April 6, 2010

CEO Pay Continues a Decline: Have We Seen the Bottom?

The front page of last Thursday’s Wall Street Journal announced “CEOs See Pay Fall Again,” and no, it wasn’t an April Fools’ Day joke. According to the data tracked by the WSJ, the median value of total direct compensation (comprised of salaries, bonuses, long term incentives and grants of stock and stock options) for the CEOs of 200 major US companies declined 0.9% to $6.95 million. This was described as only the third drop in total direct compensation since 1989, when the WSJ began tracking the data, and the second year in a row for a decline, with 2008 seeing a 3.4% drop in CEO pay.

The big question remains, where is CEO pay going to go now? One thing that is surprising to me is that the drop in median total direct compensation for CEOs was so modest for 2009. With the continuing effects of the recession and financial crisis, as well as an overall level of public and shareholder anger over executive compensation, the trend doesn’t seem to indicate any sort of long-term revisiting of the overall size of CEO pay packages. The article notes that pay curbs put in place in the 2008-2009 timeframe appear to be ending, at least anecdotally.

In order to be up-to-date on the latest on executive compensation trends, emerging responsible pay practices and public disclosure issues as the next pay cycle approaches, be sure to sign up today for our upcoming conferences, “Tackling Your 2011 Compensation Disclosures: The 5th Annual Proxy Disclosure Conference” and the “7th Annual Executive Compensation Conference.” These conferences take place in Chicago on September 20-21. Be sure to act now, because the early bird discount will expire April 15th!

What the Top Compensation Consultants Are NOW Telling Compensation Committees

For more on the latest executive compensation trends, note that we have posted the transcript for our recent webcast: “What the Top Compensation Consultants Are NOW Telling Compensation Committees.”

The SEC’s Bounty Program

A report out last week from the SEC’s Inspector General notes that the SEC’s two-decade old bounty program for paying whistleblowers in insider trading cases has paid out only $159,537 to five people. I didn’t even know there was such a program, and I guess I wasn’t alone. The report notes a number of recommendations, such as improving the process for applying for bounties and informing the public about the availability of the bounties. The SEC’s Director of Enforcement agreed with all the recommendations, so we are likely to see some ramp up in the bounty efforts. The SEC has recently asked Congress to expand its authority to pay bounties in all sorts of Enforcement cases that would bring in fines of over $1 million.

– Dave Lynn