Are CEOs overpaid?

CEO compensation has become increasingly controversial, including cases where executives have received particularly high amounts of performance compensation, exotic or unusual features such as loans from the firm (which are now banned), post-retirement benefits, perks, and guaranteed post-employment consulting contracts. As with all employees, economic theory holds that CEO pay should never exceed the CEO’s marginal revenue product (MRP), the incremental value the CEO provides for the firm. MRP, however, is difficult to measure. Furthermore, because executives supervise others, it can be problematic to apportion marginal revenue generated by the worker being supervised from that generated by the executive doing the supervising. READ MORE

Are there best practices for linking executive compensation to climate goals?

In this new paper, Feet to the Fire: How Should Companies Tie Executive Compensation to Climate Targets?, from the Rock Center for Corporate Governance at Stanford, the authors looked at how some companies bolstered their commitments to climate action—the authors refer to it as “institutionalizing” their climate goals and commitments—by including climate-related metrics in executive compensation plans and agreements.  The authors observed that, increasingly, even in the absence of regulation, companies have made voluntary pledges to reduce their carbon emissions. Citing MSCI, the authors report that about “half of large, publicly traded companies have established carbon emissions targets, and a third have pledged to achieve net zero emissions by 2030 or 2050.” But is there anything to these promises? Have any of these carbon reduction objectives been fully integrated into the company’s strategy, operations or corporate culture? One way that some companies have sought to realize their climate goals is by tethering them to a measure of compensation. These climate metrics can function as both a signal of seriousness to the public and a mechanism for bringing accountability. In employing climate metrics as performance conditions in compensation programs, are there best practices to effectively achieve the kind of “institutionalization” that the authors advance? READ MORE

The rise of the ‘total rewards professional’: 2024’s highest-impact job trend?

It’s the start of a new year, and I am mentally preparing myself for the influx of Hot Jobs of 2024 articles predicting the most sought-after roles. They will likely point to increasing demand for AI prompt engineers and drone managers. I wouldn’t be surprised if robot liaisons become the next trend.

Predictions aside, many job titles of tomorrow will remain the same as today’s—and this is not indicative of stagnation; it’s an acknowledgment that the most crucial organizational functions will remain essential even as technology evolves.

In that spirit, I’d like to submit my own candidate for job of the future: the total rewards professional. READ MORE

6 mistakes organizations make addressing pay inequities

Pay equity continues to be top of mind for organizations. As the year begins, this is a good time to reflect on how organizations might refine their pay equity processes. The benefits of effective pay equity practices are numerous, including compliance with regulations, reduced risk of discrimination lawsuits, enhancement of the organization’s brand, improved attraction and retention of top talent, and higher rates of employee engagement.

However, organizations make various mistakes that limit the impact of their efforts. To improve results and drive efficiencies, here are six common mistakes we have seen, as well as guidance on how organizations can do better. READ MORE

The New Year’s Eve Ball Is Dropping and New York’s Salary Thresholds Are Rising

On December 27, 2023, and just in time for the 2024 ball to drop, the New York State Department of Labor (NYSDOL) finalized the salary thresholds for exempt employees that were proposed as a part of Minimum Wage Order Updates in October 2023. Similarly, New York passed Senate Bill S5572 in September 2023, increasing the salary thresholds for exempt employees under Article 6 of the New York Labor Law.

As a reminder, the classification of exempt or non-exempt is particularly important for determining which employees are (1) exempt from the overtime laws, meaning that such employees are not eligible to receive overtime pay, and (2) exempt from certain wage payment laws under New York Labor Law Article 6. READ MORE

Former Harvard President Claudine Gay Keeps Her Ungodly Salary

Harvard’s former president, Claudine Gay, is set to keep her nearly $900,000 annual salary despite resigning as president, the New York Post reported. Gay resigned after she said it may not violate Harvard’s rules to call for the genocide of Jews. 

I thought that when Gay resigned in disgrace she was going to be ousted from Harvard altogether, but no! She still works at the school.  READ MORE

Climate Metrics Surge in Executive Compensation Plans--From 25% to 54% in Just Two Years

The share of S&P 500 companies integrating climate-related metrics into their executives' compensation plans more than doubled over the past two years, according to a new report from The Conference Board based on disclosure data from ESGAUGE.

Executive compensation was tied to climate-related metrics by about 25% of S&P 500 firms in 2021 but rose to 54% in 2023. The percentage also doubled in the Russell 3000 index, going from 16% to 32%.

Moreover, as the rate of adoption of climate and other ESG performance metrics increases, companies have also started using them in long-term incentive (LTI) plans: The share of S&P 500 companies that use ESG metrics in both annual and long-term incentive plans grew from 7% in 2021 to 12% in 2023. READ MORE

Employers Must Beware Of Year-End Wage Hour Issues/Landmines!

I read an interesting post by Sara Zorich of Amundsen Davis concerning the year-end wage hour issues that employers must deal with, and I agree with the concepts set forth in that article.  There are a number of implications for these year-end issues which may inadvertently expose employers to liability if they do not take heed.

As the post notes, there is a concern with the giving of bonuses to non-exempt workers.  Unless this is a true Christmas bonus or a bonus given in a totally discretionary (i.e., subjective) manner, that bonus must be included in the regular rate of employees if they work overtime.  If the bonus is part of an incentive program or a production bonus or promised in any way to workers, it is includible.  If it is a year-end bonus, then it must be allocated over fifty-two weeks, an equal portion thrown into each week and then overtime must be calculated or re-calculated. READ MORE

Warren Buffett has earned a $100,000 salary for over 40 years. Here's a look at the billionaire investor's unique compensation.

Warren Buffett is a legendary investor, the boss of a $800 billion company, and one of the richest people on the planet. Yet he's earned a modest annual salary of $100,000 for over 40 years, Securities and Exchange Commission filings show.

As Berkshire Hathaway's CEO and chairman, Buffett recommends to his board of directors how much he should be paid, and decides the rest of the executives' compensation. The 93-year-old has received $100,000 a year since 1980 — a fraction of the $18 million average pay of S&P 500 CEOs in 2021. READ MORE

Interview Expert Shares the One Thing Not To Do in Salary Negotiations

It's not uncommon for recruiters to ask about salary expectations when interviewing a candidate, but what's the correct way to answer? An interview expert has recently gone viral after sharing her best tips to answer the question the right way.

In a clip shared in December under the username anna..papalia, she explains that when the interviewer asks you about your salary expectations you should not give them a number right away. READ MORE

When newspapers close, nonprofit executive salaries go up. Way up

Local newspapers are key to keeping residents informed about civic affairs, and the threat of negative media coverage keeps nonprofit leadership salaries in check, according to new University at Buffalo School of Management research.

Published in the Journal of Accounting and Public Policy, the study found that when a newspaper goes out of business, total executive compensation at local nonprofits goes up by more than $38,000 on average—an increase of nearly 32%. READ MORE

Rethinking Compensation Strategies for 2024 & Beyond

The dynamics of the workforce, shaped by technological advancements, cultural shifts and global events, necessitate a profound reassessment of compensation strategies in 2024. Businesses must adapt to emerging trends, reconsider traditional approaches to performance-based compensation and embrace principles of equity and inclusion. Staying agile and knowledgeable on compensation-based developments is imperative to remain competitive and prosperous in the new year.

This article explores the essential elements that your organization should consider when rethinking compensation strategies. READ MORE

ISS and Glass Lewis Update 2024 Proxy Voting Policies

Institutional Shareholder Services (ISS) and Glass Lewis, the two most influential proxy advisory firms, recently released updates to their voting policies for the 2024 proxy season. The ISS US policy update will apply for shareholder meetings held on or after February 1, 2024. The Glass Lewis US policy updates, included in its 2024 US Benchmark Policy Guidelines, will apply for shareholder meetings held on or after January 1, 2024. This alert provides a high-level description of each firm’s key policy updates for the United States.

Following numerous substantive policy updates for the 2023 proxy season, ISS included only one US policy update for 2024. Glass Lewis’ US policy updates for 2024 also are relatively light, with a continued focus on executive compensation and board composition and risk oversight. READ MORE

These 2024 IRS changes can increase paychecks, lower taxes

The new year brings slightly larger paychecks to many Americans thanks to changes the IRS made to adjust for inflation.

Why it matters: Cost-of-living adjustments — such as those on taxes, wages and Social Security payments — are crucial as consumers cope with inflation and high prices.

The big picture: New IRS tax brackets and increased standard deductions go into effect Jan. 1 along with other tax inflation adjustments that include the mileage rate increasing by 1.5 cents a mile and higher contribution limits for tax-deferred retirement plans. READ MORE

These jobs saw the biggest pay hikes across the U.S. in 2023

The ferocious inflation that slammed Americans during the pandemic was partially offset by the strongest pay gains in years. Even as people paid more for everything from groceries to rent, real weekly earnings for the typical U.S. worker rose 1.7% between 2019 and 2023, government labor data shows.

Driven by a resilient labor market, some jobs saw particularly strong wage increases over the last year, according to a recent survey from compensation data firm Payscale. Here are the 10 jobs with the hottest wage growth in 2023 compared with the prior year, along with median pay. The analysis is based on responses from more than 3,500 workers across 15 job titles. READ MORE

This Person Quit Their Job After Managers Wouldn't Raise Their Pay. Then, The Recruitment Team Unknowingly Offered Them The Same Position For 4.5X Their Original Salary

If you have a LinkedIn or other job search account, then you've likely had a recruiter slip into your DMs with some "amazing" opportunity. But, have you ever had a recruiter from a former job reach out? Well, that's what happened to redditor slobberypuppykisses, who we'll call SPK for short.

In an unfortunately relatable post, SPK vented: "A third party recruiter reached out to me asking for a call to discuss X role he was recruiting for at an undisclosed company. After going through my experience for about five minutes, he tells me the name of the company and the expected salary. It took everything in me not to laugh and hang up." READ MORE