Court OKs Using Salary History to Set Pay

Employers can pay men and women differently if that disparity is based on salary history, a federal appeals court has ruled.

The Equal Pay Act only prohibits pay discrimination based on sex, the 9th U.S. Circuit Court of Appeals said April 27 in Rizo v. Yovino (No. 16-15372), and salaries are a “factor other than sex.” The ruling applies in Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington.

The decision comes as several states and cities are adopting laws that prohibit employers from asking job applicants about their salary history. The measures are aimed at undoing decades of pay discrimination based on sex. READ MORE

New York City employers won't be able to ask for your salary history anymore

Mayor Bill de Blasio, a Democrat, signed a bill on Thursday that makes it unlawful for those involved in the hiring process to inquire about what an applicant currently makes -- a measure that takes aim at the gender pay gap.

"This is about fixing a broken history. This is about overcoming years and years of discrimination that held people back," de Blasio said at the signing ceremony. READ MORE

CEO Pay Is Out of Control. Here’s How to Rein It In

This past march, Walt Disney Co. settled a claim by the Department of Labor that it had violated the law by deducting the cost of uniforms from employees’ wages—which brought the workers’ pay below the federal minimum wage. The violations, which occurred at Disney facilities in Florida over the past few years, didn’t add up to a lot of money. Disney will pay back wages of $3.8 million to 16,000 workers (about $230 per employee). What made the story galling is that the entire expense is roughly in line with what Robert Iger, Disney’s CEO, earns in a single month. Last year Iger netted $44 million. READ MORE

Compensation in U.S. rises in 1Q

Wages and benefits paid to U.S. civilian workers grew steadily in the first three months of the year.

The Employment Cost Index, which tracks wages and benefits, was up 0.8 percent in the first quarter, the Labor Department said Friday. That’s the biggest quarterly growth since December 2007 and slightly faster than the 0.5 percent growth in the last quarter of 2016.

Wages and salaries, which account for 70 percent of compensation costs, rose 0.8 percent. Benefit costs, which cover pensions and health insurance, increased 0.7 percent. READ MORE

Pension funds line up against IBM executive compensation, support proxy access

Several large pension funds and proxy advisory firm Institutional Shareholder Services are against ratifying the compensation of Virginia Rometty, CEO of International Business Machines Corp., and four other top executives.

Ms. Rometty's total pay rose to $50.9 million in fiscal year 2017, up from $20.8 million in fiscal year 2016, according to a report last month from ISS. The pay of the four other executives named in the management proposal ranged from $7.3 million to $9 million in fiscal year 2016. READ MORE

Federal vs. private sector: Reverse this compensation gap

A new Congressional Budget Office report confirms what a 2012 CBO analysis found: Federal employees' compensation — wages plus benefits — continues to outpace private-sector compensation for similar jobs, now totaling “roughly 17 percent more,” according to The Washington Free Beacon.

Federal workers with no educational credentials beyond a high school diploma earned 53 percent more than their private-sector counterparts from 2011 through 2015. Those with bachelor's degrees earned 21 percent more. And “benefits increased at a greater rate for federal workers than wages did,” The Free Beacon reports. READ MORE

Here’s Why Executive Pay Gets a Bum Rap

Maybe some executives are overpaid. The good ones, however, are not. In fact, a good case can be made that many of them are underpaid.

Executive pay gets a bum rap. Looking at a total compensation number without context, it’s easy to understand why. Examine the real magnitude of what high-performing top executives actually do, though, and they morph into one of the best bargains around. READ MORE

Executive Compensation Is Right Where It Should Be

Executive pay is just about right — for today, which assumes an efficient market. To suggest otherwise would imply that there is a market irregularity, such as a bubble or inefficiency, which causes an imbalance in executive pay.

I submit that the market for executive pay is more efficient today than it was 20, 50, or even 100 years ago, driven by three primary forces; more information, more scrutiny/attention, and more employment liquidity. READ MORE

Is your company offering competitive compensation packages?

As we approach the end of an academic year, many soon-to-be college graduates are entering the job market. After numerous conversations with students in the past couple of weeks, one theme has emerged.

Many students consider salary as the end-all, be-all. And while salary is important, it may not be the most important aspect of an offer to consider. The organization’s culture is important, plus the benefits package can make or break the deal. Due to space constraints, let's focus only on salary and benefits, not culture. READ MORE

Use of TSR as Incentive Pay Metric Flattens Out

In response to regulations that took effect following the passage of the Dodd-Frank Act, as well as pressure from proxy advisers and investors, it became common practice for executive compensation to be based on company performance.

Relative total shareholder return (rTSR) — a measure of TSR compared with that of other companies, usually a peer group of some kind — emerged as the leading metric for determining long-term incentive payouts for named executive officers. READ MORE

Wells Fargo publishes sales scandal findings, seizing $75 million in compensation from 2 former executives

Wells Fargo's board of directors today released a report on the company’s sales scandal that has rocked the bank since September, saying it will seize more than $75 million worth of compensation from two executives at the heart of the dispute.

The 113-page report was highly critical of former CEO John Stumpf and former head of community banking Carie Tolstedt.

Stumpf "was too slow to investigate or critically challenge sales practices in the Community Bank," the report said. "He also failed to appreciate the seriousness of the problem and the substantial reputational risk to Wells Fargo." READ MORE

BP cuts CEO pay by $8 million after shareholder revolt

CEO Bob Dudley's total pay package for 2016 was cut by 40% to $11.6 million, BP said in its annual report.

The reduction follows a rare shareholder revolt last year when 59% voted against Dudley's 2015 pay and benefits package worth $19.6 million.

Shareholders protested his pay getting bumped up 20% despite a weaker performance by BP (BP) in 2015, when it reported an annual loss of $5.2 billion and its share price slumped. Dudley still got his money since the vote wasn't binding. READ MORE

Branstad signs bills limiting workers' compensation, blocking minimum wage hikes

Gov. Terry Branstad on Thursday signed into law two controversial pieces of legislation — one blocking local minimum wage hikes and another scaling back the state's workers' compensation laws.

House File 295 rolls back minimum wage increases already approved in five Iowa counties, including in Polk County where the new wage of $8.75 an hour was set to take effect April 1. Johnson, Linn, Wapello and Lee counties also have raised their minimum wages. READ MORE

Equal Pay Day: How does your compensation compare?

See Dick and Jane. Dick and Jane are the same age, earned the same college degree, have two years of the same work experience, are employed by the same company and hold the same job title. The only difference? Dick makes $50,000 per year and Jane only makes $40,000.

April 4 is Equal Pay Day, which symbolizes how far into this year that Jane must work to earn the same amount that Dick earned in the previous year. Her education, skills, experience and job responsibilities are the same as Dick’s, but Jane makes 80 cents for every dollar that Dick is paid. Why? Because Jane is female.

Did reading this story about two fictional characters make you angry? It should, because for many women, this isn’t a fictional story. READ MORE

All of Your Questions About Employee Stock Options, Answered

Maybe you’ve paid your dues for years and are finally being tapped for upper management. Or perhaps you’re being recruited by a tech startup who wants you to get in early on a big venture.

In either case, a company may try to woo you with a compensation package that includes stock options, which are used to tie your total pay to the company’s performance so that if the company does well, you do well. While stock options won’t pad your paycheck right away, they can help grow your wealth in the long run.

But if you’ve never had to deal with stock options before, it’s easy to get overwhelmed by all of the jargon. So we’ve collected eight of the most common terms you might come across and decoded them, so you’ll know what, exactly, you’re being offered. READ MORE

Iowa House OKs bill to abolish compensation boards

The Iowa House voted to abolish compensation boards and place responsibility for setting county elected officials’ salaries with boards of supervisors.

“If supervisors want to give themselves a raise, then own it,” bill manager Rep. Megan Jones, R-Spencer, said about a bill she said was about “smaller, smarter government … truth in government … transparency in government.”

The House also approved changes in domestic abuse sentencing laws and modified Department of Transportation enforcement officers’ authority. READ MORE

Performance Management: Lessons from Professional Baseball

Spring means a few things for me but especially spring training for professional baseball and geeking out over how to get the most out of the talent on my favorite team (both on the baseball diamond, and in my office). Baseball performance metrics have changed over my lifetime. I watch expectantly at the promise of equivalent change in non-baseball employers as I read articles like “The Performance Management Revolution” in the Harvard Business Review.

Let me expedite that change by sharing how businesses might copy the Pittsburgh Pirates. READ MORE

Former Valeant CEO sues company over unmade compensation

Former Valeant Pharmaceuticals International Inc Chief Executive Michael Pearson has filed a lawsuit against the Canadian drugmaker, alleging it refused to pay him more than 3 million shares he is owed, the Wall Street Journal reported on Monday.

Based on Valeant's stock price of $10.81 at the close of trading Monday on the NYSE, the shares have a market value of about $32.43 million. READ MORE

Wells Fargo to pay $110 million to settle fake account suit

Wells Fargo has agreed to pay $110 million to settle a class-action lawsuit over up to 2 million accounts its employees opened for customers without getting their permission, the bank announced Tuesday.

It’s the first private settlement that Wells has reached since the company paid $185 million to federal and California authorities late last year. Authorities said bank employees, driven by high-pressure sales tactics, opened the bank and credit card accounts without customer authorization. READ MORE

WILL ACA REPEAL EFFORTS IMPACT EXECUTIVE PAY PRACTICES?

The House Republican health-care proposal, the American Health Care Act (H.R. 1628), would modify or repeal in part the Affordable Care Act tax provisions impacting executive pay for health insurers, among other changes.  See related story, How Will The Proposed AHCA Be Different From the ACA For Employers?

Health insurers and executive compensation experts are keeping a close eye on American Health Care Act developments, including the House floor vote scheduled for March 23.  The proposed repeal of the ACA-mandated tax provisions would be effective for tax years beginning after Dec. 31, 2017. READ MORE