American CEOs make 351 times more than workers. In 1965 it was 15 to one

Last week, the Economic Policy Institute, a nonpartisan thinktank, released a report on the increasing pay gap between chief executives and workers. This research tells a familiar story with updated figures. When taking into account stocks, which now make up more than 80% of the average CEO’s compensation package, the report found that chief-executive pay has risen by an astounding 1,322% since 1978. That’s more than six times more than the top 0.1% of wage earners and more than 73 times higher than the growth of the typical worker’s pay, which grew by only 18% in the same time period. Most remarkable, however, is the 18.9% increase in CEO compensation between 2019 and 2020 alone. READ MORE

Anger boils over at People magazine owner after workers stiffed on bonuses

The boss of the media giant that publishes People and Entertainment Weekly sparked a ruckus when he announced he was handing out a round of “thank you” bonuses to most employees — but meanwhile jilted a small group of unionized, rank-and-file workers, The Post has learned.

Insiders said more than 200 unionized employees at Meredith — the publishing behemoth whose titles also include Better Homes & Gardens, InStyle and Real Simple — are fuming because they aren’t getting the $1,000, one-time cash bump, despite working long hours and taking on more work during the pandemic. READ MORE

Rethinking total reward strategies

Recently, a major US insurance broker with 20,000 agents started to question why so many were leaving the company—and taking their business books with them. The answer lay in the data about reward. It turned out the company was significantly out of touch with what people wanted. The company’s employee preference surveys had not been translated into the type of benefits it was offering. Based on the new analysis, the company redesigned its performance-based compensation, reduced equity awards, improved supplemental healthcare, and implemented a personalized training and development portal. The result: increases in agent sales performance (of 5 to 20%), engagement (up to 21%), and employee satisfaction and retention (up to 20% in some areas). What’s more, all of these gains came with a decrease in compensation costs of 8 to 12%. READ MORE

Issues to Consider When Officers Grant Equity Awards

Equity-based awards are often a significant element of a company’s compensation program. However, unlike more broad-based employee benefit programs, which are generally only subject to federal laws, equity-based compensation arrangements are, in most cases, subject to both federal (for example, the Securities Exchange Act of 1934, as amended (Exchange Act)) and state laws. Individual state laws generally govern the formation and operation of both private and public corporations and other business entities that are organized in their state. The corporate governance provisions of such state laws typically govern certain aspects of executive compensation arrangements including who has the authority to grant equity awards. READ MORE

Laffer: Spending spree is income redistribution – and it won’t work

U.S. debt rising from 79% of GDP to 123% of GDP, as it has since just before the beginning of the pandemic, from the end of 2019 to the present counting the now $3.5 trillion all but certain new spending bill plus unspent funds from previous bills, is a first for America. This debt increase represents a massive redistribution of U.S. income pure and simple. People who don’t work get paid, companies who borrow get their debts forgiven tax-free, and government beneficence distributed to one and all are all part of the so-called stimulus funds. READ MORE

Wyden’s “Ending the Carried Interest Loophole Act” Would Require Annual Ordinary Income Inclusions

On August 5, 2021, Senate Finance Committee Chairman Ron Wyden (D-OR) and Senate Finance Committee member Sheldon Whitehouse (D-RI) introduced the "Ending the Carried Interest Loophole Act" (the "Bill" or the "Proposal").

Managers of various types of investment funds that are structured as partnerships often receive a profits interest in the fund, commonly referred to as a "carried interest," in exchange for their services. Under general principles of partnership taxation, the carried interest can be issued by the partnership without current tax. The partner holds the interest as a capital asset and generally recognizes income only when the partnership disposes of its investments, realizes income from them, or when the partner sells its partnership interest. The character and timing of the income is generally determined by reference to the timing of recognition and character of profits made by the partnership. READ MORE

Apple says it has pay equity, but an informal employee survey suggests otherwise

An early analysis of the informal Apple pay equity survey shows a six percent wage gap between the salaries of men and women, according to software engineer Cher Scarlett. It’s similar to the gender wage gap in San Francisco, which hovers around five percent, but disappointing for a company that claims people of all genders “earn the same when engaging in similar work with comparable experience and performance.” READ MORE

Build the Framework to Make Better Executive Pay Decisions

Many compensation committees were stuck in an unenviable position this proxy season. COVID-19 blew up many incentive programs and the committees were left balancing the interests of management with those of external groups. While executives wanted fair compensation for weathering a storm not of their own making, the media, proxy advisors and shareholders were ready to pounce on any questionable use of committee discretion on pay. READ MORE

Four Key De-SPAC Executive Compensation Issues

In recent years, the number and value of so-called “de-SPAC” transactions have increased sharply. De-SPAC transactions are an alternative method of going public that may be faster and less costly than a traditional IPO. The typical de-SPAC transaction involves a publicly traded special purpose acquisition company (SPAC) that merges with a target private operating company, with the result that the operating company becomes publicly traded. READ MORE

How inflation made many Americans' pay raises disappear

When it appeared the threat of the COVID-19 pandemic was starting to wane, the economy opened up and wages rose as demand for workers increased. In fact, there was a record high number of jobs available, and the competitive labor market forced companies to pay more in order to attract workers. As a result, between March and June of 2021, there was a 2.8% increase in compensation. READ MORE

Biggest tax hike on wealthy since '93 is bogged down in US Congress

Wealthy Americans wondering how much more taxes they’ll owe after Democrats pass their sweeping social-spending package may have to wait until deep into the fall, or later, to find out.

The tax-writing panels in the House and Senate had until Sept. 15 to finish writing the details of what would amount to the biggest tax-hike package since 1993. Those details are part of a legislative push that incorporates Democrats’ plans for ramping up spending on initiatives including health, child care and clean energy. READ MORE

These Hourly Workers Benefit the Most From Overtime

The coronavirus pandemic has transformed the professional lives of nearly every American. Many workers, for instance, work their jobs remotely. Data from a Gallup Panel noted that 62% of employed Americans currently work from home. But while working from home is becoming increasingly common, it also comes with its own set of challenges: homeschooling kids, barking dogs and spouses who wander willy-nilly in and out of frame during Zoom meetings.

Of course, these challenges pale in comparison to those who are out of jobs entirely. And although unemployment has since dropped down below 10%, it's still much higher than it was before the pandemic. READ MORE

97 percent of small business owners won't pay more income taxes under Biden plan - U.S. Treasury

Just three percent of the nation's small businesses would see a tax increase under U.S. President Joe Biden's plan to tax the nation's highest earners to help fund a $3.5 trillion spending bill, a new U.S. Treasury analysis shows.

The Biden administration is expected to tout the findings of the report in a virtual meeting on Thursday with a Pennsylvania small business. Democrats in Washington hope to overcome intra-party squabbles to pass the president's signature spending plans, aimed at climate initiatives and expanding the social safety net. READ MORE

Updated Nonqualified Deferred Compensation Plan Audit Guide

In June the Internal Revenue Service released an updated Nonqualified Deferred Compensation Audit Technique Guide. This updated Guide replaces the initial Guide published in 2015. While it is too early to say whether the release of the updated guidance signals increased audit activity by the Service in the nonqualified plan space, plan sponsors of nonqualified deferred compensation plans may want to consider reading the updated guidance to re-familiarize themselves with the underpinnings of Section 409A of the Code. READ MORE

Workers want better pay and incentives, and businesses are responding

A new report out Tuesday from the marketing and sales tracking platform Salesforce gives a sense of just how hard it’s been for small businesses to attract new hires. They’re offering everything from bonuses to flexible work schedules. And, almost a third of businesses surveyed say that they’ve increased wages significantly. That can be hard on those businesses, but as some economists point out, it’s also a signal that there’s not so much a shortage of labor, but more a shortage of well-paying jobs. READ MORE