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.
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.
|
