A millennial's math on compensation

I graduated from business school with roughly $200,000 of debt and a choice. I could manage investments in the family office of one of the world’s top hedge funds or I could take a job at the Connecticut Green Bank. The difference in salary and bonus was, to put it mildly, appreciable. I chose the Green Bank.

For the (many) people who measure the worth of a job by its paycheck, my choice is mystifying. They rationalize my decision as the admirable, perhaps naïve, pursuit of meaningful work: I’m a public servant. I’m helping society. I feel good about what I do. Yes, this is all true, but such assessments are incomplete for three reasons. First, they conflate a job with a career. Second, they oversimplify the math on compensation. Third, they ignore a fundamental shift underway in the business community: The idea that we have to choose between "doing good" for the world and "doing well" for ourselves is increasingly misguided. READ MORE

Nursing home CEO wants $100M payout amid bankruptcy threat

The landlord of America’s second-biggest nursing home chain is haggling with the company’s top executive over a lavish compensation package, even as the chain teeters on the edge of bankruptcy, sources told The Post.

Paul Ormond, CEO of HCR ManorCare, is demanding $100 million in deferred compensation that private equity giant Carlyle Group promised to pay him as part of a $6.3 billion buyout of the company in 2007, according to sources close to the situation. READ MORE

Dissecting Marissa Mayer’s $900,000-a-Week Yahoo Paycheck

When a withered Yahoo is absorbed by Verizon Communications in the next week or so, it will be the end of an era for one of the pioneering names of the internet age.

It will also conclude the remarkable five-year run of Yahoo’s chief executive, Marissa Mayer, who was paid nearly a quarter of a billion dollars — a generous sum even by Silicon Valley’s lofty standards — while presiding over the company’s continued decline. READ MORE

Why Companies Should Measure “Share of Growth,” Not Just Market Share

Accelerating growth is on every CEO’s agenda. Each year business leaders commit to an overall revenue growth target, but the reality is that growth within a business is often very uneven. Some parts grow faster, and one hopes that they offset the other parts that may be declining. Dave Calhoun, former vice chair at General Electric and now senior managing director at Blackstone, says that it’s better to double down on your winners than to invest in fixing the losers. But many companies have a one-size-fits-all mindset toward metrics, which makes it hard to use that judgment when allocating resources from the top. READ MORE

Fired Uber Executive Said to Forfeit $250 Million Stock Grant

Anthony Levandowski lost both his job at Uber Technologies Inc. and a potential $250 million payday.

Levandowski, 37, who was terminated from the San Francisco-based company on Tuesday, got 5.31 million shares when he was hired in August. The grant was set to vest based on his continued service and achievement of certain performance milestones. Levandowski was employed at-will and none of the shares had vested when he left, according to an Uber executive familiar with the matter. READ MORE

Board Confirms Unallowability of Executive Compensation Based on Changes in Securities and Dividends Prices

In Exelis Inc. (ASBCA No. 58966, Mar. 29, 2017), the Board upheld the Government's disallowance of compensation paid under Exelis’ Long-Term Incentive Plan as expressly unallowable under FAR 31.205-6(i) and subject to level 1 penalties because it was “based on changes in the prices of corporate securities and dividends.” The amount of compensation was determined based on “total shareholder return” (TSR) using a formula that compared growth in the value of Exelis’ stock and dividends to other companies. The Board held that, “[a]s in Raytheon, the metric Exelis used to calculate and value the TSR compensation was TSR performance ratings, which were based on securities price changes and dividend payments.” The Board rejected Exelis’ argument that Raytheon could be distinguished because the TSR costs were “paid based upon a predetermined compensation award pool,” noting that “the plain language of the cost principle more broadly renders unallowable any compensation that is ‘calculated’ or ‘valued’ based upon‘changes in the price of corporate securities.”

Early Proxy Results Signal Investors Want Annual Say on Executive Pay

Shareholders strongly favor maintaining annual say-on-pay votes, even though the majority of investors back company executive compensation plans, according to a report from ISS Analytics, a unit of the nation’s biggest proxy adviser.

Investors this year get to weigh in on how frequently companies should seek their opinion on executive remuneration plans. This is the second time shareholders get to decide on the frequency of the executive compensation approval ballot since 2011, when the rules first came into effect. Investors could opt to hold the vote annually, once every two years, or every three years. READ MORE

Practical Considerations Relating to Share Withholding for Taxes

In a previous post, we summarized a new Financial Accounting Standards Board (FASB) rule that allows increased share withholding for taxes under United States Generally Accepted Accounting Principles (GAAP). This new rule permits cash settlement of a share-based award for tax withholding up to the maximum statutory tax rate in the applicable jurisdiction without causing adverse accounting treatment of the equity award.

The rule generally became effective for calendar year companies on January 1, 2017. Many companies are now considering implementing increased share withholding for taxes and must consider their existing equity plan provisions and securities law, IRS, and payroll issues. READ MORE

SEC Takes Action: Results of Under-Disclosing Executive Perks

The Securities Exchange Commission (SEC) investigation of and the action taken against MDC Partners Inc. (“MDC”) and its former Chief Executive Officer, Miles S. Nadal (“Nadal”), underscore the importance of proper disclosure of executive compensation. Between 2009 and 2014, MDC disclosed in its proxy statements some, but not all, of the perquisites paid on Nadal’s behalf. The estimated $11.285M worth of perquisites that MDC failed to disclose included private aircraft usage, club memberships, cosmetic surgery, yacht and sports car related expenses, jewelry, charitable donations, pet care and personal travel expenses. READ MORE

SEC fines and sanctions executive for misstatement of executive compensation

On May 11, 2017, the former head of MDC Partners, Inc. (MDCA), a NASDAQ-traded marketing firm, entered into a settlement with the Securities and Exchange Commission (SEC) to pay a $5.5 million fine arising from a years-long pattern of executive compensation disclosure violations. While MDCA already agreed to pay a $1.5 million SEC settlement earlier this year[1] in relation to these violations and cooperated with the SEC in its investigation, this most recent order pertains to its former President, CEO and Chairman, as an individual.

Companies registered under the Securities Act of 1933 or Securities Exchange Act of 1934, as amended (Exchange Act) are required to report certain executive compensation in accordance with Item 402 of Regulation S-K.[2] While salary, bonus, stock options and other more traditional benefits often comprise a large proportion of this reported compensation, perquisites (or “perks”) also need to be disclosed. READ MORE

CEO Pay Is Rising Twice as Fast as Workers' Income

The Associated Press reports that American CEOs got an 8.5-percent raise last year, taking in a median of $11.5 million in salary, stock, and other compensation. It's the biggest CEO pay increase in three years.

The raises are a reflection of the bull market in stocks.

"Boards of directors increasingly require that CEOs push their stock price higher to collect their maximum possible payout, and the Standard & Poor's 500 index returned 12 percent last year," the AP reported. READ MORE

Hewlett Packard Enterprise has frustrated its sales people with issues over their pay ... again

On April 27, Hewlett Packard Enterprise held an all-hands meeting for the thousands of people in its North American salesforce and apologized to them.

The company's internal software, which tracks how much each person has sold and their sales commissions that form the bulk of their pay, was still not working properly, a top HPE exec confessed matter-of-factly. READ MORE

Trump, Hill Republicans target ‘overly generous compensation’ for feds

With President Trump targeting federal employees’ retirement programs and House Republicans taking aim at their compensation generally, Uncle Sam’s goal of being a model employer looks shaky.

The administration’s fiscal 2018 budget proposal, scheduled for release Tuesday, includes a series of cuts to retirement programs, as The Washington Post reported last week. Then, amid a torrent of reports denoting Trump as unfit, unprepared and unbecoming, Republicans took time for a hearing to promote the notion that feds are overpaid. READ MORE