appropriate incentives."
Financial Week
CEO pay way down, but top performers still
fared well
While
cash compensation declined overall, execs at top-performing companies saw
bigger bonuses, analysis of proxies show
April 9,
2008
Most chief
executives and chief financial officers saw their cash compensation
decrease last year but executives at top performing companies raked in
substantially higher cash bonuses, according to an analysis of 2008
proxies by compensation consultant Steven Hall
& Partners.
Among the 522 companies that have filed proxies so far
this year, the median cash compensation paid to CEOs was $1.23 million, a
4.3% decrease from the previous year. CFOs, meanwhile took home
total cash compensation of $550,000, 1.4% less than they were paid last
year.
But a closer look at
the top-performing companies shows that their CEOs and CFOs were
appropriately rewarded for a job well done, said Steven Hall, managing director and founder of the
eponymous consulting firm.
Companies whose performance put them in the top
quartile, realized growth of 77% in their median net income in 2007, as
measured by Steven Hall. CEOs
at these companies were paid a median cash bonus of $663,286 last year, a
25% spike from the year before, which pushed their total compensation up
15% to $1.43 million. CFOs at top quartile companies saw their cash
bonuses jump up by 23%, to $293,645, driving their total compensation up
10% to $696,869.
Mr. Hall's analysis also showed that
companies that fell into the bottom quartile for performance -- where net
income decreased by at least 39% last year -- paid their CEOs median cash
bonuses that were 72% lower, while CFOs were given cash bonuses that were
52% less.
At companies in
the bottom quartile, many executives didn't get a bonus at all.
Almost a third of companies that Mr.
Hall analyzed didn't reward their CEOs with any cash incentive
last year.
"Boards are
holding executives' feet to the fire," said Mr. Hall. "They are making them
accountable for their results and for delivering true performance, that
much is clear."
New York Times
Executive Pay: A Special Report
A Brighter Spotlight, Yet the Pay Rises
April 6, 2008
Wasn't 2008 supposed
to be the year of the shareholder victory on the executive compensation
front?
After all, tighter
disclosure rules kicked in last year, and -- the theory went -- once
companies had to shine a spotlight on their compensation practices, they
were bound to make them better.
Some compensation consultants say the S.E.C.
disclosure rules went too far. Pearl
Meyer, senior managing director at Steven Hall & Partners,
suggest that executives who missed performance targets might still deserve
hefty bonuses, if they managed to stem losses even as economic factors
beyond their control -- say, soaring oil prices or a housing slowdown --
decimated their industry. But, she said, it would be hard to lay out
a cogent formula for that. Thus, she concludes, making directors
spell out the details of their compensation plans could force them toward
rewarding conventional short-term performance.
Business Week
Directors
and Investors at Odds on Performance-Based Pay
Two Camps disagree on whether the current
executive compensation model is changing for the better
March 28, 2008
Directors and
institutional shareholders disagree on whether the current U.S. executive
pay model is changing for the better. But while the two groups are
split on the pay process, both agree that the status quo is giving
Corporate America a bad rap.
While the two sides of the battle may not see eye to
eye on the issue, Pearl Meyer, senior managing
director at comp-consulting firm Steven Hall & Partners,
says directors are beginning to give more attention to CEO pay. "You
have directors out there who are far more diligent and far more committed
on this issue, " Meyer says.
"It's a very thoughtful process now, compared to what I have witnessed in
the past. The older view was 'trust me,' and now it's 'show me.'"
The Wall Street Journal
Financial Firms' Stock Options: 'Half'Bad
March 20, 2008
Fully 55% of the financial services and
insurance companies in the Fortune 500 have stock options that are
underwater, meaning the company's stock price is below the exercise price
of the options, according to Steven Hall &
Partners, an independent executive-compensation consulting
firm. That is up sharply from just two years ago, when just
10% of such firms had underwater options.
CNNMoney.com
Most Big
Financial Firms' Stock Options are Underwater - Study
March 19, 2008
Here is more bad news
for financial industry executives: More than half of the Fortune 500 firms
in the sector have issued stock options that are worthless at present,
shown in a new study by Steven Hall &
Partners, an independent executive-compensation consulting firm.
"There's a lot of
pain being dealt out," Steven Hall, managing
director at the New York firm, said in a telephone interview.
Repricing previously issued
stock option grants could put options above water, but Hall does not expect that to occur very
often, given companies' reluctance to seek shareholder approval for such
changes. Increasing the amount of stock option grants to offset the
decline in stock prices could be a challenge for firms that don't have
enough shares approved for that, in Hall's view.
"It's a depressing story, but it's not hopeless,"
Hall said, noting that holders of
vested stock options typically have 7 to 10 years to exercise them."
Forbes.com
Much Ado about Nothing?
March 7, 2008
The U.S.
Congressional House Oversight and Government Reform Committee heard the
testimonies of the most infamous chief executives of the past year:
Stanley O'Neal of Merrill Lynch, Charles Prince III of Citigroup and
Angelo Mozillo of Countrywide Financial. O'Neal and Prince resigned
from their respective roles in 2007. Mozillo remains at the helm of
the mortgage lender he established.
Pearl Meyer, a consultant
at the New York City-based Steven Hall & Partners, has
firsthand experience at providing these corporate boards the guidance
apparently being ignored or at least misused. Meyer worked with Countrywide's board when
she was with another consultancy firm, Pearl Meyer & Partners.
The relationship between the two companies fell apart in 2004 over a
conflict concerning Mozilo's pay. That exchange was documented in
the congressional report.
"[Countrywide] were convinced they were doing the
right thing, contrary to our recommendations," she said.
Financial Week
IRS Wants to Tax Golden Parachutes
February 25, 2008
"its a
chicken-and-egg problem," explained Steve
Root, managing director at compensation consultancy Steven Hall &
Partners. "A termination provision that pays out regardless
of performance can infect the status of a pre-termination award from being
performance-based compensation."
The Indianapolis Star
Underwater Stock Options
Depressed share prices have left many corporate
employees and retirees with what seems to be an empty perk
February
24, 2008
...
Thousands of Eli Lilly managers, executives and retirees are sitting on
more than 88 million worthless options, more than any other large company
in Indiana, according to executive
compensation consultant Steven Hall & Partners in New
York.
Nationally, the picture is not much brighter. At
more than one-third of the corporations in the Fortune 500, stock options
are underwater, according to Steven Hall &
Partners.
CNNMONEY
Update:
Yahoo Change-in-Control Plans Cover All Employees
February 19, 2008
Yahoo, Inc. will
offer all of its employees enhanced severance packages -- worth up to two
years' salary for top executives -- if they are laid off following a
change in control of the Internet company.
Executive Compensation
consultant Pearl Meyer, senior managaing director at Steven Hall &
Partners, said the terms of the plan were "well within standard
practice" for executives but she said it was unusual to apply a "good
reason" walk-a-way provision throughout the entire organization.
Financial Week
Option
Reprice Wave Battle
February
18, 2008
With
top executives and rank-and-filers at many U.S. companies holding
now-worthless stock options, the time seems right for a round of of
repricing. New rules requiring companies to get the blessing of
shareholders, themselves freshly gored by falling stock prices, will force
boards to devise friendlier, or at least less objectionable, ways to pitch
the controversial practice.
"It's an excellent time for companies to consider [the
problem of underwaters] since annual shareholder meetings are right around
the corner," said Pearl Meyer, senior managing
director at compensation consultancy Steven Hall &
Partners.
Stock
options are underwater at 34% of the companies in the Fortune 500,
according to Ms. Meyer. The
industries most underwater include home builders, health-care services,
computers, media, financial services, retail and semiconductors.
Reuters
February 12, 2008
Stock options are
"under water" -- meaning the current price of the stock has sunk below the
exercise price of the options -- at 34 percent of the corporations in the
Fortune 500, according to a study from executive compensation consulting firm Steven Hall
& Partners.
Pearl Meyer, the
consulting firm's senior managing director, said the situation
creates problems for companies in hard-hit sectors such as financials,
retail, home building, pharmaceuticals, automobiles and airlines that have
used stock options as a compensation and retention tool for employees.
Many companies "have senior
executives, and, in some cases, all employees whose option grants over a
number of years are all of a sudden worthless," Pearl Meyer said.
When options are under water,
companies risk the loss of talented executives who may jump ship to other
firms that entice with the promise of new options priced at the market's
current low prices, Meyer said.
But if companies try to keep currrent employees happy by giving out new
options, they risk angering their shareholders, who also have been hurt by
the market slide, she said.
Meyer said
companies struggling with underwater options can take steps to help out
employees such as doling out restricted stock, as long as the firms have
the shares on hand to distribute. Another option, she said, is to
provide compensation through cash incentive plans.
Baltimoresun.com
Price's Gains Bring Big Pay
Top 3 leaders get $23 million
February 9, 2008
Steven Hall, managing director
at New York firm Steven Hall & Partners, which consults on
compensation plans with boards, said its common for executive pay in the
financial services and mutual fund industries to be heavily tied to
individual and company performance.
"They pay the people who deliver the results," Hall said. Few industries pay anyone
more than the CEO. It's unique to this business because they
actually pay people based on what they deliver.
Forbes.com
Wall Street Job Hunters Hit A Buyers Market
February 8, 2008
As banks forgo paying
out bonuses and liquidate entire departments, it's a buyer's market on
Wall Street. But many bankers didn't seem to get the memo.
At the C-suite level, many firms are
pulling out their Christmas wish lists as companies unable to pay top
executives hemorrhage talent. Steven
Hall of Steven Hall & Partners, an executive compensation consultancy
firm, likens the situation to sharks circling a wounded whale, as
healthy firms poach C-suite talent from companies wounded by subprime
woes. "You'll see a firm pay out and put itself in a loss position
just to keep its prime talent," Hall says.
The
Washington Post
The Bonuses Keep Coming
January 29, 2008
Some investment banks
already have a list of people they would like to pluck from rival firms
and are waiting for their employers to be in a tough position, said
Steven Hall, managing director of Steven Hall
& Partners, a compensation consultancy. "You have to
pay people who are performing, even in bad times, in order to keep them in
place," Hall said.
The Wall Street Journal
Theory & Practice
Their Names Liveth Forever, Just Not on Latest
Firms
July 9, 2007
Executive-pay adviser
Pearl Meyer spent 11 years building
her name into a well-known brand before selling Pearl Meyer & Partners in 2000.
Ms. Meyer planned to stay at the
firm, and says she "stupidly" promised buyer Clark Consulting that she
wouldn't use Pearl, Meyer or her
initials at another business. "The prospect of my leaving never
occurred to me," she explains.
Five years later, Ms.
Meyer and four partners resigned to start a rival pay consulting
firm. Constrained by the sale agreement, the group named the new
firm Steven Hall & Partners after
its managing director.
Mix-ups persist over Pearl
Meyer the adviser and Pearl
Meyer the company. At conferences, "people charge up to me
and criticize me for things I didn't do," Ms.
Meyer says. Her typical retort? "I'm Steven Hall. Why are you complaining to
me?"
David Swinford,
president and chief executive of Pearl Meyer
& Partners, says that when Ms.
Meyer left the firm, she urged colleagues to keep doing "good
work so they wouldn't embarrass her name, and we try to do that."
Fashion-industry founders
often negotiate lifetime royalties when they sell their oponymous
companies, says Suzanne Hogan, chief operating officer for Lippincott, a
brand-strategy consulting firm. "In retrospect," Ms. Meyer says, "it would have been a good
tactic."
ExecuNet
CareerSmart Advisor
New
Compensation Legislation and Your Paycheck
July 9, 2007
"The new disclosure
rules have not dampened direct compensation of executives due to high
performance and rising stock prices in 2006," says Pearl Meyer, senior managing director of Steven Hall and Partners,
an executive compensation consulting firm based in New
York. "However it is resulting in pressure on perquisites,
supplementary retirement funds and change in control benefits. I
believe the SEC will not make any material changes in disclosure in
2008. The same rules will continue to prevail for the 2008 proxy
season with changes probably made for 2009 proxy season based on analysis
of disclosures to date. We'll be in the same rules for 2008.
BNA Daily Tax Report
Executive Compensation
Compensation Committees Look to Planning,
Reasonableness Over Time in Setting Pay
Conference held on
June 21, 2007
June 21, 2007
Succession planning
is the single most important tool for holding down executive pay, consultant Steven Hall said
June 21. Hall told the American
Law Institute-American Bar Association's annual executive compensation
conference that succession planning allows companies to bring executives
up through the ranks and avoid expensive buyouts and the cost of bringing
in new people.
Internal
equity "is coming back" as compensation committees are looking for
relationships between pay levels, Hall said, adding that pay is not going down
but growth is slower. The cash component of pay is starting to rise,
the shift toward performance restricted stock and stock-based stock
appreciation rights continues, with long-term incentives making up the
most significant part of total pay for senior executives, Hall said.
Regarding public company pay in comparison to private
equity firms, Hall said there are no
general surveys of pay at private equity firms. As to whether pay
programs should be adjusted to compete with private equity firms, Hall likened the present situation with
private equity to the dot.com world before the bubble burst and advised,
"hold your ground."
The Wall Street Journal
Seeking Ne CEO, Some Boards Skip The Stars
May 21, 2007
Boards seeking
outside CEOs as corporate saviors often become enamored. "When they
find the person they think will make a difference, the cost is [viewed as]
immaterial," says Pearl Meyer, a New York pay
consultant who advises Boards.
Pittsburgh Post Gazette
Executive Pay Remains Mind-Boggling
But Regulatory Changes To Make Compensation Clearer
Muddy This Year's Compilation
May
13, 2007
Experts
say new regulations requiring companies to disclose more information about
executive compensation will put more pressure on those companies to do a
better job of aligning pay with performance...
But compensation consultant Pearl Meyer expects the rules will have
unintended consequences because shareholders aren't the only ones looking
at the additional information. Companies who discover they are
paying much more than their competitors may rein in compensation, says
Mrs. Meyer, senior managing director of Steven
Hall & Partners.
Of course, the opposite could prove true too, she
said. "Others who are not leaders of the pack will say 'Hey, we're
very much behind. Let's catch up.'"
She recalled that the SEC's last major revision of pay
disclosure rules in 1992 had an inflationary impact on executive
compensation rushed to play catchup.
Financial Executive
SEC
Disclosure Rules Evoke Concern
May 1, 2007
Pearl Meyer, one of
the deans of executive compensation consulting, is concerned about
compensation disclosures in this proxy season, for a number of reasons.
Meyer, who headed
her own firm as Pearl Meyer & Partners, is now managing director of
Steven Hall & Partners in New York. She laid out her
concerns in an interview, suggesting that the compensation disclosure
rules enacted last year by the Securities and Exchange Commission (SEC)
could cause confusion and a surfeit of information that shareholders may
not want to wade through.
"I'm concerned that we've created a scenario
of unintended consequences -- the compensation sections of the proxy
are running 20-odd pages in some cases" she says. "We've
created a whole new set of fine print that no one is going to read
after this first year."
St. Louis Post-Dispatch
Disclosure Rules Provide New Look At Execs'
Pay
April 22, 2007
Thanks to the
Securities and Exchange Commission's new disclosure requirements, we know
more about executive compensation than ever before.
Steven Hall, managing director of consulting firm
Steven Hall & Partners in New York, said some boards changed
their pay criteria to avoid "some ugly admissions in the CD&A."
In general, Hall believes, compensation committees have
been conscientious about linking pay to performance. "There's been a
lot of good work done," he said. "They're setting performance on a
much more rigorous basis than we've seen in the past."
The true test comes when a
company stumbles. Pay for performance is a fine mantra when things
are going well, but shareholders have a right to expect executives to
share in losses, too. In Mercer's survey of big companies, 2001 was
the last year when CEO pay declined. It fell only 2.8% in a year
when profits dropped by 18 percent.
"It seems much stickier on the down side," Hall said.
MSNBC
Baltimore Business
Journal
New Exec Pay Disclosure Regs Have Some
Tongue-Tied
SEC Chief Wants Proxies
Filed In 'Plain English'
April 22, 2007
"I think the SEC
disclosure format failed to achieve its primary purpose, which was to
permit investors to clearly relate pay to performance in 2006," said
Pearl Meyer, senior managing director of
compensation consulting firm Steven Hall & Partners.
Boardroom exchange
2006 Directors' College Highlights
Panel Discussion
Executive
Compensation in the Spotlight
Following the
disclosure rules introduced by the SEC in 1992, senior management began
receiving enriched pensions, enhanced perquisites, deferred compensation
arrangements (with above-market payouts for senior executives), and
parachute payouts, of which many investors were not aware.
Results Count
Before
1992, "we really did pay attention to internal parity, as well as results
achieved," says Pearl Meyer of Steven Hall
& Partners. At the top Meyer emphasizes, you should pay for results,
not just hard work. "Other folks in a company may be compensated for
their efforts, but the CEO has to do more than give it the old scouting
try. Compensation committees need to ask: Did we make money?
How did the shareholders do? How did our various constituencies do? Are we
strategically on target? A CEO's compensation should depend on the answers
to these questions. Management teams overall should be told there
are no free rides. To earn compensation in the top 25 percent, you
must perform in the top 25 percent."
St. Louis Post-Dispatch
Planes, Dues Add Up In Executives'
Pay
March 28, 2007
New Securities and
Exchange Commission rules force companies to assign a value to stock
options and pension plans for the first time, and to calculate a figure
for total pay ...
Some
once-popular perks are disappearing because of the new rules, says Steven Hall, managing director of consulting firm
Steven Hall & Partners in New York. "Many executives
are volunteering to pay their own club dues."
BusinessWeek
Golden
Parachutes: Cut The Cords
CEO Severance
Packages Are Out Of Control - Much Too Big And Used Too
Often. Pro or Con?
March 23,
2007
Let's keep in
mind that CEOs command such extraordinary compensation because they have
extraordinary leadership skills.
"I've tried to hit a golf ball, so I understand why
Tiger Woods makes $80 million a year," says Pearl Meyer, senior managing director at Steven Hall
& Partners, an executive
compensation consulting firm. "But most people haven't
tried to be a CEO. They see the private aircraft and parking space
by the door but have no idea how difficult the job is."
...corporations are taking
steps to address one of the public's bitterest complaints about golden
parachutes: "pay for poor performance."
"Lawyers are grappling with ways to clarify the small
print, to specify exactly what defines disappointing performance and how
that will affect severance," says Meyer. "We're also writing 'claw backs'
into contracts, where executives can get their stock taken away if they
violate Sarbanes-Oxley or other rules."
Deseret Morning News
Forth
Worth Star Telegram
Atlanta Journal Constitution
Delta Pay Plan Wins Praise: Key Executives
Won't Bail Now, Observers Say
March 21, 2007
Delta Air Lines' plan
to give an extra big chunk of money to rank-and-file employees as it
leaves bankruptcy court will pay off for the airline in the long run,
corporate compensation observers and others predict.
The question is whether
Delta's executive corps will hang with the airline though their payout is
less rich than has been the case for other corporations exiting
bankruptcy.
Pearl Meyer bets they will.
"I would think people who
stuck with the company through the bankruptcy would want to continue,"
said Meyer, senior managing director for New
York-based executive compensation consultant Steven Hall &
Partners. "They have walked through walls of fire and
emerged from the other side as a team."
Associated Press
Belleville
News Democrat
Ameren Execs Get Big Bonuses But
Rank-and-File Got Overtime During Outages
March 17, 2007
St.
Louis Post-Dispatch
Ameren Worked The Numbers,
Execs Got The Bonuses
March 16, 2007
Compensation
committees generally have a lot of latitude to decide what costs are
included when calculating executive pay, said Nora McCord of Steven Hall & Partners, an
executive pay consulting firm in New York. Typically,
events that are outside of a company's control aren't counted for those
purposes, she said.
Investment Dealers' Digest
A Fork in The Road
After
its big splash in 05, Wachovia now scaling back its Wall
Street ambitions?
February 12,
2007
"What
management has to do is demonstrate that [tying compensation to the
overall performance of a division] is a more productive approach to
running the business that will yield a higher total pot in which you can
participate," says Pearl Meyer, senior
managing director at Steven Hall & Partners, a compensation consulting
firm .
Associated Press
Experts Don't Expect Home Depot's New CEO's Pay
to Set A Trend
January 24,
2007
Steven Hall, an
executive compensation expert who runs a consulting firm in New
York, said such examples are likely the exception, not the
rule.
"The problem is the
people with the background to be CEOs, proven or not, are in very limited
supply. There's a lot of competition for them."
Reuters
Lifting The Lid: Exec Pay
Consultants To Face Closer Scrutiny
January 12, 2007
For consultants,
advising on executive pay is far less lucrative than larger-scale,
long-term services like outsourcing and employee compensation plans, said
Pearl Meyer, a partner with independent
consulting firm Steven Hall & Partners.
"It's a small-ticket,
but most influential in the course of a corporation's affairs," Meyer said. "It's the star quality of
the executives who are receiving large packages that's attracting the
attention of the press and of stockholders."
Meyer said most
firms were highly ethical, but individual consultants might feel pressure
to sell other services, leading to a conflict of interest.
St. Louis Post-Dispatch
Nardelli Held His Wallet Up With Belt and
Suspenders
January 5, 2007
"If a board decides
to embrace an employment contract as a sort of necessary evil, it needs to
think through all the possible consequences. What does it cost
shareholders if the company is acquired, or if the executive quits or
dies? Let's make sure there are no surprises," says Steven Hall, managing director of consulting firm
Steven Hall & Partners.
The Wall Street Journal
IBM Ends Director Stock Options, Spotlighting Popular
Perk's Decline
December 21,
2006
"The overall
governance thrust today is to have board members become [stock] owners
rather than optionees," said Pearl Meyer,
senior managing director of Steven Hall & Partners, a pay consultancy
in New York. Options focus recipients "too much on
short-term movements in the stock price," she said.
Forbes.com
Directorship
Are You Making Too Much Money?
December 12, 2006
The role of
compensation consultants and how they engage with board compensation
committees are coming under new scrutiny. And the flap over the
dating of stock options granted to top managers is going to intensify the
pressure to link pay with performance.
"What we've seen in the past year I would call a
revolution rather than an evolution, due to the impact of outside forces
on compensation and corporate governance," Pearl Meyer, one the superstars in the field,
said in a panel discussion on compensation at the Directorship's recent
Agenda 07 Forum in New York.
"We're faced with intense scrutiny from all our
various publics, which is a result of a distrust of management and a
disenchantment with board governance," said Meyer, who is senior managing director with Steven
Hall & Partners, based in New York. "We've had an
intense dispersion of power, first from management to the board, and then
from board to the various outside forces. Directors must step up to
the governance challenge we're facing and champion change. And the
way we can do that is looking at the new standards of reasonableness."
"I've been endeavoring to
bring compensation committees together especially with audit committees,
because our performance metrics and our goals are based upon the results
that audit is reviewing," Meyer
said. "I think we need better integration. Perhaps it
should occur at the committee chair level. Other approaches I've
seen include having committee members attend other meetings, or [having]
many board members attend committee meetings."
The new best practice, Meyer said, is to have consultants whose only
responsibility is compensation and whose sole reporting relationship is to
the board.
Charlotte Observer
5 Burning Issues On Executive Pay
December 3, 2006
Will CEO Pay go
down? No, said verteran executive compensation consultant Pearl Meyer of Steven Hall &
Partners." The market for executives continues to be
tight," Meyer said.
However, "it's going to be tougher earning your money because of the
pay-for-performance movement.
IOMA
Study Finds Board Comp at All-Time High
December 2006
Median total
compensation for independent directors at the 500 largest U.S. companies
in 2005/2006 rose 14%, from $162,363 to $185,000, according to a new study
by Steven Hall & Partners, an executive
compensation consulting firm. The increase is due in part
to higher cash retainers for board service (up 11%) and and committee
chairmanship (up 25% to 80%, depending on the committee). Board pay
for firms in the bottom 250 of the Top 500 companies studied grew 19%.
The study found that median
total remuneration for directors at the top 1,000 companies in 2005/2006
ranges from $160,021 to $175,250, depending on committee membership and
role. Director total remuneration includes cash retainers, stock
awards and meeting fees for service on both the board and its
committees.
The trend away
from stock options continues; while 95% of the Top 1,000 Firms award
equity to directors, only 23% use options alone and just under half grant
options at all. In contrast, 72% award full-value shares and 27%
award both full-value shares and options. At companies using
full-value shares, the median award is $66, 054, about on par with the
median option grant value of $69,886. Overall, the median equity
award is $87,375.
In
addition, 34% of companies ceased paying board meeting fees, typically
$1,500 a meeting. At companies without meeting fees, median total
pay is $181,385, which is 11% more than the $163,350 at companies that pay
such fees.
Base and Bonus
Director's Pay is Up at Smaller Large Firms
November, 2006
The smaller Fortune
500 companies are now rapidly increasing their own directors' compensation
in an effort to keep up.
Median total remuneration for companies in the bottom
250 of the top 500 companies grew 19% from 2004 to 2005, according to a
study conducted by Steven Hall &
Partners. That's compared to the upper half of these
companies, which increased diretors' pay by roughly 12%. Overall,
the top 500 companies' director pay grew 14%.
We are seeing the big companies set the trends for
other companies," says Steven Hall, managing
director. Hall says
that the compensation is typically the last thing directors examine when
considering an offer to join a board. First, they consider the risks
and time commitment involved as well as who's already on the board.
The New York TImes
Signing Up a New Chief In the Age of Prenups
November 25,
2006
Shareholder activists are clamoring for
clauses that provide immediate vesting and payouts only if the former
chief loses his or her job as a result of the merger. The executives
win more often than not, "but boards are paying attention to the concept,"
said Pearl Meyer, a managing partner at the
compensation consulting firm Steven Hall & Partners.
Investment Dealer's
Digest:
Director Pay
Takes Off At Smaller Companies: But Investment Bankers Don't
Always Cash In As Relationships May Prohibit Them From Taking
Compensation
October
16, 2006
A survey
by compensation expert Steven Hall &
Partners researched director pay at the top 500 US companies and
found that while these companies paid directors 14% more in 2005/2006 than
in 2004/2005, the bottom 250 companies had to raise pay by a full
19%. Median total compensation of directors at these 500 companies
now stands at $185,000, up from $162,363 the year before.
Why did that happen?
Steven Hall, who is managing director
at his eponymous firm, says that the smaller companies have had to "play
catch-up."
"Board
compensation at smaller firms is rising at a faster rate than at larger
firms in an effort... to meet the competitive challenge of recruiting
directors in an era of greater responsibility, public scrutiny and
potential personal liability," he says.
The Wall Street
Journal: What's New - Dispatches From The
Staff Of The Dow Jones Corporate Governance Newsletter
October 9, 2006
Director pay reached
a new high in 2005.
...Steven Hall &
Partners LLC found that total remuneration rose between 8.1% and
12% in 2005, depending on which committees directors served on. The
study cited "growing oversight, higher visibility, increased
accountability, and heavy demand for a limited pool of qualified
candidates" for the increase in compensation.
The Corporate Board: Option
Pricing Abuse And Boards
September/October
2006
Byline by Pearl Meyer
Unfortunately, option timing abuse has signaled a
lack of board vigilance and management integrity. Regardless of the
final outcome, this story will further damage corporate reputations with
the general public, as well as employees, investors, regulators and the
media. Diligent board oversight will serve as the critical
ingredient to restoring confidence in corporate America.
Workspan: Viewpoint - Aligning
The Interests of Directors and Shareholders
September 2006
Byline by Pearl Meyer
The nation's leading soft-drink manufacturer recently
announced a new board compensation plan payable in cash that is contingent
upon company-profit performance. While commendable for its stated
objective of aligning director and shareholder interests, this approach is
not likely to be imitated by other companies, which is an equally positive
development...
St. Louis
Post-Dispatch: Here's Hoping Senate
Gets Answers On Backdating
September 6, 2006
Enron was a
one-company scandal. So was WorldCom; so was Tyco. The current
options-backdating scandal, though, has already enveloped more than 80
companies.
One leading pay
consultant, Steven Hall of Steven Hall &
Partners in New York, says he had never heard of backdating until
the scandal broke this summer. "You don't know whether to be proud
that none of your clients were involved in this or embarassed that you
didn't know about something so widespread," Hall said. "I'm sticking with proud at
the moment."
Hall says he can imagine executives, about to
get options, talking about how much their package would have been worth if
it had been issued earlier. Someone made the leap, he guesses, from
idle musing to outright deception.
The Wall Street Journal: Surveying
the Field - Magnified Scrutiny
August 28, 2006
A study of 181 of the
200 largest U.S. companies by compensation consulting firm Steven Hall & Partners LLC found [Board
pay] increases depended on which committees directors were
on. Steven Hall, principal of
the firm, says retainers for chairing audit or compensation committees
were up 25%, to $15,000 and $10,000 respectively.
The Wall Street Journal: $100
Million Helps Lure Away General Electric Veteran
August 24, 2006
In a move that
illustrates the growing power of private equity, Dutch media firm VNU NV
snatched Mr. Calhoun, 49, from GE where he was one of four vice chairmen
and a confidant of Chief Executive Jeffrey Immelt.
"Private equity people are
singing a siren song that's almost irrestible," said Pearl Meyer, senior managing director of Steven Hall
& Partners, a compensation consulting firm.
Corporate Governance: Director
Pay Found Increasing, Along With The Scrutiny
August 16, 2006
A study by
compensation consulting firm Steven Hall &
Partners LLC found total remuneration made a steep increase -
rising between 8.1% and 12.4% for the 2004-2005 period, depending on which
committees directors served. That amounted to pay of between
$195,000 and $210,833.
Steven Hall's
study found that retainers for chairing committees also increased - up 25%
for chairing audit or compensation committees, bringing those retainers to
$15,000 and $10,000 respectively. There was an increase of 33% for
governance committee chairmanships, making that retainer $10,000.
"The [director pay] numbers
were lower than expected," said Hall,
who added that pay hasn't kept pace with directors' snowballing
workloads. The study cited "growing oversight, higher visibility,
increased accountability, and heavy demand for a limited pool of qualified
candidates" for the increase in board compensation. Hall sees those factors contributing to
increases this year as well.
Pittsburgh Post- Gazette: Business
News
As Scrutiny of Corporate Board Rises, So Does
Compensation for Directors
August 15, 2006
The median pay of a
director of the 200 largest U.S. companies ranged from $195,000 to
$210,833 in the latest fiscal year, up 8 percent to 12 percent from the
previous year, according to New York
compensation consultant Steven Hall & Partners.
Pay for audit committee
chairman - typically the highest compensated director - reached $210,833,
an 8 percent increase, according to Steven
Hall. He attributed part of the increase to the $15,000
retainer audit committee chairman received, up 25% from the previous
year.
"Not only is more
time involved, but also more commitment and risk," said Mr. Hall, the consulting firm's managing director.
Dow
Jones: Guest Column - Options Backdating Past
and Future
August
2, 2006
Byline article by Steven Hall & Nora
McCord
The executive
compensation scandal of 2006 is the backdating of stock options.
Executives have lost their jobs over it, some have been indicted for it
and companies are scrambling to answer the question: We didn't do
this, did we?
The current
challenge for boards is to determine what actions to take now to ensure
the highest level of governance practices and ensure their company follows
not only the letter of the law, but the spirit.
Real
Estate Forum: What's In Your Wallet?
July 2006
When it comes to
compensation, real estate executives are as richly paid as their
counterparts in other industries.
2005 compensation levels are part of a fairly
consistent pattern of growth that has taken place over the past few
years. According to Steven Hall, founder
and managing director of Steven Hall & Partners, CEO salaries
in the REIT sector jumped 23% from 2004 to 2005, while COOs gained a
paltry 3%. CFOs, with their new status, gained 29%. "CFOs have
gotten a lot more recognition in recent years because of the risks and
responsibilities associated with their position. Their signatures
are on the SEC documents right along with the CEOs'. The penalties
are focused squarely on both, but the CEO has always had his signature on
those documents. The CFO can provide a lot of value, or a lot of
pain if he doesn't do his job right."
And the increases should continue this year.
Hall predicts, conservatively, that
total compensation for top real estate executives in 2006 should bump up
4% or 5%.
Corporate
Secretary: Best Available Options
July 2006
Byline article by Steven Hall, Managing
Director
The recently
announced investigations by the SEC into whether certain companies
backdated option grants to provide executives with an advantageous
exercise price promise to be ugly. While the practice seems to have
been limited, it will certainly be held up as an example of executive
greed and a reason for the government to provide greater oversight
over executive pay.
Regardless of the final outcome for the companies
involved, this issue represents another opportunity for those involved in
the design, approval and implementation of executive compensation to be
reminded that integrity and playing by the rules are critical
responsibilities that we have as stewards of the company on behalf of
shareholders.
Workforce
Management: Option Scandals Might Put HR in Watchdog
Role
July 25, 2006
Recent scandals
involving companies backdating their stock option grants to employees
may help HR managers get that last seat at the table they've longed
for. However, it might not be the seat they wanted.
These cases suggest that HR
professionals will no longer be able to plead ignorance, says Pearl Meyer, senior managing director at Steven Hall
& Partners, a New York executive compensation consulting
firm.
"Their
jobs are going to be far more complex and technical than they bargained
for," she says. No longer can HR managers just focus on recruiting
employees, she says. "They need to extend their compliance knowledge
and responsibilities."
The New York
Times: Haunted by a Heady Past - Silicon Valley Was
Calming Down, Now an Options Scandal
July 22, 2006
The practice of
backdating options dates to the early 1990's but took on momentum during
the frenzied days of the Internet era, when the competition for available
talent was fierce.
People
out there really duped themselves into thinking they were doing this for
the benefit of stock-holders when in reality they were defrauding them,"
said Pearl Meyer, a managing partner at Steven
Hall & Partners, a New York executive compensation firm that
has worked with scores of Valley-based companies. They clearly
viewed this as a victimless crime.
Corporate Secretary: Compensation - The
Secret Life of ...
June 2006
The Sarbanes-Oxley
Act, the pressure on boards to act with true independence and a general
climate of heightened scrutiny have all set the stage for eradicating
conflicts of interest in the executive compensation consulting
world. In fact, positive strides have already been been made.
Joseph Sorrentino, managing director at Steven
Hall & Partners, a Manhattan-based independent executive compensation
consulting firm founded in September 2005 notes that his firm is
more often hired by boards and not by management -- something that simply
wasn't true a few years back.
GlobeSt.com:
Executive Watch
June
27, 2006
Based on a review of proxy statements from
106 public REITS, made by Steven Hall &
Partners, an executive compensation consulting firm, median total
compensation (base, bonus and equity) for REIT CFOs as of December 2005
was $920,011, a 29% increase over the prior year.
Baltimore Sun: CEO Pay, and
Scrutiny, Continue to Rise
June 18, 2006
Compensation
consultants acknowledge the emotional reaction to the issue [executive pay
levels]. But they say the implications for the nation and the
economy could be greater in the long term if society fails to reward the
competitiveness and innovation of a limited number of people who possess
the skills and experience to run a large company.
"We don't want to kill the
golden goose," said Pearl Meyer, a senior
managing partner at compensation consulting firm Steven Hall &
Partners. "We don't want to kill the entrepreneurial spirit
in America."
Pittsburgh Tribune Review: Stock Options
Still A Popular Incentive For Executives
June 15, 2006
"Stock options are
alive and well even with the charge to earnings," said Steven Hall, managing director of New York based
executive pay consultant Steven Hall & Partners.
Accountingweb.com: SEC Calls for Greater
Disclosure of Executive Pay, Probes Options Dating
June 2, 2006
While compensation
numbers for last year reflected stock options exercised, FAS 123 has
already changed the way executives are compensated, say Steven Hall of Steven Hall & Partners, an
executive pay consulting firm in New York, according to the
Journal. "It's caused companies to shift compensation to other
vehicles. The other movement that has taken place is that the number
of people who get stock options has gone down."
BusinessWeek: Upfront - CFOs Sing The SarbOx
Blues
May
29, 2006
...
a study by executive compensation consultant
Steven Hall & Partners shows last year's average total CFO
pay up 13%, to $1.75 million annually.
The Providence Journal (Rhode Island):
RECIPES FOR MAKING MONEY
Rhode
Island Companies Must Reveal More Details Than Ever About How They
Compensate Top Executives
May 21, 2006
The decisions
(executives) make on the job and the money they take home are being eyed
by shareholders thirsting for better returns and watchdogs eager to take a
bite out of someone's hide. "This is a complicated, and to make it
worse, an emotional topic," said Steven Hall,
of Steven Hall & Partners, an executive pay consultancy in New York
City. Corporate accountants must now estimate option costs
based on how long they expect employees will hold onto them, how sharply a
company's stock will rise and fall, and other factors. Some
companies are trying to avoid this math altogether.
"I think it's done two
things," Hall said of the rule
change. "It's caused companies to shift compensation to other
vehicles. The other movement is that the number of people who get
stock options has gone down. There was a trend in the 1990s of
pushing down stock options to lower-level employees," Hall said. "That's stopped and is
retreating."
San Antonio
Express-News: Executive Compensation - San Antonio's CEOs Pay
& Perks
May
14, 2006
A
long career in the energy business has led to shareholder gold and rewards
for Valero Energy Corp. CEO Bill Greehey, whose $95.3 million
compensation set a record for San Antonio CEO pay. Greehey stepped
down as CEO at the end of last year and remains chairman of the
company.
Pearl Meyer, a partner in compensation consulting firm
Steven Hall & Partners, said Valero's long track record is
paying off for shareholders, including executives holding options.
"Valero's executives have done a marvelous job in building the company
over the last several years, so it's no surprise that they built a lot of
shareholder value," Meyer said.
Base and Bonus: At Sears Holdings, Equity
Takes a Back Seat
May
2006
Sear's unique
comp program also follows a period of massive change in the way companies
use equity grants. In the wake of new options expensing rules,
companies have been shifting from options to whole-share equity awards in
their incentive plans. Yet, essentially abandoning new stock grants
for executives represents a big step that few firms have embraced.
The benefits of equity are too great, both for the company and the
employee. "Equity grants are alive and well in America," says
Steven Hall, managing director of Steven Hall
& Partners.
St.
Louis Post-Dispatch (Missouri): Executives' Pay Remains as
Large as Their Egos
April
23, 2006
Pay
consultants say that not only are companies aligning pay with performance,
they're also disclosing more information to shareholders.
Steven Hall, managing director at consulting firm
Steven Hall & Partners in New York, thinks better disclosure
may have the biggest effect on things like company cars and country-club
memberships.
"Benefits and
perquisites are getting second and third looks...," Hall said. "There are companies where
the CEO is saying, 'I don't need the country club paid for by the company
any more."
workspan
weekly: Survey - CEO Pay Should Remain with Boards
April 21, 2006
More board
compensation committee members than CEOs believe excessive CEO pay is more
prevalent, according to a survey conducted by Steven Hall & Partners, independent executive
compensation consultants.
Although only 3.4% of CEOs say excessive CEO pay
occurs frequently, 14% of compensation committee members say it
does. 85% of compensation committee members believe there is
evidence of excessive CEO pay, while 41% of CEOs say excesive CEO pay is
rare. Survey respondents either lead one of the 1,000 largest U.S.
companies or sit on the board compensation committee.
"These conflicting views
suggest that compensation committee members are awake to the pay versus
performance issue and their responsibility to exercise independent
oversight," said Steven Hall, managing
director of Steven Hall & Partners.
"While it is human
nature for CEOs to consider themselves fairly paid, the fact that
compensation committee members have a different perspective is a positive
sign in the re-balancing of power within the corporation."
Dow Jones News Service/MarketWatch
Firms Critique Proposed SEC Compensation
Tables
April 20,
2006
The
Securities and Exchange Commission's proposal that companies include the
estimated value of stock and option grants in their main executive
compensation summary has created some strange bedfellows.
Intel Corp. (INTC) and Kellogg
Co. (K), for example, are in agreement with a coalition of international
pension fund investors, the Corporate Library, and New York pay consultant Steven Hall &
Partners in urging the SEC to revamp the proposed tables.
One of the main concerns
raised by critics is that combining the value of yet-to-be-earned equity,
as proposed, with hard cash actually paid out the prior year in a single
table risks confusing investors.
The Wall Street Journal: CEO Seeks
to Halt Stock-Based Pay at United Health - Move Comes Amid
Scrutiny of Options Timing, Gains; Suspensions in Vitesse Probe
April 19, 2006
UnitedHealth Group
Inc. Chief Executive Officer William W. McGuire recommended that the big
health insurer suspend many forms of its senior executive pay, including
stock options, in what compensation experts called an unprecedented move
in recent corporate-pay practices.
The cessation of stock-option grants would be "very
unusual," said Pearl Meyer, senior managing
director of Steven Hall & Partners, a New York compensation-consulting
firm. Some companies have stopped giving options to highly
compensated executives, Ms. Meyer
said, but "where they have, they have changed the compensation program to
use another long-term vehicle."
Trading
Markets: Steven Hall & Partners Files Letter With SEC
Commenting on Commission's Proposed Amendments to Executive
Compensation - Quick Facts
April 18, 2006
On Tuesday, Steven Hall & Partners announced that is
has filed a letter with the Securities and Exchange Commission on 'SEC'
commenting on the Commission's Proposed Amendments to Executive
Compensation and Related Party Disclosure Rules.
In its letter to the SEC,
Steven Hall & Partners affirmed
its support of executive compensation disclosure stating that they commend
the SEC for proceeding with this initiative. They fundamentally
agree that corporate stakeholders and potential investors deserve
disclosure of executive compensation that is complete, transparent,
comparable from year to year, and comparable from company to company.
Compliance Week: Coke Director Pay Plan
Raises Eyebrows
April 18,
2006
When
Coca-Cola recently announced plans to tie all its compensation for its
board of directors to specific performance targets, Chief Executive
Officer Neville Isdell crowed: "This all-or-nothing approach to board
compensation aligns the interests of our directors with those of
shareowners more closely than any other compensation formula I have
seen."
Most compensation
and governance experts, however, say tying director compensation to
performance is a bad idea.
"It leaves a conflict of interest between management
and directors," says Pearl Meyer, an executive
compensation consultant at Steven Hall & Partners . "If
compensation is based on goals they are setting, you can ultimately say
they are not disinterested."
The New York
Times: For Leading Exxon to Riches, $144,573 a Day
April 15, 2006
For 13 years as
chairman and chief executive, Lee R. Raymond propelled Exxon, the
successor to John D. Rockefeller's Standard Oil Trust, to the pinnacle of
the oil world.
For his
efforts, Mr. Raymond, who retired in December, was compensated more then
$686 million from 1993 to 2005, according to an analysis done for The New
York Times by Brian Foley, an independent compensation consultant.
Pearl Meyer, a senior managing partner at Steven Hall
& Partners, a New York-based company that advises
corporate boards on executive compensation, said "Lee Raymond is reaping
the results of a 43-year career during which he led the organization
through difficult times as well as some good years." Mrs. Meyer said at her previous firm she
provided consulting services to Exxon's board but was not involved in Mr.
Raymond's retirement compensation.
The Wall Street Journal:
The CEO Health Plan - In Era of Givebacks, Some
Executives Get Free Coverage After They Retire
April 13, 2006
At a time when
companies are scaling back health benefits for other retirees, former top
executives at many corporations are receiving partial or full lifetime
medical coverage on top of pensions valued at millions of dollars, a Wall
Street Journal analysis of dozens of recent securities filings
indicates.
Companies are
most likely to promise lifetime health benefits when hiring midcareer or
older executives, especially if their prior employers offered similar
perks, says Steven Hall, managing director of
Steven Hall & Partners, an executive-compensation firm in New York.
The Wall Street Journal: The Journal Report: The WSJ 350: A survey of CEO
Compensation
Purchase Plan - More Small-Company Owners Are
Selling The Business Now, With The Promise of Getting Paid Later
April 10, 2006
If you run your own
company and are seriously considering selling it, accepting a "buy now,
pay later" arrangement may be a great way to get the deal done. But
don't take any future checks for granted.
Another thorny issue can be how much operational
control the seller should have after the acquisition. Often, notes
Pearl Meyer, senior managing director of New
York pay consultant Steven Hall & Partners, the seller would
want to negotiate for an agreement to make sure that the buyer can't
"materially change" the operations of the acquired business. Changes
in marketing, for instance, could reduce the seller's chance to obtain the
earn-out.
Forbes.com: Ask An Expert - The Name on The Door
March 9,
2006
When Pearl Meyer sold her eponymous executive
compensation firm to Clark/Bardes Holdings (now Clark Inc.) in 2000, she
also relinquished the rights to her trademarked name. That made
things a bit difficult last August when Meyer, fed up with working for a publicly
held company, decided to leave Clark to strike out on her own. She
ended up calling the new firm Steven Hall
& Partners, after her longtime partner.
MSNBC - Baltimore Business
Journal: McCormick Survives Tough Year, But CEO Bonus Doesn't
February 26,
2006
In a year
when longtime food industry standout McCormick & Co. Inc. struggled
with problem after problem, CEO Robert Lawless' bonus fell by more than 50
percent.
Nationwide,
companies are struggling with how to best link bonus pay to company
performance, said Steven Hall, managing
director of New York-based executive pay consultants Steven Hall & Partners .
Hall had not studied McCormick's proxy, but
in response to a brief description of pay and earnings for 2005, he said,
"It sounds as though they were judging themselves harshly... expecting
better performance, which they didn't meet, and pay suffered as a
result."
Overall, salary
hikes for CEOs are slowing after years of increases, Hall said.
www.managment-issues: CEO Churn On The
Rise
February 9,
2006
After a
one-year lull in 2003, CEO turnover among the top 200 largest U.S.
corporations rose in 2004 and 2005, with many departing bosses receiving
generous 'golden goodbyes'.
Sixteen percent of these 200 largest U.S. companies
have a new CEO this year as compared to 17 percent in 2004 and eight
percent in 2003, according to executive compensation consultants, Steven Hall & Partners.
Steven Hall & Partners' analysis also
shows that half of the 16 CEOs who departed in 2005 from the top 100
companies received separation payments, with two who resigned under
pressure from their boards receiving some of the highest cash payments.
Phillip Purcell, former CEO of
Morgan Stanley, is unlikely to be complaining about receiving almost $44
million in cash, while Carly Fiorina, former CEO of Hewlett Packard, was
paid $14 million.
"Fortunately, these two severance packages were the
exception, not the rule in 2005, but they certainly captured the
headlines. Awards such as these are often questioned as pay for
non-performance," said Steven Hall, Managing
Director of Steven Hall & Partners.
"Going forward, the cost of
the packages like the one received by Carly Fiorina pursuant to her hiring
employment contract with Hewlett Packard will be disclosed up-front under
the proposed Securities and Exchange Commission (SEC) rules and no longer
catch shareholders unaware."
Reuters: US CEO Turnover High, Golden Parachutes
Questioned
February 7,
2006
Thirty-two of
the 200 largest companies got new CEOs last year, down from 34 in 2004 but
up from 16 in 2003, according to the study by Steven Hall & Partners, a New York compensation
and governance consultant . The recent peak is 42, set in
2000.
"Boards are growing
increasingly sensitive to corporate performance, and not letting a
situation fester before taking action," said Pearl Meyer, senior managing director at Steven
Hall, in an interview.
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