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|Articles - October 2012|
|Monday, September 24, 2012|
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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.
Wednesday, February 25, 2015
BY JASON NORRIS, CFA | OB GUEST BLOGGER
Pets.com, GeoCities, eToys, and WorldCom … blasts-from-the-past that all signify the late 1990s Internet bubble. Yet we believe the dynamics of the market, specifically in technology stocks, are much different today than it was during the late 1990s.
Friday, March 13, 2015
BY JACOB PALMER | OB DIGITAL NEWS EDITOR
Ten startups have secured venture capital, angel or seed funding in 2015.
Friday, March 27, 2015
BY JOE CORTRIGHT
The CRC is a cautionary tale about how we plan for, finance and invest in transportation infrastructure.
Monday, April 13, 2015
BY GRANT KIRBY | OP-ED CONTRIBUTOR
The mega-shift from technology-driven to data-driven organizations raises questions about Oregon’s workforce preparedness.
Thursday, April 23, 2015
BY JACOB PALMER | DIGITAL NEWS EDITOR
The entrepreneurial spirit was alive and well at the Oregon Angel showcase, an annual event for angel investors and early stage entrepreneurs.
Friday, March 27, 2015
BY JACOB PALMER
Five years in the making, the Portland Mercado — the city’s first Latino public market — will celebrate its grand opening April 11. A $3.5 million public-private partnership spearheaded by Hacienda CDC, the market will house 15 to 20 businesses in the food, retail and service sectors. It has some big-name funders, including the Paul G. Allen Family Foundation and JPMorgan Chase. The project goals are equally ambitious: to improve cross-cultural understanding, alleviate poverty and spur community economic development.
Tuesday, February 24, 2015
BY LINDA BAKER | OB EDITOR
At Oregon State University, a 21st century version of the bad dream — nuclear terrorism — is alive and well. This winter, the Department of Nuclear Physics and Radiation Health Physics created a new interdisciplinary graduate emphasis in nuclear forensics, a Sherlock Holmes-sounding program that aims to identify how and where confiscated nuclear and radiological materials were created.
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A new report highlights how Oregon bankers are giving back to their communities.
Since 1932 Tidewater Transportation & Terminals (operating as Tidewater Barge Lines and Tidewater Terminal Company) has operated a multicommodity transportation and terminal company based in Vancouver, Washington. The friendly expression on the company’s shipping containers reflects the attitude of about 330 safety and community-conscious employees but belies how complicated the barge business really is.
The Port of The Dalles has run marine facilities since the 1930s, but they are part of a larger mission to strengthen the local economy. They focus on regional economic development with a strong bent toward adding good-paying jobs in high tech, manufacturing and other industries.
Thinking about an MBA? Join us for our upcoming Wine & Cheese Information Session to learn more about Concordia University's MBA program.
Providing attendees with unique taste of the Northwest Reception.
CFM Strategic Communications turns 25 this year and is celebrating with a revamped website, special events for firm alumni and clients, a special-label wine and a list of 25 stories about its client work over the past quarter century.