Well, here’s something you don’t see too often. Or maybe never…
Rick Holley is CEO of Plum Creek Timber Co. PCL 0.12%, a Seattle-based real estate investment trust that owns and manages around 6.8 million acres of timberland in 19 states. Today Holley disclosed, via a regulatory filing, that he has returned 44,445 restricted stock units back to the company because “he does not believe that he should receive such an award unless Plum Creek’s stockholders see an increase in their investment return.” At today’s opening price of $41.80 per share, Holley’s giveback would work out to more than $1.85 million.
To be sure, it’s been a rough 18 months for Plum Creek shareholders, in part due to low levels of new home construction. The stock hit an all-time high of $54.04 per share on May 12,2013, before falling as low as $39 per share on October 1, 2014. Revenue has also been nearly flat over the past two years, while net income is expected to fall in fiscal 2014. That said, it’s hard to remember the last time a CEO voluntarily gave up stock as a sort of apologia to disappointed investors. Holley has been president and CEO of Plum Creek since 1994, before which he was its chief financial officer. He began his career at General Electric GE 0.95% in 1974.
Here is the full statement from Plum Creek’s filing:
“On December 12, 2014, Rick R. Holley, chief executive officer of the company, returned an award of 44,445 restricted stock units that were granted to him by the Compensation Committee of the Board of Directors of the company on February 3, 2014. Disclosure of the award was made by the company under Item 5.02(e) of its Current Report on Form 8-K filed on February 6, 2014, which report is incorporated herein by reference. The award, which would have vested entirely on February 3, 2017, was made to Mr. Holley as incentive for him to remain in his position as chief executive officer for the next several years. However, in light of prevailing economic conditions, Mr. Holley elected to return the restricted stock units because he does not believe that he should receive such an award unless Plum Creek’s stockholders see an increase in their investment return. Nonetheless, Mr. Holley remains fully committed to Plum Creek and intends to lead the company through this challenging and prolonged economic cycle.”
Holley tells Fortune that the board was “surprised” when he informed them of his decision. “I told them I wasn’t asking for their approval. They had given these to me and I appreciated their confidence in me, but I didn’t feel comfortable taking them… This has been a year where total shareholder returns are down 10% or more. It just wasn’t the right thing to do.”
If you want a preview of how proxy advisors & institutional investors perceive the coming pay ratio disclosures, check out this Bloomberg article. Of course, we’ll have representatives from ISS, Glass Lewis, BlackRock, CalSTRS and Capital Research and Management at our upcoming “Proxy Disclosure Conference/Say-on-Pay Workshop” to discuss that and more…
Starting in 2018 [Broc’s correction], US companies will have to report the ratio of their CEO’s pay to the average employee’s salary to the Securities and Exchange Commission. But why wait? Salary-data aggregator Glassdoor put together a ranking of pay ratios for companies in the S&P 500 based on the median employee pay data it has and CEO pay data from company filings. At the top: David Zaslav of Discovery Communications with an astounding ratio of 1,951-to-one, followed by the chiefs at Chipotle (1,522), CVS (1,192), and Walmart (1,133).
The biggest takeaway? We have no idea what these ratios really look like. Estimates are wildly inconsistent. And it’s unclear how much better things will be under the new rules since companies will get to choose how they calculate employee pay.
A recent analysis from Payscale, also an online salary aggregator, came out with an entirely different ranking and vastly lower ratios. Larry Merlo of CVS tops its list, but with a ratio of 422-to-one, compared to 1,192 from Glassdoor. Payscale’s highest estimated ratio would only make the 37th spot on Glassdoor’s ranking.
A separate Bloomberg analysis computed average worker pay in a different way, using publicly available data, and came up with a whole other set of estimates and rankings. Bloomberg puts the average salary at JP Morgan at $124,959, compared to $65,344 from Glassdoor. Consequently, Glassdoor’s estimate of the pay ratio is twice as high.
To make it more confusing, Glassdoor isn’t universally higher. Bloomberg has ex-McDonald’s CEO Don Thompson in first place with a pay gap ratio of 644 to one. Glassdoor puts the ratio at 422.
Some caveats are in order for data from sites like Payscale and Glassdoor. Their salary data is self-reported by employees, and not entirely reliable. And as Glassdoor notes, CEO pay varies highly from year to year, due to things like stock options and bonuses. Employees tend to underreport such earnings to Glassdoor, and the distribution of people who report on the site may be skewed in terms of pay or seniority. Some companies have already disputed the average salaries reported by Glassdoor.
Here’s a note that I received from a member in response:
According to this Reuters article, the Glassdoor study (which I couldn’t find anywhere on Glassdoor’s website) used “CEO compensation figures reported by 441 S&P 500 companies through Aug. 14 and Glassdoor.com user reports about salaries at those companies. Only companies for which Glassdoor had 30 or more worker salary reports were included. The data could be skewed if workers under-counted tips or bonuses, Glassdoor said.” Anyone using Glassdoor or Payscale stats as reliable is irresponsible – but some journalists obviously are (here’s another example).
As it typically does a few months ahead of the event, our conference hotel in San Diego – the Manchester Grand Hyatt – is nearly sold out. We have procured an overflow hotel next door – the San Diego Marriott Marquis – for which you can obtain comparable room rates if you reserve online thru this page. But you’ll want to try the Manchester Grand Hyatt first – obtain a discounted rate there by following these instructions. This hotel relates to our popular conferences – “Proxy Disclosure Conference” & “Say-on-Pay Workshop” – to be held October 27-28th in San Diego and via Live Nationwide Video Webcast.
Those conferences are paired with the audio archives that are up from yesterday’s “Pay Ratio Workshop.” You can register at anytime to gain immediate access to these archives and also gain access to our October pair of conferences. Register Now! Here’s a list of the archived 9 panels for the “Pay Ratio Workshop”:
– “Overview: The Final Rules”
– “Getting Ready for Compliance: Sampling & Other Data Issues”
– “Streamlining Your Compliance Efforts”
– “Board Presentations: What To Tell Boards Now”
– “Disclosure: Handling the Transition Period”
– “Parsing Model Disclosures: US-Only Workforces”
– “Parsing Model Disclosures: Global Workforces”
– “Parsing a Recent Pay Ratio Disclosure”
– “How to Handle PR & Employee Fallout”
The Course Materials alone are worth the price of admission. But this 4-hour audio-only event is paired with our much lengthier “Proxy Disclosure Conference” & “Say-on-Pay Workshop” that are being held in October. Register Now! Here’s a list of the 9 panels for the “Pay Ratio Workshop” (& the agendas for all three events):
– “Overview: The Final Rules”
– “Getting Ready for Compliance: Sampling & Other Data Issues”
– “Streamlining Your Compliance Efforts”
– “Board Presentations: What To Tell Boards Now”
– “Disclosure: Handling the Transition Period”
– “Parsing Model Disclosures: US-Only Workforces”
– “Parsing Model Disclosures: Global Workforces”
– “Parsing a Recent Pay Ratio Disclosure”
– “How to Handle PR & Employee Fallout”
In the wake of the pay ratio rules being adopted, get a handle on what you need to do now during tomorrow’s “Pay Ratio Workshop.” The Course Materials for tomorrow include 22-pages of annotated model pay ratio disclosures (in Word to facilitate your starting point!) – and 128-pages of detailed analysis of executive pay disclosures made during the 2015 proxy season. The Course Materials alone are worth the price of admission.
But there’s more! This 4-hour audio-only event is paired with our much lengthier “Proxy Disclosure Conference” & “Say-on-Pay Workshop” that are being held in October. Register Now! Here’s a list of the 9 panels for the “Pay Ratio Workshop”:
– “Overview: The Final Rules”
– “Getting Ready for Compliance: Sampling & Other Data Issues”
– “Streamlining Your Compliance Efforts”
– “Board Presentations: What To Tell Boards Now”
– “Disclosure: Handling the Transition Period”
– “Parsing Model Disclosures: US-Only Workforces”
– “Parsing Model Disclosures: Global Workforces”
– “Parsing a Recent Pay Ratio Disclosure”
– “How to Handle PR & Employee Fallout”
In the wake of the pay ratio rules being adopted, you need to get a handle on what to do now – as there are tasks you should be accomplishing way ahead of your disclosure obligation. Tune into our “Pay Ratio Workshop” next Tuesday, August 25th – an audio-only event (whose archive will be up immediately if you can’t attend live). Register Now!
Here’s a list of the nine panels that will span over four hours of practical instruction on Tuesday:
– “Overview: The Final Rules”
– “Getting Ready for Compliance: Sampling & Other Data Issues”
– “Streamlining Your Compliance Efforts”
– “Board Presentations: What To Tell Boards Now”
– “Disclosure: Handling the Transition Period”
– “Parsing Model Disclosures: US-Only Workforces”
– “Parsing Model Disclosures: Global Workforces”
– “Parsing a Recent Pay Ratio Disclosure”
– “How to Handle PR & Employee Fallout”
Yesterday, the SEC’s pay ratio rules were published in the Federal Register – so they have an effective date of October 19, 2015. That’s not the compliance date however…
In the wake of the pay ratio rules being adopted, you need to get a handle on what to do now – as there are tasks you should be accomplishing way ahead of your disclosure obligation. Tune into our “Pay Ratio Workshop” next Tuesday, August 25th – an audio-only event (whose archive will be up immediately if you can’t attend live). Register Now!
Here’s a list of the nine panels that will span over four hours of practical instruction on Tuesday:
– “Overview: The Final Rules”
– “Getting Ready for Compliance: Sampling & Other Data Issues”
– “Streamlining Your Compliance Efforts”
– “Board Presentations: What To Tell Boards Now”
– “Disclosure: Handling the Transition Period”
– “Parsing Model Disclosures: US-Only Workforces”
– “Parsing Model Disclosures: Global Workforces”
– “Parsing a Recent Pay Ratio Disclosure”
– “How to Handle PR & Employee Fallout”
In the wake of the pay ratio rules being adopted, this is one of the topic du jours. And it’s one that will be tackled during our “Pay Ratio Workshop” next Tuesday, August 25th during the panel entitled “How to Handle PR & Employee Fallout.” Register Now! Here’s a list of the 9 panels:
– “Overview: The Final Rules”
– “Getting Ready for Compliance: Sampling & Other Data Issues”
– “Streamlining Your Compliance Efforts”
– “Board Presentations: What To Tell Boards Now”
– “Disclosure: Handling the Transition Period”
– “Parsing Model Disclosures: US-Only Workforces”
– “Parsing Model Disclosures: Global Workforces”
– “Parsing a Recent Pay Ratio Disclosure”
– “How to Handle PR & Employee Fallout”
In the meantime, check out this memo by Towers Watson that provides survey data regarding employee attitudes towards pay and covers the possible influence of pay ratio on employee perceptions…
