EveryJoe » executive compensation

Obama Pay Czar Cuts Executive Pay

Mark Ellis — Wed, 21 Oct 2009 23:29:15 +0000

Pay czar Kenneth Feinberg has decided to bring the hammer of his authority crashing down on the executive pay packages of the seven firms receiving the most federal aid. According to media reports, Feinberg and the government will limit the pay of the twenty five highest-paid executives at these companies, with salaries taking the biggest cuts.

In all, salaries are expected to plummet 90 percent on average and total compensation will most likely fall by about 50 percent, marking a huge decrease in the amount that many executives will be receiving as compensation this year. The executives of AIG’s financial products unit, which has been identified in one of the main causes behind the insurer’s close brush with collapse, will receive no more than $200,000 in pay, and any perks packages larger than $25,000 in value at any of these firms will need approval.

Although the changes to pay levels have shocked the business community, Feinberg’s reported moves to demand changes in governance at these firms has also attracted much skepticism. Reports say that the positions of Chairman and CEO will have to be split, that boards will have to create risk assessment committees, and that certain director elections will be eliminated.

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Obama Pay Czar Cuts Executive Pay

BofA CEO to Receive No 2009 Salary

Mark Ellis — Fri, 16 Oct 2009 03:48:13 +0000

Bank of America’s outgoing chief executive Ken Lewis, whose resignation from the post came as a complete surprise to Bank of America’s board of directors, will essentially earn no money for his work in 2009 due to the mandate of Kenneth R. Feinberg, the Obama administration’s special master on compensation. Lewis will instead return about $1 million to the bank.

Feinberg, who has the authority to set executive compensation levels of seven major corporations that received federal bailout money, suggested that Lewis should receive no wages or special compensation for 2009. Lewis agreed with Feinberg’s suggestions and stated that he does not believe that it is in the bank’s best interest to disagree with the Obama administration’s pay master.

Lewis would have otherwise earned a base salary of $1.5 million in the year of 2009, but will instead be writing a check for around $1 million to return the wages that he has already earned throughout the year to the bank. The reaction throughout much of Wall Street and from many analysts following the situation is shock, as much of the business community can hardly imagine the government asking a company executive to return his pay.

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BofA CEO to Receive No 2009 Salary

Fed Sets New Bank Pay Rules

Mark Ellis — Sun, 20 Sep 2009 00:27:52 +0000

As most people are already aware, the financial crisis has been largely blamed on excessive risks taken on the part of financial systems that aimed to bring in huge paydays for bank employees. Now, though, the Federal Reserve plans to implement several rules that will change how banks pay their employees in order to avoid dangerous risk-taking.

The government has faced enormous pressure from both the outraged public and from other countries, such as France and Germany, to curb these harmful practices. In response to these desires, the Fed has finally rolled out a series of guidelines that will come into play over the next few weeks. These guidelines will eventually apply to any employee that might engage in risky behavior, not just bank executives.

According to the Federal Reserve, every Fed-regulated financial institution in the country will be subject to these regulations and that it already has the power to undertake these new endeavors. This means that 5,000 bank holding companies and 800 smaller state-chartered banks will be subject to these new rules.

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Fed Sets New Bank Pay Rules

Oracle’s Ellison Accepts $1 Salary for 2010

Mark Ellis — Sun, 23 Aug 2009 02:36:17 +0000

Oracle CEO Larry Ellison has decided decrease his annual salary to $1 for the year 2010, according to Oracle’s filing with the Securities and Exchange Commission. The move will shave exactly $999,999 off of Ellison’s income compared to this year, but fortunately for Ellison, the world’s fourth-wealthiest man, his base salary only accounts for about 1.2 percent of his total earnings.

Other massively wealthy executives have paved the way in the field of $1 base salary reductions, such as Apple CEO Steve Jobs and Google founders Larry Page and Sergey Brin. According to Oracle’s filing with the SEC, Ellison’s company wants to provide Ellison full compensation for the “active and vital role” he plays.

Most of Ellison’s wealth comes from the 1.18 billion shares of Oracle that he owns, 23.4 percent of the company’s total shares, and the compensation that he receives in stocks rather than in cash. Ellison founded Oracle in 1977 and the software company has since grown into the third-largest component of the software market, behind Microsoft and IBM.

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Oracle’s Ellison Accepts $1 Salary for 2010

Proposed Law Empowers Shareholders

Mark Ellis — Wed, 10 Jun 2009 20:19:34 +0000

Many investors and a large part of the general public have expressed their outrage and disgust at the excessive compensation practices of several corporate executives essentially draining their companies dry. In response to this situation, Obama has proposed new legislation that would give shareholders larger control over pay practices, allowing them to limit these golden parachutes and other forms of reckless compensation.

Wall Street (Image:Flickr)

“This financial crisis had many significant causes, but executive compensation practices were a contributing factor,” according to Treasury Secretary Timothy Geithner in a statement he released today.

The say on pay law, as the concept is referred to in the business world, sits alongside other proposed laws that aim to increase corporate transparency, such as a law that would force corporate compensation committees to distance themselves from the company. According to Geithner, the federal government has been considering several different tactics to curb executive irresponsibility, which means that the say on pay law may be the tip of the iceberg.

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Proposed Law Empowers Shareholders