March 29, 2024

Executive Pay Report: An Unstoppable Climb in C.E.O. Pay

Well, what a difference a few months and a larger pool of C.E.O.’s make. According to an updated analysis, the top 200 chief executives at public companies with at least $1 billion in revenue actually got a big raise last year, over all. The research, conducted for Sunday Business by Equilar Inc., the executive compensation analysis firm, found that the median 2012 pay package came in at $15.1 million — a leap of 16 percent from 2011. 

So much for the idea that shareholders were finally getting through to corporate boards on the topic of reining in pay.

At least the stock market returns generated by these companies last year exceeded the pay increases awarded to their chiefs. Still, at 19 percent in 2012, that median return was only three percentage points higher than the pay raise.

In other words, it’s still good to be king.

Because the data shows only chief executives’ pay, it does not reveal how good it still is to be a prince. Brian Foley, an independent compensation consultant in White Plains, pointed out that the 2012 compensation of the No. 2 executives at some of these companies would have vaulted them to the top ranks on the C.E.O. roster.

“The interesting thing is that there are people at these companies that make as much or more than other C.E.O.’s,” Mr. Foley said. “I’m sure it’s a case of ‘Look at what the C.E.O. has; I want more of that.’ “

Lawrence J. Ellison, founder and C.E.O. of Oracle, the software company, is a familiar face on the pay charts, and is ranked No. 1 this year. And had his two top lieutenants been included, they, too, would have landed among the top five on the list. Safra A. Catz, Oracle’s chief financial officer and co-president, and Mark V. Hurd, also a co-president, each received packages worth $52 million in 2012. (Mr. Hurd, you might remember, received severance of more than $12.2 million when he left Hewlett-Packard in 2010.)

As usual, cash pay for many of the managers pales next to the value of the stock and option grants they received. Median cash compensation was $5.3 million last year, while stock and option grants came in at $9 million.

Stock grants are clearly where the action is, and their value can really add up. Equilar’s analysis calculates the median value of stock holdings of these top C.E.O.’s at $51 million.

The trouble is, stock grants, which are supposed to create an incentive to improve a company’s performance, are also where pay excesses and disconnects arise, compensation consultants say. How these boards measure corporate performance can create pay problems by failing to align long-term incentives with shareholders’ interests.

This is a significant lapse, given how hefty the incentive awards of stock or options can be. Performance shares generally comprise at least 50 percent of a typical chief executive’s long-term incentive award, consultants say.

The median of combined stock and option awards last year for the 200 C.E.O.’s on the list was 60 percent of pay. But individual cases can be far larger. Mr. Ellison received $90.7 million in options in 2012, or 94 percent of his nearly $96.2 million in total pay. Over all, Mr. Ellison’s compensation was up 24 percent from last year; his shareholders’ returns, meanwhile, were negative 22 percent in the company’s fiscal year, which ended in May.

Mr. Ellison was hardly alone in receiving boatloads of stock in 2012. Among the five top C.E.O.’s receiving compensation packages that were at least double those of last year, stock and option awards — which can vest over several years — provided the major kick.

Those executives included Robert A. Kotick of Activision Blizzard, the software publishing company; James Q. Crowe of Level 3 Communications, the communications network company; and Mark G. Parker of Nike. Mr. Kotick received stock awards worth almost $56 million, or 86 percent of his total. Of Mr. Crowe’s $40.7 million in pay, stock and option grants amounted to $37 million, or 91 percent of the total. At Nike, Mr. Parker’s stock and option awards were 77 percent of his $35.2 million in compensation.

At least shareholders of Level 3 and Nike made money on their stocks in fiscal 2012 — a gain of 36 percent at Level 3 and 30 percent at Nike. Activision’s holders weren’t so fortunate: their company’s shares lost 12 percent.

Article source: http://www.nytimes.com/2013/06/30/business/an-unstoppable-climb-in-ceo-pay.html?partner=rss&emc=rss

As Fiscal Deadline Looms, Path to Deal Remains Unclear

Treasury Secretary Timothy F. Geithner, adding to the building tension over how to handle a year-end pileup of threatened tax increases and spending cuts, formally notified Congress on Wednesday that the government would hit its statutory borrowing limit on Monday, raising anew the threat of a federal default as the two parties remained in a standoff.

Mr. Geithner wrote that he would take “extraordinary measures” to keep the government afloat but said that with so much uncertainty over the shape of the tax code and future government spending he did not know how long the Treasury could shuffle accounts before the government could no longer pay its creditors.

For months, President Obama, members of Congress of both parties and top economists have warned that the nation’s fragile economy could be swept back into recession if the two parties did not come to a post-election compromise on January’s combination of tax increases and across-the-board spending cuts.

Yet with days left before the fiscal punch lands, both sides are exhibiting little sense of urgency, and new public statements Wednesday appeared to be designed more to ensure the other side is blamed rather than to foster progress toward a deal.

After a high-level telephone conference call, House Republican leaders called on the Senate to act but opened the door to bringing to the House floor any last-minute legislation the Senate could produce.

“The House will take this action on whatever the Senate can pass, but the Senate first must act,” said the statement issued on behalf of Speaker John A. Boehner and his three top lieutenants.

But Senator Harry Reid, the majority leader, instead called on House Republicans to pass an existing Senate measure that would prevent tax increases on household income up to $250,000. “The Senate has already rejected House Republicans’ Tea Party bills, and no further legislation can move through the Senate until Republicans drop their knee-jerk obstruction,” he said in a statement.

Senators will return to the Capitol on Thursday evening with nothing yet to consider. The series of votes waiting for them are unrelated to the fiscal deadline. The House will be gaveled into session at 2 p.m., but since Mr. Boehner has not called the members back to Washington, it will most likely be gaveled back into recess shortly thereafter.

The shift to the Senate has focused new attention on Senator Mitch McConnell of Kentucky, the Republican leader and a deal-making veteran. Democrats say they need assurances from Mr. McConnell that he will not use procedural tactics to delay any potential bill for an interim solution to avert the fiscal crisis.

But Don Stewart, a spokesman for Mr. McConnell, said no one from the White House or from Mr. Reid’s office has reached out to begin negotiations. Democrats say that Mr. McConnell knows full well what they are proposing: the same Senate bill that passed in July extending all the expiring Bush-era income tax cuts on incomes below $250,000, setting the tax rate on dividends and capital gains at 20 percent, and stopping the alternative minimum tax from rising to hit more middle class taxpayers. Onto that, Democrats would like to add an extension of expiring unemployment benefits and a delay in across-the-board spending cuts while negotiations on a broader deficit reduction plan slips into next year.

Democrats now suggest that Republicans are content to wait until after the January deadline. On Jan. 3, Mr. Boehner is likely to be re-elected speaker for the 113th Congress. After that roll call, he may feel less pressure from his right flank against a deal.

For its part, the Senate may simply be out of time. Without unanimous agreement, Mr. Reid would have to take procedural steps to begin considering a bill. He could then be forced to press for another vote to cut off debate before final passage. If forced to jump through those hoops, the 112th Congress could expire before final votes could be cast.

“I think there’s some chance that we get a deal done in the early weeks of January, which technically means you’re going over the cliff,” Representative Jim Himes, Democrat of Connecticut, said on CNBC on Wednesday.

Lawmakers from both parties say Mr. McConnell could be the key to a resolution. He has played the role of adjudicator for Congressional Republicans before, during last year’s fight over a payroll tax extension and the battle between Democrats and Republicans over how, or if, to pay for an emergency disaster financing bill.

With days to spare, Mr. McConnell must decide whether to allow on the Senate floor the Democrats’ bill to extend expiring tax cuts. If passed without a filibuster, that legislation could force the House speaker’s hand and quiet his raucous Republican conference. Or Mr. McConnell, who is up for re-election in 2014 and would like to avoid a primary fight, could stand back quietly and hope that Mr. Boehner and Mr. Obama somehow manage to put together a deal that saves him the trouble.

If Mr. McConnell cannot come to the rescue, there is another hope: Starbucks. Howard Schultz, the company’s chief executive officer, asked baristas who work in Washington-area Starbucks to scrawl “Come Together” on coffee cups for the rest of the week to generate enthusiasm for a compromise.

Article source: http://www.nytimes.com/2012/12/27/us/politics/little-sense-of-fiscal-urgency-as-senators-prepare-to-return.html?partner=rss&emc=rss

Media Decoder Blog: Tom Mockridge Will Leave News Corp. Unit in Britain

Tom Mockridge, a longtime News Corporation official who served as chief executive of the company’s British newspapers in the aftermath of a phone hacking scandal, will step down.

Mr. Mockridge announced on Sunday that he would leave his post at the end of year. The day before, reports emerged that Robert Thomson, currently the top editor at The Wall Street Journal, was expected to be named chief executive of News Corporation’s planned spinoff publishing company. Mr. Mockridge and Mr. Thomson had long been considered the top candidates for the chief executive job. An announcement about Mr. Thomson’s appointment was widely expected by Monday or Tuesday.

Rupert Murdoch, chairman and chief executive of News Corporation, called Mr. Mockridge “a skilled executive and a trusted friend” and said his decision to step down was “absolutely and entirely his own.”

Mr. Mockridge stepped into the role of chief executive of News Corporation’s British publishing unit, News International, last July. He served as a steady hand at a time of corporate crisis. His predecessor as chief executive, Rebekah Brooks, and other top News International executives became the subject of an investigation into phone hacking at the News of the World tabloid.

More recently, Mr. Mockridge has been active in the recently completed Leveson Inquiry into media practices in Britain. Several top lieutenants within the company thought Mr. Mockridge’s time overseeing the company’s embattled British newspaper unit would pay off with his appointment as chief executive to the larger, spun-off publishing company, which will include The Journal, The New York Post and HarperCollins.

Born in New Zealand, Mr. Mockridge joined News Corporation in Australia in 1991. In a news release, News Corporation said he planned to “pursue outside opportunities.”

Article source: http://mediadecoder.blogs.nytimes.com/2012/12/02/chief-of-news-corp-unit-in-britain-is-resigning/?partner=rss&emc=rss