11 CEOs bust through $30M-a-year barrier

[GMDino]

http://www.usatoday.com/story/money/markets/2016/04/14/11-ceos-bust-through-30m--year-barrier/82956426/

Quote:Investors didn't see a big pay day last year since the stock market was flat. But some CEOs sure did.


Eleven current CEOs of S&P 500 companies, including Philippe Dauman of media giant Viacom (VIAB), Marc Benioff of online sales software makerSalesforce.com (CRM) and Robert Iger of media powerhouse Disney (DIS), are members of the lucrative $30-million-a-year club, based on an analysis of data from S&P Global Market Intelligence by USA TODAY of the 418 CEO pay packages reported so far. Total pay package sums were tallied using the methodology required by the Securities and Exchange Commission.

Breaking the $30 million-a-year barrier was even more rare this year because the stagnant stock market stalled earnings growth, and anemic gains in pension values due to accounting changes put a lid on gains. In 2014, 22 of current S&P 500 CEOs made $30 million or more.

"These kinds of paychecks are really out of line," says Eleanor Bloxham, CEO of The Value Alliance, an advisory service for corporate boards and executives. These pay packages "are not just out of line with what shareholders are making ... (they are) causing negative effects on the economy."

The biggest pay package was awarded to Dauman to the tune of $54.2 million. That fiscal 2015 pay package was 22% more than the previous year's.
Shareholders didn't fare nearly as well, with the stock dropping 44% and net income falling 19% to $2 billion in the same period. Viacom's regulatory filing shows that $17 million of Dauman's total pay was from a contract renewal. Excluding that renewal, Dauman's pay fell 16%, the filing shows. Viacom didn't respond to a request for comment.

Large CEO pay packages catch attention, but they might be easier for shareholders to take if they are gaining, too. Take Disney's Iger, who was paid $44.9 million last year. That pay package puts the CEO among the best-paid, but Disney's stock jumped 16% during fiscal 2015, which ended on Oct. 3, while Iger's pay actually fell 4% from 2014. A Disney spokesman said that 92% of Iger’s compensation is linked with financial performance. Disney's net income rose 12% last fiscal year to $8.4 billion.

Deciding how to measure CEO pay continues to be a topic of great discussion. David Cote, CEO of Honeywell (HON), was paid $34.5 million last fiscal year, up 18% from fiscal 2014. The SEC required the company to include pay Cote received connected with a growth plan that is actually paid over two years, says Rob Ferris, a spokesman at Honeywell. "This differs with how our compensation committee views this element of compensation, because the total payment is earned over two years and should be annualized, since performance cycles do not overlap," he said.  Adjusted to an annual basis, Cote's total pay fell in 2015. Honeywell's stock rose 3.7% in 2015.

Some companies make a point to say they're addressing CEO pay. Salesforce.com's Benioff saw his pay drop 16% in fiscal 2015, which ended in January.
But it still came in at $33.4 million, making him the fifth-best-paid CEO in the analysis. The company said in a regulatory filing that it made "significant changes" to Benioff's pay "taking into account feedback we received from stockholders." The biggest change replaces option-based incentives to a plan where 91% of his compensation is tied to achievements or is based on the stock's performance. Shares of Salesforce rose nearly 21% in fiscal 2015, while the company's net loss widened to $263 million.

Bloxham says that large pay packages, though, fuel a lack of engagement of rank-and-file workers and send the message companies are only what they are due to top executives. She criticized Iger's pay package in light of the fact the company's heir apparent, former Chief Operating Officer Thomas Staggs, announced this month he will resign. "What boards should be driving for are sustainable companies," Bloxham says. "The goal should be a company that could operate without the CEO."

[Bilbo Saggins]

That's it?  

[JustWinBaby]

And how many athletes, singers and actors made $30M+ last year?

[Benton]

I don't have a problem with CEOs who make $30 million. Go for it, if you can get it.

My problem is with CEOs who make $30 million (or $1 million for that matter) as part of companies that benefit from a number of loopholes, deferments and aide. Back during TARP, the top 10 CEOs receiving funds earned $240 million. That's (averaged) $24 million each to be so incredibly bad at your job that Congress has to do it for you.

[GMDino]

(04-15-2016, 12:08 AM)JustWinBaby Wrote: And how many athletes, singers and actors made $30M+ last year?

(04-15-2016, 12:57 AM)Benton Wrote: I don't have a problem with CEOs who make $30 million. Go for it, if you can get it.

My problem is with CEOs who make $30 million (or $1 million for that matter) as part of companies that benefit from a number of loopholes, deferments and aide. Back during TARP, the top 10 CEOs receiving funds earned $240 million. That's (averaged) $24 million each to be so incredibly bad at your job that Congress has to do it for you.

Except most of these companies saw their value drop over the last year.

One example in the story showed the CEO would have seen a 16% drop in compensation...but they gave him a $17 million resigning bonus so it actually went UP 22%.

When folks ***** about big business I sometimes hear the argument that "your retirement plan must like it".  Well, according to the story, stocks and investment returns sunk while the guy with "all the responsibility" got a raise.

Welcome to business in America.

[fredtoast]

The problem I have with our current tax structure is that the top bracket is less than half a million. So we divide all the people making less than $400 thousand into 4 different brackets, but then just have one bracket for everyone making between half a million and $100 million.

This will sound a little strange to some of you, but a person with a few kids making $400K a year ($300K after taxes) can burn through it pretty quick. Sending 3 kids to top private colleges could easily burn a million dollars. Now I am NOT saying that people making $400K a year are struggling in any way. They can easily live in comfort on that much money. All I am saying is that a family like that would notice the difference of a few thousand dollars a year in taxes. But when you are making ten times that amount ($4 million year) a few thousand dollars is almost meaningless.

If we are going to raise taxes then it should only be on people making more than $3 million a year or something like that. And remember that any higher tax bracket rate only applies to the income above that bracket. So a guy making $3 million a year would still pay at the lowest rate on the first $25K he earns just like all the rest of us.

[JustWinBaby]

(04-15-2016, 07:34 AM)GMDino Wrote: Except most of these companies saw their value drop over the last year.

One example in the story showed the CEO would have seen a 16% drop in compensation...but they gave him a $17 million resigning bonus so it actually went UP 22%.

When folks ***** about big business I sometimes hear the argument that "your retirement plan must like it".  Well, according to the story, stocks and investment returns sunk while the guy with "all the responsibility" got a raise.

Welcome to business in America.

Just saw an article the other day about how many mutual funds aren't actually advocating for their proxy shareholders as they should...rubber-stamping Exec comp far too often.

It's been a common practice to link Exec comp to stock performance, and that's a perfectly rational and aligned incentive.  The problem is stock performance tends to be heavily correlated with the industry and overall market.  The incentive should actually be on outperforming your industry.  That was the "leading edge" thinking when I was in grad school over a decade ago....have not seen anything more about it since.

Boards who select CEO's tend to have a laziness and fear (sometimes legal, as fiduciaries) of the unknown.  That causes them not only to stick with losers, but to pay ridiculous premiums for "known" quantities because for whatever reason they fail to identify up-and-comers who would probably be better (and much cheaper).

[JustWinBaby]

(04-15-2016, 12:08 PM)fredtoast Wrote: The problem I have with our current tax structure is that the top bracket is less than half a million.  So we divide all the people making less than $400 thousand into 4 different brackets, but then just have one bracket for everyone making between half a million and $100 million.

I don't disagree, but most of what you are talking about as it relates to the 0.5% or whatever is going to be capital gains or deferred income.  So simply raising their marginal income rates isn't going to accomplish much.

Really I think raising or eliminating capital gains treatment to offset lower corporate taxes would solve a lot of issues.

Alternatively, maybe they need a few more brackets for capital gains.  But global competition for capital investment is fierce, and we have to be cognizant of becoming competitive there if the taxes on investment gains are too high.

The theory behind lower capital gains rates has always been double (or triple) taxation, but in reality the money invested yielding cap gains increasingly is never subjected to double or triple taxation.

[fredtoast]

(04-15-2016, 03:23 PM)JustWinBaby Wrote: Boards who select CEO's tend to have a laziness and fear (sometimes legal, as fiduciaries) of the unknown.  That causes them not only to stick with losers, but to pay ridiculous premiums for "known" quantities because for whatever reason they fail to identify up-and-comers who would probably be better (and much cheaper).

This.

CEO's get their contracts bought out for failing then go get other great jbs.

it is just like professional sports where teams keep hiring coaches and managers who have been fired for failing with other teams.

[JustWinBaby]

(04-15-2016, 03:37 PM)fredtoast Wrote: it is just like professional sports where teams keep hiring coaches and managers who have been fired for failing with other teams.

That comparison is spot-on.  And I think it's less about being an insiders club and more about the people making these decisions are afraid of taking a risk on an unknown that fails.  No idea how someone decides a known failure is a smart choice.