Incentivizing Nonfinancial Metrics for Private Company Executives

Private companies are increasingly employing nonfinancial metrics in executive incentive plans, consistent with this trend among publicly traded companies.  

Private companies have far more governance leeway in their compensation plan design, which can be an advantage in some instances. The adoption has been slower than at public companies, with the most significant gains in annual bonus plans.  READ MORE

Fast Company’s CEO Fair Pay report: The 15 ‘most fairly’ paid finance CEOs

The masters of the universe at banking and finance companies are famous (or infamous) for their bulging compensation packages. But not every company in the sector boasts an exorbitantly remunerated executives: Some make only a small multiple more than their average employee.

As part of Fast Company’s CEO Fair Pay report, we’ve broken out the 15 CEOs of finance companies (as determined by SIC code) who make the closest in salary to their median employee. This list has a few of the CEOs who were featured on the 15 most fairly paid CEOs on the Russell 3000, though most make enough more than their median employee that they did not feature there. READ MORE

The Midwest is getting left behind as the rest of America sees big raises

The Midwest may have the lowest unemployment rate of any US region, but it's falling behind in raising wages for its workers.

Compared to the rest of the US, the Midwest is lagging in terms of real median wage growth, rising just 0.4% — or eight cents — from 2019 to 2022, new research from the left-leaning think tank Economic Policy Institute shows. This is in contrast to the nation's 3.1% median wage growth during the same period. READ MORE

Analyzing the 2023 Proxy Season Say on Pay

With the 2023 proxy season now in the rearview mirror, WTW’s post-season say-on-pay (SoP) research within the Russell 3000 indicates a shift from the recent norm.  

Though shareholder support remained generally stable at 90% (compared to 89% in 2022 and 91% in 2021 at this time), results have improved in comparison to the past two years when it comes to failures and opposition. READ MORE

Examine Compensation Decisions Carefully in the Case of a Demotion

Whether a demotion is prompted by an internal reorganization, a merger or the need to better match an employee's skills to a different position, compensation is a major factor when determining how to best navigate the change. 

Shifting compensation is more clear-cut when an employee knowingly applies for, interviews for and accepts a different position within the same company that carries less responsibility and pay. However, when an employer initiates a worker's demotion, one of the biggest considerations is how to handle morale and performance issues if the employee’s pay is decreased — or how to address pay equity questions that may arise if the employee's higher salary remains in place.  READ MORE

Equal Pay Transparency Hearing Scheduled in Colorado

On September 29, Colorado’s Department of Labor and Employment released its proposed Equal Pay Transparency (EPT) rules. The update is aimed at providing clarity on the state’s Ensure Equal Pay for Equal Work Act. SB23-105, which comes into effect on January 1, 2024, amends Colorado’s pay transparency statute.

A public hearing on the proposed rules is scheduled for October 30, 2023. If adopted, the Equal Pay Transparency rules will also take effect from January 1, 2024. READ MORE

The CEO Shareholder: Straightforward Rewards for Long-term Performance

To be successful, companies need to attract and reward leaders who create value over the long term, but executive remuneration often focuses on short- term targets. Shareholders and their advisors similarly focus on short-term returns as a primary metric in the evaluation of pay plans. Replacing these short term-oriented approaches with direct long-term stock ownership by executives is a better solution.

It’s no surprise that executive remuneration stands out as one of the most visible and closely examined aspects of a publicly listed company’s corporate governance program. READ MORE

California Announces 2024 Substantial Increase in Computer Professional Exemption Compensation Rate

The minimum wage thresholds for the California computer professional exemption have been raised in line with inflation. The California Department of Industrial Relations (DIR) published a memo on October 17, 2023 increasing the compensation threshold for exempt computer professionals by 3.3% over the 2023 rates. The compensation rates are adjusted annually to account for inflation according to the California Consumer Price Index (CPI) for urban wage earners and clerical workers. READ MORE

Microsoft CEO Satya Nadella and other executives take a big hit to compensation

Every year Microsoft is required to submit a regulatory filing that includes compensation for its CEO and other top executives. In the most recent regulatory filing for fiscal year 2023 submitted by Microsoft, we are able to see that Microsoft's C-suite has had a substantial reduction in its compensation over fiscal year 2022. This was mostly due to the company missing several of its financial targets for the year. We have a breakdown of the compensation numbers and what it means on a larger scale. READ MORE

Why pay transparency won’t work without real pay equity transformation

When it comes to the drivers behind increased pay transparency, a new survey has found that the stick is taking priority over the carrot.

According to WTW’s 2023 Pay Transparency Survey, regulatory requirements are, by far, the most commonly cited (81%) factor for encouraging greater levels of pay program communication. Coming in a distant second, third and fourth—in a near dead heat—are company values and culture (55%), employee expectations (54%) and an ESG/DEI agenda (53%). READ MORE

Michigan elections board deadlocks on a new $15-per-hour minimum wage initiative

A group seeking to raise Michigan's minimum wage is headed to court after the Michigan Board of State Canvassers deadlocked on its certification for the ballot over a change in its petition language.

The petition's definition of an employer bound by the state's minimum wage changed significantly between when the board approved summary language in January 2022 and when it authorized other items on the form in February and March 2022 — so much so that the changes would exempt 90% of Michigan businesses from paying any sort of state minimum wage. READ MORE

8 Industries Where a Six-Figure Salary Will Make You Happy

Does money buy happiness, as the saying goes? An old study from 2010 found that once you reach annual earnings of $75,000, money doesn’t make you that much happier.

Inflation, a pandemic, and rising housing costs may have changed that number since 13 years ago. Moneyzine.com recently surveyed 1,200 Americans to see if they are happy with their income. For eight professions polled, it takes at least six figures to be happy. Four other professions come in over the $75,000 mark, while most hover close to it. READ MORE

Netflix Promises ‘Substantial Changes’ to Executive Pay Model After Shareholder Pushback

Netflix has promised to make “substantial changes” to its executive pay model after significant shareholder pushback regarding the sizable pay packages.

“We recognize we don’t have wide support for our executive compensation model of the last 20 years. We are listening to our shareholders and plan on substantial changes for 2024 to a more conventional model,” Netflix said in its third quarter earnings statement. “Our executive compensation plan will continue to be built on pay for performance.” READ MORE

Are America’s CEOs overpaid?

“We’re fed up with falling behind,” declared Shawn Fain, the boss of America’s United Auto Workers (UAW), last month after the union began a campaign of intermittent strikes at Ford, General Motors (GM) and Stellantis, America’s “big three” carmakers. A month in, the two sides are still at loggerheads. Jim Farley, Ford’s chief executive, has argued that the 36% pay rise over four years demanded by the striking workers would cripple his business. The UAW has countered that the average pay of the big three’s CEOs is 40% higher than it was in 2019, compared with 6% for the union’s members, which is well below inflation. Last year Mr Farley raked in $21m in pay, Carlos Tavares, his counterpart at Stellantis, $25m and Mary Barra of GM, $29m. The average full-time UAW member made less than $60,000. READ MORE

How an ‘Effort-Reward Imbalance’ Can Make Work Miserable

Life isn’t fair.

It’s a phrase so often repeated that it has become a cliché. But studies have shown that humans are hard-wired to want their fair share, as are other animals that have cooperative relationships, like monkeys, birds and wolves.

In one famous experiment, researchers trained two capuchin monkeys to hand them tokens in exchange for a cucumber snack. At first, the animals were happy with this arrangement — that is, until one of the monkeys received grapes instead, which are considered far more delicious. The other monkey, who continued to receive cucumbers, looked enraged, shook the walls of her enclosure and hurled the cucumbers out of reach. READ MORE

Negotiating the best compensation and executive perks package

The unemployment rate in the United States has remained below 4 percent since January 2022, according to the Bureau of Labor Statistics. Competition for workers is high across many sectors. Anecdotally, demand for executives at various levels in the Lehigh Valley is consistently strong. This market dynamic is one reason that compensation and perks are key components of any executive’s decision to join a new company or remain with their current employer.  

 Company perks and compensation packages should be a key decision-making factor for any executive because those packages can have a huge impact on their financial future. A 2021 report from Harvard Business Review analyzed compensation of top executives at all Russell 3000 companies and found that only 18 percent of their compensation was base salary; the remaining 82 percent was variable. Those variables, such as stock options, are precisely what’s laid out in compensation and perks packages. READ MORE