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In decades past, motivating employees was all about raises, promotions and bonuses. Those days are gone, and today's employers are quickly learning that engagement stems from different kinds of incentives — ones that impact an employee's emotional, rather than financial, health.
Based on insights from members of Forbes Coaches Council, here's why traditional incentives might be out of date, and what you can do to offer customized and effective rewards to your team. READ MORE
Wells Fargo & Company (NYSE:WFC) today announced executive compensation actions to reinforce accountability of the company’s leadership for the issues arising from the Community Bank’s sales practices.
The Board has taken actions affecting the Operating Committee, Wells Fargo’s 11 highest-ranking executives, based on the accountability of all those in senior management for the overall operational and reputation risk of the company, and not on any findings of improper behavior in the Board's ongoing independent investigation. The compensation actions will affect the eight members of the Committee who were in place before it was reconstituted in November 2016. READ MORE
An additional 60 days was given to the Justice Department to respond to a court order that delayed an Obama administration rule to expand employee eligibility for overtime compensation.
The U.S. Court of Appeals for the Fifth Circuit granted additional time to the department, which filed the request Feb. 22 and has until May 1 to file a brief in the case (Nevada v. DOL, 5th Cir., No. 16-41606, extension granted 2/22/17).
The rule, which would double the salary threshold to be considered exempt from overtime to $47,476 and was to take effect Dec. 1, was put on hold Nov. 22 by federal district court in Texas. Under the rule, a worker earning less than the threshold would qualify for overtime pay at time and one-half the worker’s regular rate. READ MORE
Skills matter, and those with IT skills have seen a steady increase in compensation over the past year.
The IT compensation and bonuses rose for both certified and noncertified skills, according to research from Foote Partners LLC, a Vero Beach, Fla., research and advisory firm that publishes the IT Skills and Certifications Pay Index (ITSCPI) of IT compensation. READ MORE
The Indiana Supreme Court will hear a case Feb. 23 in which a trial court and the Indiana Court of Appeals reached opposite conclusions about whether key HHGregg managers were entitled to incentive bonuses triggered by the company’s receipt of $40 million from an executive’s life insurance proceeds.
Dwain Underwood represents a class of about 70 high-level HHGregg employees who at the beginning of fiscal year 2012 were provided total rewards statements from the company. The statements said based on HHGregg’s earnings before interest, taxes, depreciation and amortization that they would be entitled to bonuses of $12,500 to $30,000 each if the company met EBITDA revenue targets. READ MORE
Wells Fargo & Co said on Tuesday it fired four executives in its community banking business as part of an independent investigation into its sales practices.
Wells Fargo has been under pressure to show it is holding its management accountable after government investigations found that some of its employees opened as many as two million accounts without customers' knowledge. READ MORE
Executive compensation has always been a delicate and contentious issue, but it has come under more intense scrutiny in the years following the financial crisis.
Wealth inequality is growing at a rapid pace. According to the Economic Policy Institute, CEO pay climbed 997 percent between 1978 and 2014, while worker compensation increased by just 11 percent. Furthermore, in 2015, CEOs in the US were paid 276 times more than the typical worker. Shareholders and the general public are often critical of executive compensation packages and feel there is a disconnect between executives and the rest of the workforce. Issues are brought into even sharper focus when executives are seemingly ‘rewarded’ for company underperformance or failures. READ MORE
This article examines common forms of equity compensation, specifically option plans, restricted share unit ("RSU") plans and deferred share unit ("DSU") plans. These plans use a company's equity to compensate and incentivize employees. Each type of plan involves the issuance of new shares or the payment of amount of cash equivalent to the fair market value of such shares (cashin-lieu of shares).
These equity-based plans vary in their suitability to remunerate (i.e. compensation for work already performed) and to provide incentives (i.e. motivating future work) for consultants, employees, officers and directors. READ MORE
Occasionally when I’m with a large group I ask two questions. The first, “Who had a performance review last year?” will result in most hands going up. I follow up by asking, “Who had a really positive experience in that performance review?” Unexpectedly, only a few hands will go up.
What’s wrong with performance management?
Performance reviews tend to focus on the past. They are a look in the rear view mirror instead of through the windshield and planning for a brighter future. Research has shown this results in negative outcomes over 30% of the time and can also damage people’s self-esteem. Employees lament that these reviews focus primarily on recent events rather than performance over time. They note that managers will often carry a bias, as well. Indeed, other research shows that often immediate colleagues have a more accurate view of a person’s performance than does the manager. Finally, results have shown these reviews will rarely improve performance, although the process is a huge investment of managers’ time, besides being an emotional drain for many. READ MORE
Chief executives increasingly recognize the positive impact that HR can have on talent attraction and retention, setting company culture, and defending the bottom line. Consequently, they are demanding more and more from their top C-suite HR leaders, particularly chief talent officers and CHROs, who are responding by elevating their functional performance to deliver more for the business.
What can CHROs do to set themselves — and their teams — up for success and deliver on the promise of an engaged, responsive, and strategic HR function?
According to a report by Heidrick & Struggles’ alumnus Brian Bark and managing partner Daniel Kaplan, the CHRO’s first priority must be to ensure that he or she has a skilled “top team” in four core areas: talent, total rewards, shared services, and business partners. Assembling this team requires CHROs to embrace expanded leadership within the department to establish a culture of performance excellence as well as identify and mentor promising candidates. READ MORE
1. Close the "Performance Pay" Loophole
The more corporations pay their executives, the less they pay in federal taxes, thanks to a tax code loophole that lets corporations deduct unlimited amounts of executive compensation from their taxable income -- as long as they label the pay "performance-based." This loophole stems from a 1993 Clinton administration reform meant to address widespread public outrage over runaway CEO pay. The reform -- Section 162(m) of the federal tax code -- placed a $1 million cap on the deductibility of executive compensation. But by exempting "performance pay," the reform invited an explosion of executive compensation in the form of deductible stock options, performance shares, and other bonuses designed to meet the exemption criteria.
A recent Institute for Policy Studies analysis has found that America's top 20 banks paid out more than $2 billion in fully deductible performance bonuses to their top five executives between 2012 and 2015, a windfall that translates into a taxpayer subsidy worth more than $725 million, or $1.7 million per executive per year.
Senators Jack Reed and Richard Blumenthal and Rep. Lloyd Doggett have recently introduced the Stop Subsidizing Multimillion Dollar Corporate Bonuses Act (S. 82 and HR 399), which would eliminate the "performance pay" loophole. The Joint Committee on Taxation estimates this legislation would generate $50 billion over 10 years. READ MORE
It was late September last year. Minto had just heard that then-CEO John Stumpf apologized in front of a Senate panel for a major scandal that rocked Wells Fargo. Employees had created up to 2 million fraudulent accounts in the names of real consumers. Senator after senator blasted Stumpf, many expressing disbelief that the San Francisco bank could do such a thing.
If only they had met Minto 15 years earlier.
In 2001, Minto was an assistant branch manager in San Rafael when he started to notice troubling behavior: Some employees were signing up unusually large numbers of customers. One particular banker recruited more than two dozen customers in a single day. READ MORE
It’s somewhat shocking that it has already been 12 years since IRC §409A was effective on January 1, 2005. Maybe it seems so quick because I’ve only completed reading roughly 1,955 of the 58,000 pages of legislation that was enacted, in large part, because of the perceived abuses by Enron executives as their empire was crumbling (really, it was only about 450 pages…but give it a shot sometime and tell me that it doesn’t feel like 58,000 after about 10 minutes).
All in all, as a Consultant in the executive benefit space that spends every day living in the 409A world, the legislation, while odd in certain respects, isn’t all that bad. In fact, many in my world have learned to appreciate the path or guide that 409A provides with respect to plan design and management. Really, it was the lack of structure that existed with Non-Qualified Deferred Compensation (NQDC) Plans that got us into this situation in the first place. READ MORE
Senior executives who changed jobs last year received double-digit compensation increases, as they increased their cash compensation by 21.1 percent, on average, over what they earned at their previous organizations.
This increase applied to every industry and every functional area, according to executive search firm Salveson Stetson Group, which analyzed compensation data from a representative sample of the firm's senior executive placements among a variety of organizations in 2016. The compensation packages analyzed included base salary and incentive pay awarded last year.
The average compensation increase for a senior-level candidate accepting a new job in 2016 was up slightly from the 18.44 percent increase notched for 2015. READ MORE
A Dodd-Frank Act requirement that companies disclose how top executives’ compensation compares with pay for rank-and-file employees will get fresh scrutiny at the U.S. Securities and Exchange Commission after the agency’s acting chairman requested a review Monday.
Michael Piwowar, who as a commissioner opposed the rule when it was approved in 2015, said he was re-opening public comment on the pay-ratio rule in response to complaints that some companies “have begun to encounter unanticipated compliance difficulties.” The move offers no immediate relief for firms required to comply starting this year, but it could be a first step to ultimately changing the rule, which was included in Dodd-Frank amid claims that executive pay incentives fueled excessive risk before the 2008 financial crisis. READ MORE
A few weeks ago, a jury in New Jersey federal court found that Lockheed Martin discriminated against a former employee. The employee claimed that Lockheed violated federal and state laws by discriminating against him on the basis of age, including by paying him less than his younger co-workers. The jury’s award: $51.5 million ($1.5 million in compensatory damages and $50 million in punitive damages). Although the claim was only partially based on unequal pay, and although the punitive damages award is constitutionally suspect (U.S. Supreme Court precedent holds that punitive damages should generally not be more than ten times the amount of compensatory damages), the award is indicative of an ever-emerging emphasis on pay equity. READ MORE
Bank of America Corp.’s top executives were sitting on the right to buy 400,000 shares of the bank’s stock at $53.85, a perk handed out by its board a decade ago.
The problem is, the stock trades at $24.58.
Those stock options expired worthless on Wednesday, a sign of the lingering effects of the financial crisis and the huge gap between banks that have recovered fully from that era and those still far from the targets set during Wall Street’s better times. READ MORE
The spectacle of Google’s self-driving car effort (now known as Waymo) losing so many top employees over the past few years has been hard to figure out (excepting the fact that Apple’s car project seemed to be having even more problems). This is especially the case when one considers that the company’s program had seemingly been making good progress and was/is something of a leader in the field.
The explanation put forward in the recent Bloomberg article seems to do a good job of explaining the situation, though — Google simply put too much money on the table, and utilized a compensation system that was (seemingly) not well thought out. READ MORE
Increasing your company sales, doesn’t just have to be about increasing your sales team and their working hours. A sales incentives scheme can help give your salespeople the right tools, mindset, and work ethic they need to deliver more sales for you. READ MORE
Awarding higher pay and bonuses to top performers seems like the straightforward way to incentivize and retain great employees. The most popular format being performance-based bonuses, which keep base pay manageable and provide incentives for better performance. However, research shows us that this may not be as simple as it seems.
A study by Willis Towers Watson found that only 20% of employers in North America actually believe merit pay is effective in driving high performance. READ MORE