CEO of ailing Punch gets huge wage increase

Punch International, an industrial holding enterprise head-quartered in Belgium, has been cutting back on expenses and staff since early this year. Yet former CEO Guido Dumarey managed to receive a pay rise to one million euro.

As the company is in financial trouble, a capital increase of EUR 20 million (executed this month) is its final attempt to endure the crisis. In spite of this unsteady situation, Dumarey was granted a salary of EUR 1 million a year by Punch’s remuneration committee on April 23rd. The prospectus does not give a motivation for this odd decision.

Dumarey handed in his notice in June, to take responsibility for the bad investments Punch has made. Current CEO Wim Deblauwe has to survive with ‘merely’ EUR 156.420 a year.


De Morgen

Fran

G20 intentions torpedoed by bankers

On the G20 meeting in September, standards were effectuated to confine bank payment to a minimum. Several countries however, such as Britain, Switzerland and the US, disagreed with the harsh measures on bonus restriction. Thanks to tough lobbying of these countries’ bankers, there will be no obliged cap on bonuses and the bank compensation constraint will be confined to the biggest banks and insurance companies.

This implies a great victory for Swiss bankers, as the financial industry in Switzerland is very important and the country risked competitive disadvantage by excluding bank bonuses. Nevertheless, the Swiss regulator said that these bonus payments “must actually have been earned by the company over the long term” instead of being based on reckless risks, an argumentation that is followed by other G20 members. The new strategy becomes operative on January 1.


New York Times

Fran

Richest Indian sets an example for other top executives

Mukesh Ambani, chairman and managing director of the conglomerate Reliance Industries and also India’s richest man, will renounce two thirds of his remuneration to set a personal example of pay restraint. In one of its latest meetings, RIL’s remuneration committee decided to decrease Mr. Ambani’s commissions by 69%, simultaneously with a marginal increase of his wage and fringe benefits. This results in a total income drop of 66%, reducing his salary to 150 million rupees (3,3 million dollars) as opposed to 442 million rupees in 2008.

This event shows us that all around the world, the issue of executive compensation is being handled. The RIL meeting took place a couple of days after Salman Khurshid (the Corporate Affairs Minister of India) urged firms not to give excessive pays to top executives. Earlier, Anil Ambani (Mukesh’s younger brother) decided to relinquish his wage and commissions.


Telegraph

Fran

Revolution on its way?

The results of the annual study of Compensation and Entrepreneurship by J. Robert Scott (an executive search firm) and Ernst & Young LLP (global leader in assurance, tax, transaction and advisory services) showed that in 2009, for the time in ten years, the executive compensation in private technology companies remained flat in contrast to the increase in the private life sciences firms. Not only does this study reveal a potential revolution in executive pay, the results are also used to assist venture capital firms in critical decisions when attracting, rewarding and retaining talented executives.

The base salaries for CEO’s in private technology firms remained steady in 2008-2009 with an average of around $230,000. Concerning the bonuses in 2008, the CEO’s got 64 percent of their target bonus or an average of $61,000, which is a drop of 6 percent compared to 2007. Looking at the private life sciences firms, the average base salary went up by 3.2 percent stating a total of $273,000 in 2009. The average CEO bonus was $48,000 in 2008 or 44 percent of their target bonus. A drop of 29% looking at 2007.

A revolutionary result, because it was the first time in 10 years the investigators didn’t noticed an increase in the technology firms. “In fact, the average increase over the past nine years has been five percent annually." said Aaron Lapat, managing director of the J. Robert Scott organization.

Making a small summary of the survey, we can conclude that the executive compensation at private technology firms didn’t change during 2008-2009 although the salaries and the bonuses dropped.

Reuters

Nathan

Pay czar Kenneth R. Feinberg OKs pay changes for 2 top executives at BofA

After reviews on the pay structure by Kenneth R. Feinberg, the US pay czar, Bank of America cut compensation of two of its top executives.
Both Joe L. Price, Chief Financial Officer, and Barbara J. Desoer, mortgage unit President, will see their salary go down in 2009.

Price's salary was lowered from $800,000 in 2008, to $500,000 this year. Compared to stock awards worth $2.3 million and option awards $1.5 million in 2008, the CFO will receive stock unit awards valued at $5.3 million in 2009.

Desoer, who's in charge of mortgage, home equity and insurance services will also see her annual salary trimmed to $500,000 from $800,000 last year. She will receive stock unit awards valued at $3.95 million, compared to a respective $2.3 million and $1.53 million in stock awards and option awards in 2008.
As for other compensation, such as tax preparation, payment of insurance premiums, use of corporate aircrafts and other perks, both executives are limitted to $25,000. If they have already received more in perks this year, they must repay the difference.

Bank of America is one of the first companies to adjust its executive compensation, but soon many others will have to follow in order to pay back the government the money from the Troubled Asset Relief Program.

The Washington Post

Alexander

Oil and gas executive compensation survey

In order to examine executive compensation in leading energy sector companies, Equilar, Inc., an information services firm which specializes in researching executive pay, was asked to perform a survey, in which they analyzed and compiled pay data in over 34 companies around the world.
The survey contains information about the total annual compensation, which includes base salary, cash bonus payouts, the grant-date value of stock and option awards, and other compensation, for each CEO they studied.
For companies located in the US, Equilar used the Summary Compensation Table of each firm’s annual proxy statement and the Grants of Plan-Based Awards Table. They used the director and management remuneration section for companies abroad.
Next to the total annual compensation, the survey also contains information about retirement plans and change in pay, which represents the percentage increase or decrease in total compensation from fiscal year 2007 to fiscal year 2008.
Finally the survey closes down with a ranking on total 2008 compensation.

Financial Times

Alexander

France pushes G20 to curb bank bonuses

After the G20 meeting in Pittsburgh in September, where standards were implemented on banking pay as a result of the excessive compensations in the financial sector, France said they are not satisfied about the lack of motivation some countries have regarding the need to curb bonuses. Sarkozy will discuss the issue at the follow-up G20 meeting.

The French want to apply the G20 standards before the 2009 bonuses are paid around February and March 2010. Concerns over bonuses have risen again after the news that eight U.S. Banks - which all received support from the government - have set aside around $117.6 billion for 2009 to pay their employees.

All countries must have the same rules about bankers’ pay because otherwise countries with a less strict regulation will have an competitive advantage when attracting executives. The G20 has therefore agreed to stop guaranteed bonuses and will work on its progress to apply all the standards before the bonus season.


Bernard Matthys


Cnbc

New competitive pay offers are being considered

Kenneth Feinberg, whose job is to police compensation of CEOs in companies that received help under the Troubled Asset Relief Program (popularly called the 'pay czar’), is worried that pay restrictions he ordered at bailed-out companies will affect their competitiveness. He defended his move to curb excessive pay: “I’m always concerned that the companies thrive and they keep the personnel they need to stay in business”. Feinberg also added he would love to see other companies adopt compensation plans based on their long-term profits.

One month ago, the pay and bonuses for the top 25 earners at the seven biggest bailed-out firms were reduced by 50%. Now Feinberg has mentioned that he might allow firms to hire new executives at competitive pay.

The success of the pay levels for the bailed-out firms will be measured by their repayment of taxpayer money: it's of the utmost importance that these companies are kept in business, in order that the U.S. taxpayer will get repaid.


Bernard Matthys

Reuters

Wall Street bonuses to rise 40% in 2009

A new annual report predicts that Wall Street incentives will increase by an average of 40% in 2009, one year after the beginning of the financial meltdown. This is mostly the result of near-record revenues from fixed-income, commodities and foreign exchange trading, where businesses are growing stronger. However, the employees of hedge funds, private-equity firms and prime-brokerage operations will see a decline in their remuneration by up to 30 percent because of lower return on investments.

The report showed that bonuses at financial firms are being offered more and more in the form of multi-year stock options. Despite the increase in stock options, bonuses are believed to remain below the 2007 record levels.

To prevent a repeat of the financial crisis, the Federal Reserve is working on rules to ban excessive banker pay. The Federal Reserve will monitor incentive compensation at banks that encourages excessive risk-taking.

Bernard Matthys

money.cnn.com

‘Has a new age dawned in the realm of executive compensation?’

The merge, expected in the first half of 2010, between two of the biggest power-tool makers, Black and Decker and Stanley Works, is not only in favor of the stakeholders and the two companies themselves, also former Black and Decker boss Nolan D. Archibald profits from the situation. Archibald, 66 years old, is stepping aside as president and chief executive and therefore receives a severance payment of $20.5 million. The Black and Decker board said this golden parachute was “appropriate” but Archibald turned it down. Don’t worry, Archibald will not have to struggle through life the next decades, he is staying on as executive chairman of the board of directors and will earn around $7 million during the next three years, on top of Black and Decker stock options worth an estimated $45 million and a pension worth $50 million. The fact he turns his severance payment down is understandable but nevertheless astonishing.

Nathan

Washingtonpost

Obama puts limit on executive compensation

At the beginning of 2009, the president of the United States Barack Obama, set a $500,000 annual compensation cap for executives at companies who are getting taxpayer bailouts to stop them from going bankrupt. He thinks excessive compensation is one of the main reasons of the economical crisis and in order to revive the economy, he will now lay down clear conditions about the executive compensation. Restrictions on golden parachutes and greater say to shareholders over the wages and bonuses of company chiefs are two of the main new rules.
In the short term the new regulation imposes that only companies who have received bailout money agree to stricter oversight and prove they have already applied the established rules on executive compensation. In the long term these rules will not only count for companies who receive government funds but for all public financial institution.

Nathan

Reuters

Microsoft introduces 'say on pay' - votes

Microsoft is one of the first companies to adopt say on pay provisions.
In september the software giant introduced a non-binding advisory vote on executive compensation. This vote will take place every three years, starting this year on November 19, at the company's annual meeting.

"Given the interest in executive pay, we think it makes sense to encourage more dialogue with our shareholders on our compensation approach," said Brad Smith, Microsoft general counsel.
This initiative will be followed by many other American companies, as it is part of the Troubled Asset Relief Program, which the US-government introduced last year in order to maintain the financial crisis.
Although say on pay provisions might help fixing the economy, it may not solve the underlying problem of executive over-compensation.

Alexander
Financial Times