Elon’s Shocking $56 Billion Yearly Pay: Is It Too Much?

Elon Musk, the CEO of Tesla, has recently faced another legal setback regarding his massive compensation plan. Judge Kathaleen St. J. McCormick of the Delaware Court of Chancery upheld her previous decision from January to cancel the $56 billion package awarded in 2018. Despite a second shareholder vote in June to reinstate it, the judge ruled that the initial process was “deeply flawed” and that the subsequent vote did not rectify these issues. READ MORE

DEI-Tied Executive Pay Loses Ground at Companies Amid Backlash

More companies are ditching diversity, equity, and inclusion metrics to help determine their executives’ compensation amid a conservative backlash against corporate DEI programs.

The pullback, however, doesn’t mean the popular tie-in has been abandoned. In fact, a majority of S&P 500 companies and more than 40% of Russell 3000 firms that use environmental, social, and governance metrics in executive pay still link compensation to achieving DEI goals, according to a report the Conference Board, ESGAUGE, and FW Cook released Thursday. READ MORE

Research finds CEOs innovate — or don’t — based on compensation packages and input from analysts


West Virginia University research shows the stock market shapes chief executive officers’ commitments to innovation through mechanisms that range from CEO pay packages to feedback from financial analysts.

“The investment industry usually views financial analysts’ feedback, such as earnings forecasts, as impeding innovation because of the pressure the feedback puts on CEOs,” said Xinchun Wang, associate professor of marketing at the WVU John Chambers College of Business and Economics. “But not all feedback provided by analysts generates that kind of pressure. Stock recommendations actually foster explorative activities like research and development — investments that, although risky, can positively affect long-term returns.” READ MORE

Elon Musk won’t get his $55 billion pay package after all

Elon Musk isn’t going to get that $55 billion pay package after all, a Delaware Chancery Court judge has ruled.

Tesla shareholders approved the package in 2018, which gave Musk incentive to hit specific milestones, including a market valuation of $650 billion, which was more than 10 times the valuation at the time. The trial hinged on a specific question: did Musk mislead the shareholders when he gave them the plan? READ MORE

IBM investors staged 2021 revolt over exec pay

IBM moved to appease shareholders that last year revolted against executive compensation proposals when they contested the massive one-time equity award granted to former Red Hat boss Jim Whitehurst.

Whitehurst, who was made IBM President following Big Blue's $34bn buy of Red Hat, was to be handed a compensation package of more than $27m last year, including $22.4m in stock awards. This upset investors. READ MORE

ESG Metrics and Executive Compensation – What to Consider to Do It Right

Environmental, social and governance (ESG), sustainability and corporate responsibility matters touch every area of a business, and the breadth of related metrics is expansive. Most organizations have done some work in this realm. But many find the amount of change, data and transparency needed to be overwhelming. Each aspect of an ESG program is complex, and organizations seeking to make progress may struggle with how to implement it effectively. One trend we see increasing is organizations linking performance in ESG metrics to executive compensation. This strategy is one way for businesses to show ESG is being prioritized and aligned with business goals – but this conversation is not without nuance. READ MORE

Rising opposition to CEO pay tied to 'questionable practices,' report says

More frequent shareholder revolts at companies like Norwegian Cruise Line Holdings (NCLH.N) and General Electric show corporate directors should hesitate to hike CEO pay during tough times, according to a new report.

Proxy votes against executive pay at S&P 500 companies became more common last year and were often sparked by "questionable practices and metrics" like when companies eased performance targets during the COVID-19 pandemic, according to a report by As You Sow, a shareholder advocacy group focused on environmental, social and governance (ESG) matters. READ MORE

Most Overpaid CEOs in The S&P 500

Shareholders are starting to push back against outsize CEO pay, but some of the nation's best-known companies are still overpaying their chief executives for paltry performance.

That's according to investor advocacy group As You Sow, which published its eighth-annual report Thursday on the 100 most overpaid bosses of S&P 500 companies. Based on data provided by Institutional Shareholder Services, a shareholder advisory firm, the report found that CEO pay is increasingly becoming untethered from company performance, and, as a result, shareholders are increasingly rejecting pay packages when put to a vote. READ MORE

The SEC's Ears Remain Perked for an Abundance of Executive Perks

As we continue our review of FY 2021 SEC enforcement activity, we turn our attention to a topic that, if not already a key focus for publicly traded companies, should be. As part of their effort to recruit and retain leadership, public companies often provide benefits to their executives beyond salary and performance-related bonuses, such as use of a corporate aircraft, car allowances or country club memberships. READ MORE

SEC Comment Period Ends for Controversial Proposal Regarding Clawbacks of Executive Incentive Compensation

On October 14, Chairman Gensler announced that the Securities and Exchange Commission (SEC) would reopen the comment period for the controversial compensation clawback rule that it had initially proposed in 2015 in response to requirements of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (the "proposed clawback rule"). The proposed clawback rule would direct stock exchanges to require listed companies to implement a clawback policy for incentive-based compensation paid to executive officers when a company has to restate its financials in a wide range of circumstances, including instances where financials were merely found to contain errors due to human or other error. READ MORE

SEC Proposes Enhanced Disclosure Rules for Stock Repurchases

The US Securities and Exchange Commission has proposed amendments to its rules regarding disclosure about issuer repurchases of its equity securities, often referred to as buybacks, including a new proposed Form SR to be filed with the SEC. As proposed, these new rules prescribe considerably greater disclosure relating to buybacks and, as with the proposed rules on 10b5-1 plans, have been met with strong statements of dissent by certain SEC Commissioners. READ MORE

SEC Proposes Amendments to Rule 10b5-1 Plans and Increased Disclosure About Insider Trading Policies

Major changes may be on the horizon for "Rule 10b5-1" plans, which allow (1) company insiders to sell their company's stock (often an important piece of an employee's compensation package) or (2) an issuer to repurchase its shares, each at times when it otherwise might be prevented from doing so under the insider trading laws designed to prohibit trading by those who possess material non-public information (as is often the case for a company's officers, directors and management) or because of issuer-imposed blackout periods. READ MORE

Matters To Consider for the 2022 Annual Meeting and Reporting Season

Companies have important decisions to make as they prepare for the 2022 annual meeting and reporting season.

We have compiled this overview of key issues — including SEC disclosure requirements, recent SEC guidance, executive compensation considerations and annual meeting and corporate governance trends — on which we believe companies should focus as they plan for the upcoming season. As always, we welcome any questions you have on these topics or other areas related to annual meeting and reporting matters. READ MORE

Amid Tight Labor Market, Organizations Are Increasingly Relying on Bonuses

WorldatWork’s 2021 “Bonus Programs and Practices” survey revealed that organizations have heightened their bonus activity to attract and retain employees during an especially active labor market.

The four types of bonus programs measured in the survey were: sign-on, referral, spot and retention. More than one in three (38%) of 957 organizations surveyed use all four types. Overall, the trend is increasing among use of all four bonus types, and of those without a program currently implemented, consideration is also growing. Only 7% of organizations reported not using any of the four types of bonus programs. READ MORE

U.S. SEC issues guidance on corporate share-based executive compensation

The U.S. Securities and Exchange Commission (SEC) on Monday issued guidance to listed companies around how to properly recognize and disclose share-based compensation arrangements made to executives ahead of company earnings and other releases.

The regulator said its new guidance spells out how companies must consider the impact such 'spring-loaded awards' would have on market-moving releases. READ MORE

SEC breathes new life into 2015 executive compensation clawback rule

The U.S. Securities and Exchange Commission (SEC) on Thursday voted to revive a rule, left unfinished since 2015, that would expand the regulator's powers to clawback executives' compensation when a company had to restate its financials due to a compliance lapse.

The SEC said it would seek a further round of public feedback on the rule, which was mandated by Congress following the 2007-2009 financial crisis, with a view to finalizing the rule likely next year. READ MORE

Pandemic Hits US Bosses' Pay, But Impact Varies

Pay growth for top executives at some of the largest US firms slowed last year as the pandemic hit, and bonus payments fell, a survey showed, shedding light on how this population cohort of affluent individuals has fared. 

Willis Towers Watson’s Global Executive Compensation Analysis Team crunched the pay numbers on executives in S&P 1500 companies. There were smaller increases in both target and earned total CEO pay in 2020, increasing at the median by 4.7 per cent and 3.9 per cent, respectively. That is slower than the 6 per cent in target pay and 5.5 per cent increase in earned pay observed in the previous year and the lowest results since the 2015 to 2016 cycle. READ MORE