Charity Officials Are Increasingly Receiving Million-Dollar Paydays

Charities are becoming a lot more generous with pay at the top.

The tax-exempt organizations, which include many hospitals and colleges as well as traditional charities such as the United Way, provided seven-figure compensation to roughly 2,700 employees in 2014, an analysis of newly available data shows.

The total is higher by a third than in 2011, The Wall Street Journal found, after analyzing about 100,000 organizations that filed electronic returns with the Internal Revenue Service all four years. READ MORE

Executive Compensation for Financial Services in a Trump Administration

A month into the Trump presidency, there have been a number of important statements from the executive branch on the regulation of executive compensation impacting the financial services industry. On February 3, 2017, President Trump issued a statement on the core principles for regulating the U.S. financial system (“Core Principles”). The statement requires the Treasury and all heads of member agencies of the Financial Stability Oversight Council to report within 120 days (by June 3, 2017) all existing laws, treaties, guidance, regulations, etc., that promote the Core Principles, and all such laws, etc., that inhibit the Core Principles. The Core Principles provide some insight into future regulation or repeal efforts by the Trump administration impacting executive compensation. READ MORE

Commissioned Employees Required to Receive Separate Compensation for Rest Breaks

A California appellate court ruled this week in Vaquero v. Stoneledge Furniture, LLC (No. B269657, filed February 28, 2017) that employees paid on commission are entitled to separate compensation for rest breaks.  In a decision that frustrates employers that view the employment relationship through the lens of contract law, the Vaquero Court held that Stoneledge’s commission plan that paid sales associates a percentage of sales or a guaranteed draw in excess of minimum wage against earned commissions failed to properly compensate sales associates for rest breaks and non-productive time. READ MORE

How Higher CEO Pay Can Impact an Entire Organization

Things are looking up for association executive pay. “CEO Salary Dynamics,” [PDF] a new research paper from the ASAE Foundation and Naylor Association Solutions, reports that CEO compensation has swelled in the post-Great Recession years. From 2012 to 2016, according the report, the median CEO base salary has spiked a remarkable 33 percent, from $150,000 to $200,000. The growth is larger at trade associations (40 percent), but pretty much every category is on the upswing, whether the breakdown is by budget, staff size, or scope. Only associations with budgets below half a million dollars saw a decline between 2012 and 2016, and there the downturn is only one percentage point. READ MORE

New Deferred Compensation Rules Provide Greater Flexibility To Tax Exempt Employers

Unlike private employers, tax-exempt and governmental employers are required to comply with the complex rules of Tax Code Section 457 whenever compensation is payable to employees in arrangements beyond the current tax year such as for executive deferred compensation and severance arrangements.  Deferred compensation plans subject to Section 457(f) plans are subject to a different regulatory scheme than Section 401(k) and 403(b) retirement plans which allow for tax deferral up to, any even beyond, retirement. Because there is considerably less regulatory guidance for 457(f) plans than for 403(b) and 401(k) plans, the tax treatment of certain Section 457(f) plan designs was somewhat unclear. In June of 2016, the Internal Revenue Service ("IRS") issued long-anticipated comprehensive Section 457 proposed regulations clarifying numerous aspects of Section 457. This article describes several of the key aspects of the 457(f) guidance.  READ MORE

U.S. Senators draft bill to boost employee private stock ownership

A bipartisan pair of lawmakers on the U.S. Senate Banking Committee are planning to introduce a bill that aims to entice private corporations to give their employees larger equity stakes in their companies and promote longer-term investing.

The draft bill, titled the "Encouraging Employee Ownership Act," is being rolled out by Virginia Democrat Mark Warner and Pennsylvania Republican Pat Toomey and will be made public as soon as Thursday, according to a spokeswoman for Warner's office. READ MORE

10 Tips For An Incentive Program That Goes Beyond Compensation

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 Announces Executive Compensation Actions to Promote Accountability

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

WORKING OVERTIME ON THE OVERTIME RULE CASE

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

State Supreme Court to hear managers’ incentive fight

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

Determining executive compensation

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

So Many Options: An Overview of Equity Compensation and Incentives

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

The 6 Vital Elements Of Effective Performance Management Systems

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

Four HR Roles That Matter Most

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

Five Ways to End CEO Pay Subsidies

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

Wells Fargo whistle-blower finds vindication after 15 years

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

Optimizing NQDC Distribution Flexibility

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

Job-Changing Executives Saw Big Pay Increases Last Year

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