Hammers, Nails and Compensation Biases

It's called the law of the instrument. The concept is said to have originated with philosopher Abraham Kaplan, who said “I call it the law of the instrument, and it may be formulated as follows: Give a small boy a hammer, and he will find that everything he encounters needs pounding.”  

The more popular version comes from Abraham Maslow's The Psychology of Science (1966) and is typically presented as "If all you have is a hammer, every problem looks like a nail." READ MORE

Want to Scale Your Small Business? Consider Offering Your Employees Equity

People tend to feel a little more protective of the things they own. So if you want your employees to feel extra committed, you might consider cutting them into the company.

Offering employees equity may be the norm for startups and companies in the tech industry, but small businesses, more generally, might also explore the option of employee ownership--particularly now as the ongoing labor crunch continues to throttle hiring.  READ MORE

U.S. poll finds bipartisan concern over high CEO pay

Bipartisan majorities of U.S. adults think CEO pay is too high, a new poll found, presenting a challenge for corporate boards looking to balance compensation for leaders and workers.

In a survey of 1,037 people in February, 81% of Democrats and 71% of Republicans said the CEOs of the largest American companies were paid "too much," according to poll sponsor Just Capital, a nonprofit focused on corporate stakeholder research. READ MORE

Average startup CEO salary is $150,000 in 2022

Whenever founders raise a round of finance, the question becomes “what the hell should I be paying myself.” It’s one of those rare things you can’t really go to your board or advisors with. You’ll want to pay yourself a fair wage, but it can be a tricky conversation with the people who need to sign off on your salary before you give yourself a bump. Startup accounting firm Kruze Consulting just updated its annual CEO salary report and has some interesting insights to go with it. READ MORE

NCAA clarifies compensation rules but is crackdown likely?

Eleven months after the NCAA lifted most of its restrictions against athletes cashing in on their fame, college sports leaders are trying to send a warning to schools and boosters it believes have crossed a line: There are still rules here and they will be enforced.

But following last year’s Supreme Court ruling against the NCAA in an antitrust case, is a crackdown on so-called collectives brokering name, image and likeness deals still likely — or even possible? READ MORE

Current College Students' Salary Expectations Are Wild

Today's college students have super high expectations when it comes to starting salaries, per CNBC, which cites a recent online survey by Real Estate Witch. The 1,000 undergrads it surveyed expect to rake in $103,880 to start. The reality looks pretty different: That figure is about $50,000 more than what the average starting salary for the class of 2022 is expected to be. Then again, majors matter. Starting salaries for computer sciences and engineering hover around $75,000 (and their expectations were closer, at $95,000), whereas humanities majors will pull in around $50,000. READ MORE

Dimon Pay Should Be Rejected by JPMorgan Investors

JPMorgan Chase & Co. shareholders should vote against Chief Executive Officer Jamie Dimon’s pay package, proxy advisory firm Glass, Lewis & Co. recommended, citing a “disconnect” between his compensation and the bank’s performance.

Of particular concern is $52.6 million in option awards granted to Dimon, “nearly double the size of his regular equity grant for 2021” and representing much of his $84.4 million in annual pay, Glass Lewis said in a report. The firm also criticized the $53.3 million in total compensation for President and Chief Operating Officer Daniel Pinto, which included almost $27.9 million in option awards. READ MORE

Securities And Exchange Commission Reinvigorates Pay Versus Performance Proposal

On January 27, 2022, the Securities and Exchange Commission (SEC) reopened the comment period for its pay versus performance proposal. In May 2015, the SEC proposed rules to implement Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank).

Section 953(a) of the Dodd-Frank Act requires the SEC adopt rules requiring issuers disclose in its annual meeting of shareholders proxy statement certain information that shows the relationship between executive compensation actually paid and the financial performance of the issuer, taking into account any change in the value of the shares of stock and dividends of the issuer. READ MORE

Is a wage-price spiral driving inflation?

Price inflation is at a 40-year high — 8.5% year over year, according to the March consumer price index. Wages haven’t quite been keeping pace: Average hourly earnings were up 5.6% over the same period, per the Labor Department’s March jobs report.

Federal Reserve Chair Jerome Powell has expressed concern about the wages part of that equation. He’s said the labor market is tight to an “unhealthy” level, and that accelerating wage gains “wouldn’t be sustainable over too long of a period.” READ MORE

U.S. Posts Robust Job Gains While Wage Growth Shows Moderation

U.S. employers hired at a robust pace in April, yet more tempered wage growth and a smaller labor force offered mixed signs for a Federal Reserve that’s aggressively raising interest rates to curb hot inflation.

The 428,000 gain in nonfarm payrolls matched the advance in March and was broad-based across industries, a Labor Department report showed Friday. The unemployment rate held at 3.6% and average hourly earnings rose, albeit at a more moderate pace from a month earlier. READ MORE

How many participants is too many for a top hat plan?

A client recently reviewed a census of participants in its deferred compensation plan and found that the covered group amounted to nearly 15% of its total workforce. Mindful of the need to limit the number of participants in a top hat plan, this compliance-oriented organization asked whether it should consider changing the eligibility criteria to hold down, or even reduce, the size of the covered group. That is a good question. READ MORE

Papa Johns announces ESG metric for incentive compensation

Papa John’s International, Inc. (NASDAQ: PZZA) (“Papa Johns”) today released its 2021 Corporate Responsibility Report, covering initiatives to advance the company’s environment, social, and governance (ESG) strategy and topics most important to the company and stakeholders. In tandem with this year’s report, Papa Johns announced its corporate incentive bonus plan now includes an ESG metric, making the company the first major U.S. pizza delivery chain to announce that its ESG priorities will be linked with incentive compensation. READ MORE