CEO Pay Packages May Face Increased Scrutiny Thanks To Elon Musk

The largest compensation package in history was recently voided by a Delaware Court of Chancery judge, sending a message to corporate board members that it is their fiduciary duty to negotiate in good faith on behalf of investors. A key question for board compensation committees to ask, “Is it necessary to overpay to retain a company CEO?”

Judge Kathaleen McCormick determined that Tesla CEO Elon Musk’s 2018 10-year pay agreement that would have awarded him 12 tranches of Tesla stock options that would vest if the company’s market capitalization grew by $50 billion and revenue targets were reached was “unfair” to investors. The company’s market cap has grown from $50 billion in 2018 to more than $586 billion today (it briefly topped $1 trillion in 2021), which would mean Musk’s options would have vested. READ MORE

A former Tesla lawyer broke down in tears during Elon Musk's compensation lawsuit

You want your lawyer to be on your side. The more passionate they are, the better. If they’re so passionate they can’t control their emotions, though, you might be in trouble. That’s exactly what happened to Elon Musk in a recent court case. Todd Maron, former General Counsel for Tesla and the billionaire’s former divorce attorney, broke down crying over his love for Elon during a deposition about how much the billionaire got paid. READ MORE

Proposal Would Prevent Government Contractors From Using Pay History in Setting Compensation

Some employers ask applicants about how much they made at a prior job in order to establish their compensation for the new position. A number of states have recently adopted legislation that prohibits or limits the ability of employers to use an applicant’s pay history for purposes of setting the future hire’s compensation. These measures are based on the argument that if an applicant was discriminated against at a prior job, using that pay as a basis to set the new job’s compensation perpetuates that discrimination.

On Monday, the Biden administration announced new proposed regulations that would apply this prohibition to federal contractors and subcontractors. The proposal was included in a set of measures intended to commemorate the passage of the Lilly Ledbetter Fair Pay Act 15 years ago. Contractors would be prohibited from either asking about or using pay history when setting employee compensation. READ MORE

Compensation plays a bigger role in search for new employment, study finds

Many employees are struggling to pay their bills and the search for higher compensation is driving them to look for new roles. A new report by Achievers Workforce Institute, found that almost three-quarters of employees say they either struggle to make ends meet or must budget carefully in order to meet their needs. As living costs continue to increase and salaries see little change, compensation is playing a higher role in the search for new employment. 

Sixty-five percent of employees say they have one foot out the door and 2 in 5 employees say they will actively look for a new job in 2024. Historically, the opportunity for career progression was the most common factor behind switching jobs. But in 2024, twice as many employees say they will look for a new role with the hopes of receiving better compensation. READ MORE

RSUs in Compensation: New Changes May Affect Workers’ Compensation Premiums

Several years ago, California clarified that equity-based compensation is considered includable remuneration, with a few notable exceptions. The National Council on Compensation Insurance (NCCI), which governs 35 other states, enacted similar regulatory and administrative changes effective January 1, 2024. This will impact workers’ compensation premiums for companies that use equity-based compensation to attract and retain employees in a competitive recruiting environment. READ MORE

Voiding Elon Musk’s $56 billion Tesla pay plan is a 'wake-up call' for directors at all companies

A decision by a Delaware judge to throw out Elon Musk's $56 billion Tesla (TSLA) pay package is a threat to the wealth of the world’s richest man. It also could alter the way CEO compensation is decided at companies across America.

"It’s a big deal," said Cornell University visiting lecturer Brian Dunn, who noted this was the first case ever to overturn a board’s decision on compensation. READ MORE

The Fed’s key wage gauge slows to lowest level since 2021

The Employment Cost Index—the Fed’s key metric for wage growth that accounts for labor composition—slowed to the lowest level since June 2021, according to the Bureau of Labor Statistics on Wednesday.

The overall index eased to 0.9% in the fourth quarter on a seasonally adjusted basis, down from 1.1% in the previous quarter. That is equivalent to a 4.2% increase on a year-ago basis, down slightly from 4.3% previously. READ MORE

The Most Underrated Strategies for Earning a Salary Increase

The salary you earn can impact all aspects of your personal finances. A raise could spell the difference between being able to rent a larger place to live, affording a car, and other such things that can lend to a better quality of life.

In a recent Monster.com survey, 81% of workers say their current wage has not kept up with the rising cost of ​living. So if you're eager to see your salary go up, that's understandable. READ MORE

Feds get 7.4% pay raise under congressional Democrats' plan

A pair of congressional Democrats on Tuesday introduced legislation that would provide federal employees with an average pay raise of 7.4% next year.

The Federal Adjustment of Income Rates Act, introduced by Rep. Gerry Connolly, D-Va., in the House and Sen. Brian Schatz, D-Hawaii, in the Senate, would provide federal workers with a 4.0% across-the-board increase in basic pay next year, as well as an average increase of 3.4% to locality pay. The measure has 59 cosponsors—all Democrats—in the House. READ MORE

Why don't many executives take pay cuts to avoid layoffs? An ex-Microsoft HR VP explains.

With all the layoffs in the news we're seeing, there's always the question: Why don't the highly paid executives take a pay cut? Couldn't they trim their massive pay packages and save some jobs?

In my more than 40 years in business, including being the vice president of human resources for Microsoft, I've seen more than a few layoffs. This observation is a fair one. The executives in charge never seem to pay a price for the pain they cause, and here are several reasons. READ MORE

U.S. compensation costs up 0.9% in Q4, up 4.2% in 2023

Compensation costs for civilian workers increased 0.9%, seasonally adjusted, for the 3-month
period ending in December 2023, according to a U.S. Bureau of Labor Statistics report posted Wednesday (Jan. 31).

Wages and salaries also rose 0.9% and benefit costs increased 0.7% from September 2023, the report noted. Inflation-adjusted wages and salaries increased 0.9% for the 12 months ending December 2023. Inflation-adjusted benefit costs in the private sector increased 0.2% over that same period. READ MORE

Inside Executive Comp In 2024

Striking the right compensation balance that allows a private company to measure up when competing with peers for leadership talent can be difficult. The data, after all, isn’t public, and most headlines focus on CEO compensation at the largest public companies in the country, hardly a reference point for those operating in the middle market. 

For that reason, every year, Chief Executive Research collects and compiles CEO and senior executive compensation data at more than 1,600 private companies in the U.S. and presents it across various peer groups to help you better inform and align your pay strategy. Here are the key highlights of Chief Executive Group’s 2023–24 CEO & Senior Executive Compensation Report for Private Companies. READ MORE

A Start-Up Secret: Executives’ ‘11th-Hour’ Pay Bumps

Public companies must abide by strict rules when granting stock options to their top executives, including pricing them where the company’s shares are trading on the day they are granted and disclosing them swiftly.

Private companies planning to go public face some of the same requirements, but have more leeway in pricing their stock options — since there is no publicly traded price — and more time to disclose them. READ MORE

Biden Administration Releases Proposed Rule Requiring Disclosure of Pay Information to Applicants and Prohibition of Reliance on Prior Salary History

In recognition of the 15th anniversary of the Lilly Ledbetter Fair Pay Act, the Biden administration released on Monday, January 29th, a Notice of Proposed Rule Making (NPRM) that would prohibit federal contractors from using job applicant’s prior salary history when setting pay and would require federal contractors to post the expected salary range in its job postings. READ MORE