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|Articles - October 2012|
|Monday, September 24, 2012|
Page 3 of 3
Stock and option awards have proliferated since the 1990s.
This is evident with our sampling of Oregon CEOs: For the first time in five years, possibly longer, stock awards accounted for more pay (38%) than options (17%) and are the largest component.
With so much of it valued in stock, it’s no surprise that CEO pay rises and falls, often in tandem with the company stock price. Stock and option awards accounted for 63% of Equilar’s S&P 500 CEO pay in 2011, and 55% of the 20 Oregon CEOs' pay, up from 43% in 2007.
Restricted stock, subject to vesting periods or other conditions, and performance shares, subject to meeting performance targets, have risen in proportion to options, notes Lindner, after an accounting change in the early 2000s made companies expense option grants the same as stock. Prior to that, options were most of the equity in CEO pay.
14 top 20 CEOs received an increase in total pay this last fiscal year.
CEOs who received less included Precision Castparts’ Mark Donegan, Columbia Sportswear’s Tim Boyle, Mentor Graphics’ Walden Rhines and Umpqua Bank’s Raymond Davis, all companies whose annual net income grew.
Notably, Mentor Graphics faced pressure in recent years from well-known activist investor Carl Icahn, who got three of his nominees elected to the board. But Rhines has led the company back to profitability the past two years, and Mentor’s board has managed to fend off Icahn’s attempts to shake it up, replacing two of his picks this year.
All 20 companies passed their most recent “Say on Pay” votes.
One of the first rules to be enforced from 2010’s Dodd-Frank Act requires companies to hold nonbinding "Say On Pay" votes at annual shareholder meetings, asking investors to OK executive comp plans. This year, Columbia Sportswear had the highest pay approval, 99.6%, while Greenbrier and Schnitzer Steel had the lowest, 52.1% and 58.6%.
Boyd thinks that Say on Pay has had a positive impact on company engagement with shareholders, particularly larger institutional investors. “For the most part they all like it,” he says, “and I think companies are finding value in it. What it’s doing is really opening up the dialog between companies and shareholders.”
CEO pay may be an issue to some investors, but not all. George Hosfield, the chief investment officer of Portland-based Ferguson Wellman Capital Management, which manages more than $3 billion in mostly large-cap equities, says this is not a criterion by which he screens companies. “We’re more concerned with CEO competence than we are the compensation,” he says.
Hosfield says that “the more transparency, more sunlight, the better as a general sense,” but he also worries that the cost of regulations like Say on Pay could hurt performance, especially at smaller companies less able to absorb the cost. “Regulation with respect to how costly and burdensome it is as an impediment to business has gone up exponentially in the last decade.”
The prospect of more Dodd-Frank and other regulations hitting small companies could make it a little tougher for our CEOs to do their job and for boards to govern them. But greater regulation has boosted communication between executives, boards and shareholders, as well as cast much more light on CEO pay. At least for now, the majority of the 20 companies we tracked are making a bigger profit and rewarding their CEOs with a bigger paycheck.
Thursday, July 03, 2014
BY TED AUSTIN & MIKE BAELE | GUEST CONTRIBUTORS
The Office of Economic Analysis announced that Oregon is currently enjoying the strongest job growth since 2006. While this resurgence has been welcome, the lingering effects of the 2008 “Great Recession” continues to affect Oregon businesses, especially with regard to estate planning and business succession.
Wednesday, August 06, 2014
BY LINDA BAKER | OB EDITOR
Portland startup Green Endeavor strikes gold, inking a partnership with Underwriters Laboratories, an Illinois-based consulting and certification company with offices in 46 countries.
Friday, June 27, 2014
BY JASON NORRIS | OB BLOGGER
Over the last several months we have seen a wave of cross-border acquisitions, primarily U.S.-based companies looking to purchase non-U.S.-based companies. There are a few reasons for this, but the main culprit is the U.S. corporate tax system. The United States has one of the highest corporate tax rates in the world.
Wednesday, August 20, 2014
By Kim Moore | OB Editor
The 2015 survey launched this week. It is open to for-profit private and public companies that have at least 15 full- or part-time employees in Oregon.
Wednesday, July 02, 2014
BY JESSICA RIDGWAY | OB WEB EDITOR
Dress for Success Oregon promotes the economic independence of disadvantaged women by providing professional attire, a network of support and career development tools.
Thursday, July 24, 2014
BY CLIFF HOCKLEY | OB GUEST CONTRIBUTOR
With the increasing retirements of Baby Boomers, a massive real estate shift has created a significant increase in demand for NNN properties. The result? Increased demand has triggered higher prices and lower yields.
Thursday, July 10, 2014
BY TOM COX | OB BLOGGER
Tom Cox interviews Dr. Mark Goulston, author of Just Listen, Discover the Secret to Getting Through to Absolutely Anyone.
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