– Broc Romanek
ProxyInsight’s Seth Duppstadt reports that over 1000 proxies with pay ratios have been filed so far – the 4 highest ratios are 2818, 2526, 2483 and 2028. Wonder how those companies will fare with say-on-pay this year?
You will want to see this Pearl Meyer blog entitled “Median Employee Pay Not Quite the Spectacle Anticipated.” Deb Lifshey reports “the average of employees identified at median is nearly $75K, which is larger than many expected.” Here’s another excerpt from Deb’s blog:
Not surprisingly, the highest average median pay, based on data collected thus far, is found within the utility sector at around $151K, with energy ($107K) and real estate ($104K) following a distant second and third. Industries at the lower end of averaged median employee pay are consumer discretionary ($42K), consumer staples ($44K) and industrials ($60K).
Surprisingly, the highest average median pay falls in a middle range of company size by revenue. It is larger for companies with revenues between $1B to $3B, ($82K), as compared to those companies with revenues smaller than $1B or larger than $3B.
Companies with fewer employees also had higher average median pay. Those with under 1,500 employees have an averaged median around $98K, compared to those with over 20,000 employees, where the average median is about $58K.
Also check out the latest from the many pay ratio compilations we have posted in our “Pay Ratio” Practice Area – including this one from Willis Towers Watson entitled “Comparing Pay Ratios: What the First 200 Filings Show.” Finally, it’s your last chance to obtain a 20% early bird discount on our “Pay Ratio & Proxy Disclosure Conference.” Deadline is next Friday, April 13th…
– Broc Romanek
Time to act on the registration information for our popular conferences – “Pay Ratio & Proxy Disclosure Conference” & “Say-on-Pay Workshop: 15th Annual Executive Compensation Conference” – to be held September 25-26 in San Diego and via Live Nationwide Video Webcast. Here are the agendas – 20 panels over two days.
Early Bird Rates – Act by April 13th: Huge changes are afoot for executive compensation practices with pay ratio disclosures on the horizon. We are doing our part to help you address all these changes – and avoid costly pitfalls – by offering a special early bird discount rate to help you attend these critical conferences (both of the Conferences are bundled together with a single price). So register by April 13th to take advantage of the 20% discount.
– Broc Romanek
First, there was this WSJ article entitled “Does Verizon Really Pay the Typical Worker 60% More Than AT&T?” Then, as noted in this Steve Quinlivan blog, there was this request by Public Citizen for the SEC to investigate irregularities & inconsistencies in pay ratios disclosed by companies so far. It will be interesting to see how this plays out…
– Broc Romanek
Hilarious item on the NASPP blog yesterday from McLagan’s Ryan Gildner – here’s an excerpt:
The newly formed Data on Ratio Comparison Society (D.O.R.C.S) is pleased to announce preliminary results from a groundbreaking ongoing study of CEO pay ratio disclosures. According to Ryan Gildner, president of the Society, “This is the first study of its kind and uses an unprecedented innovative approach to evaluate the content of CEO pay ratio disclosures. We hope our data will provide a new perspective on this controversial disclosure and lead to a more complete understanding of its value.”
Using a proprietary 16-point qualitative analysis, the Society has identified the following disclosure to be the best disclosure to date:
As required by Item 402(fu) of Regulation S-K, we are providing the following information:
For fiscal 2017, our last completed fiscal year:
– The number of words comprising the CEO Pay Ratio Regulation (Item 402(u) of Regulation S-K) is 2,933.
– The number of words comprising the Compensation Discussion & Analysis Regulation (Item 402(b) of Regulation S-K) is 1,282.
Happy Anniversary Baby! 10 Years of Blogging & Counting…
Today marks 10 years of my blither & bother on this blog (note that Mark Borges’ blog and Mike Melbinger’s blog – are both over 13 years old – not shabby!). It’s the one time that I feel entitled to toot my own horn – as it takes stamina and boldness to blog for so long. A hearty “thanks” to all those that read this blog for putting up with my personality. I’m sure I won’t get more refined with age…
– Broc Romanek
Here’s the teaser for this memo from FW Cook:
Many believe that Elon Musk already has revolutionized automotive technology, rocketry, and solar energy. He now may have done the same to U.S. executive compensation with shareholder approval of his new incentive compensation arrangement at Tesla’s annual shareholder meeting on March 21st. The shares held by Musk and his brother did not count in the vote, so the outcome cannot be attributed to ownership control.
The new incentive compensation arrangement is essentially 12 tranches of performance stock options, each vesting when Tesla’s market-capitalization value grows in $50 billion increments starting from $100 billion for the first option tranche and ending at $650 billion over 10 years. Market-cap was about $53 billion on the date of shareholder approval, making the goals aspirational. But if achieved, the earned compensation value delivered from the award is estimated to be $55.8 billion. This is a value-sharing ratio of 8.5% for Musk ($55 billion ÷ $650 billion).
Our comments are not a critique of the arrangement’s structure or rigor of the goals. It is on three potential high-level implications that we see as indicated in this memo.
– Broc Romanek
The title of this Bloomberg opinion piece by Matt Levine catches your eye (here’s a Cooley blog about it). Here’s an excerpt from the piece:
But also: Warren Buffett makes $100,000 a year? Really? I mean, yes, it is famously his salary. But Buffett increases his wealth each year in two ways: He gets paid for doing his job, and also he has billions of dollars invested in Berkshire Hathaway and most years Berkshire’s stock goes up. In 2017, Berkshire Hathaway’s stock was up about 22 percent, meaning that the value of Buffett’s shares increased by about $15.1 billion, to $84.1 billion. So in a sense he made $15.1 billion in 2017, or $15.1001 billion if you include his salary, or $15.10005 billion if you deduct the stamps. That’s a pay ratio of about 282,435 to 1.
Is that the right way to count? Meh. Every year Institutional Investor’s Alpha publishes its “Rich List of the World’s Top-Earning Hedge Fund Managers,” and every year people write stories saying that the list reveals how much hedge fund managers “are paid” or “take home,” and every year I point out here that it is actually mostly a list of how much those managers’ investments appreciated. It is not really how much they are “paid.” But people like to interpret it that way, and you can understand why, since for practical purposes that appreciation is a big part of their economic reward for running their hedge funds. Most years Buffett would be way above anyone on the hedge-fund-manager list, if he counted.
This CFO.com piece claims that pay ratios mislead investors – and this WSJ article posits how to fix misleading pay ratios…
– Broc Romanek
Following up on the theme of pay ratio disclosures from the past few weeks, here’s a nifty set of charts from Pearl Meyer that summarizes the pay ratio disclosures so far. Also see this Pearl Meyer memo – and this Mercer spot survey…
All of our memos about recent pay ratio disclosures are in our “Pay Ratio” Practice Area – also read Mark Borges’ blog for detailed analysis as they come out.
– Broc Romanek
Here’s the teaser from this memo by Andrews Kurth Kenyon:
This proxy season has revealed an intensifying trend to address limitations on grants to non-employee directors in many long-term incentive plans. Based on a review of approximately 50 LTIPs submitted for approval this proxy season thus far by Delaware companies, a majority of such LTIPs now include a director-specific limit on the size of annual non-employee director grants and a handful generally permit grants only in pre-determined amounts as set forth in the LTIPs.
– Broc Romanek
Following up on my blog from a few days ago, here’s a memo from Compensation Advisory Partners that summarizes the pay ratio disclosures so far. See this Cooley blog for a summary…
– Broc Romanek
Here’s an interesting article comparing the director pay of private & public companies from Jim Reda, Kimberly Glass and James Rice of Arthur J. Gallagher & Co.