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20 November 2010
SocialFunds: Overall CEO Pay Saw Marginal Decline in 2009
Source:
www.socialfunds.com
by Robert Kropp
The latest in a series of annual reports by The Corporate Library on executive compensation finds the greatest decrease in tax gross-ups, or payment by companies of taxes on compensation packages.
SocialFunds.com -- The Corporate Library has published its annual CEO Pay Report, an event of some importance to sustainable investors and other shareowner activists who have discerned connections between excessive executive compensation in financial industries and risk-taking in pursuit of short-term profits. In 2010, more than 50 shareowner resolutions addressing executive compensation, or say-on-pay as they are popularly known, were filed.
Basing its survey on an analysis of more than 2,000 companies where CEOs were in the role for the past two fiscal years, The Corporate Library reported that executive compensation "appears to be holding steady," with a median increase in base salaries of about two percent. "However," the report observes, "Once equity is included – in the form of stock option profits and vested stock – CEO pay goes into its third year of decline," although the decrease was marginal.
According to Research Associate Greg Ruel, co-author of the survey, "Most notable is a clear drop in the number of CEOs who received a tax reimbursement in 2009 as compared to 2008." The number of CEOs receiving tax reimbursements decreased from 122 in 2008 to 80 in 2009. Furthermore, 51 CEOs who received so-called tax gross-ups, which refer to an arrangement by which the tax on compensation packages are paid for by the company, in 2008 did not receive one in 2009.
Fifty-seven percent of the industries surveyed experienced a decrease in executive compensation in 2009, with the Construction Materials and Construction & Engineering sectors decreasing the most. The Retail industry sectors—Multiline, Internet & Catalog, and Specialty—had the largest increases in compensation.
The highest paid CEO in the survey was Henry Lawrence Culp of Danaher with a total realized compensation of $141,357,486. Culp did not even appear on last year's list, but in 2009 exercised an award of stock options for a profit of $84 million. Following Culp on the list of most highly compensated CEOs were Lawrence Ellison of Oracle and Robert Kotick of Activision Blizzard.
At the end of its 2009 CEO pay survey, The Corporate Library noted, "It seems probable that many compensation committees may well take this opportunity (a recovery in stock prices) to increase annual compensation," and in the conclusion of this year's survey observed that its prediction had turned out to be accurate. "However," this year's report concluded, "An even greater potential impact on CEO compensation is around the corner for the 2011 proxy season since that will be the first year that many companies face an advisory vote on executive compensation."
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Sustainable Investment Research Platform
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