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Agenda Week
July 26, 2010

Colgate-Palmolive Reduces Severance

"In recent years we have seen companies moving away from using some of the more executive-friendly bonus definitions for computing severance, such as the maximum opportunity or the highest bonus over a period of years," says Margaret Black, a compensation consultant at Pearl Meyer & Partners.

The board's reduction of the bonus component of severance is just one example of how companies have responded to pressure to remove executive-friendly provisions from change-in-control agreements that might have been more commonplace before, says Black.

"Some provisions that were fairly common in change-in-control agreements in the recent past such as excise tax gross-up provisions and walk-away provisions (contracts allowing executives to voluntarily leave for any reason after the CIC and still receive severance) are now perceived by some institutional shareholders and shareholder advisory services to be excessive," she writes in a e-mail.

In fact, the percentage of 61 Fortune 500 companies with executive change-in-control arrangements that included excise tax gross-ups declined to 62% in 2009 from 74% the previous year, according to Pearl Meyer & Partners data.

Agenda Week
July 19, 2010

AT&T, Fluor Offer Execs Excise Tax Relief

Eighteen percent (8% more than in 2008) of 61 Fortune 500 companies that provide CIC arrangements to their executives included the "best after-tax" provision in their arrangements in 2009, according to Pearl Meyer & Partners data. During the same period of time, the percentage of these companies providing excise tax gross-ups provisions to their executives also declined. While 74% of these companies provided this perquisite to executives in 2008, only 62% offered the excise tax gross-up in 2009.

San Jose Mercury News
June 6, 2010

What the Boss Makes: Silicon Valley companies relying less on stock options

As soon as it became clear that options would carry an expense, they were the first thing compensation committees re-examined, said Jim Heim, managing director in the Boston office of executive compensation consulting firm Pearl Meyer & Partners.

"We're nearing a tipping point at tech firms where time-vested restricted shares may make more sense than options," Heim said.

The Atlanta Journal-Constitution
June 6, 2010

Georgia CEO Pay Not Tied to Success

The regular paycheck is just the starting point, said Joe Mallin, managing director and head of the Atlanta office of Pearl Meyer & Partners: "What you get paid for is showing up and putting forth effort."

If that effort doesn't produce the right results, the rest of the package of bonuses and stock options are not going to kick in, Mallin said. Yet setting up the incentives is not simple, he said: For what is the CEO truly accountable? How much of a change can he or she make? Do you compare the company's success to the broad economy? To the industry? To similar companies? Or perhaps only to its own past?

"I spend a lot of time with lots of boards and I get the impression that they believe they are more pay-for-performance-oriented than in the past," Mallin said. "Forecasting the future is inherently difficult, and it seems like over the last 10 years it has become more difficult."

Crain's Chicago Business
May 24, 2010

Washington Weighs Stronger Rights for Shareholders Compensation Practices and Risk Management

"Everybody's waiting to see how much everybody else says [about compensation-based risk]," says Jannice Koors, a managing partner at Pearl Meyer & Partners LLC in Chicago. "My guess is this first year we're going to see a lot of boilerplate language. Whether or not future disclosure is any different depends on how the SEC reacts to that."

"[Say on Pay is] likely to be less effective here because, in England, the concentration of major shareholders is much greater," Ms. Koors says. "American shareholders are less likely to agree on what their objectives are. And having shareholders say, 'I don't like your pay program' is only effective if they can also say, 'Here's what I want you to fix.'"

Crain's Chicago Business
May 24, 2010

As Shareholder Scrutiny Rises, CEOs' Once-Unassailable Perks Face the Ax, Too

"The first wave in the evolution of perks was getting rid of the status perks - the country clubs, the Lear jet," says Jannice Koors, director of the Chicago office of independent compensation consultancy Pearl Meyer & Partners. Companies were able "to keep the perks that made executives more productive, like the car and driver so he has more time to work. Now even those perks are getting heavily criticized."

"We're counseling our clients that, with the amount of press perks get and the ire they generate, nine times out of 10, it just isn't worth it," Ms. Koors says. "You've only got so much attention from the public and your shareholders. Is this what you want to spend your time defending?"

Compliance Week
May 17, 2010

Survey Shows There May Be More Work to Do on Comp Risk

The findings [of Pearl Meyer & Partners' pay-for-performance survey] show corporate boards are taking a bigger role in setting and enforcing performance standards. As a result, public companies are likely to make fewer incentive payouts to executives who fail to hit specific performance targets, says Matt Turner, managing director of PM&P.

Companies have traditionally had some discretion to make payouts when performance targets were missed to recognize executives' efforts or factors outside their control. Now, Turner says directors face pressure to directly link pay with meaningful performance, since proxy disclosures give investors detailed information about how incentive plans are administered.

While most directors expressed a willingness to pay executives more for truly superior performance, they're uncomfortable with the idea of open-ended pay programs. Turner says their concern likely relates to uncapped cash bonuses and equity "mega grants."

"Directors are less comfortable than they were five or six years ago with extremely large payouts even when is performance strong, which signals a shift in thinking that paying for effort for executive compensation is not a good idea," say Turner.

Complinet.com
April 7, 2010

Don't End Pay for Performance, Banks Warned

Banks adopting new compensation policies should not eliminate incentives for individual performance, Susan O'Donnell, a compensation consultant at Pearl Meyer & Partners, has said. The advice comes as regulators have proposed rules that rein in compensation practices which encourage employees to take risks that would threaten the firm's stability.

The proposals have raised fears that some banks will do away with incentive-based compensation plans and opt for fixed pay plans instead. "To take that away would be going into an environment of fixed pay. That goes back to 20 years ago. Incentive pay helps performance. If you take that away we drive up fixed costs which can affect competitiveness," O'Donnell said.

Consulting Magazine
April 1, 2010

Excerpt from "One on One" Profile with Managing Director Steven Van Putten

People want to be paid for what they do and recognized for their services. However, most firms focus on the greater organization and are less about the individual. The companies that are having the most success are those that are really trying to differentiate the best performers, who pose the biggest risk of leaving, from everyone else. The goal is to give greater rewards from a fixed pool to your top performers to encourage retention for a longer period of time. This is still a work in progress for many companies.

U.S. Banker
April, 2010

Seeking New Balance on Pay Policies

Laura Hanf, a compensation consultant for Pearl Meyer & Partners LLC, said she is seeing more regional banking companies express interest in clawbacks as a way of aligning the interests of management and investors. Alternative changes to clawbacks could involve lengthening the amount of time it takes to earn an incentive. Many banks are looking to scrap the long-standing model based on annual payouts to ones that cover multiple years. Others are interested in replacing time-based vesting altogether, issuing performance-based restricted stock instead.

Hanf said another area ripe for review involves incentives for loan officers, particularly those dealing in commercial lending. However, she said, few banking companies have reached a stage of implementing such changes.

Society of Women Engineers
Spring 2010

Women Hit the Sweet Spot on Corporate Boards

Jan Koors, managing director at Pearl Meyer & Partners, said the data [showing relatively few women on corporate boards] shows that companies historically have looked for board members from the ranks of their chief executive officers and former CEOs. Yet times are changing quickly. "Women have started to move up the corporate ladders to fill those CEO positions," she said. "And boards are now reaching beyond the corner office to fill new-member positions."

Directorship
February 15, 2010

Balancing Risk and Compensation

David N. Swinford, president and CEO of Pearl Meyer & Partners, led a group of directors in a robust discussion of the current challenges of executive compensation and risk oversight at the Directorship 2010 Corporate Governance Outlook Roundtable at Nasdaq OMX in New York.

Swinford addressed the concept of simplification, not over-simplification: "We have a lot of things in our executive compensation programs that are not only hard to explain to shareholders-but in fact, in many cases, the participating executives do not understand them." He emphasized that "by trusting your gut and being very candid in your deliberations with each other, putting all of the issues on the table and having the courage to say, 'This isn't the right thing to do, we should do it differently,'" will enable [directors] to create programs that will stand up to shareholder and regulatory scrutiny. Swinford said that he believes "discretion" is often a negative term, and suggested that "judgment" be considered as a substitute. "It allows people to say, after the fact, [if] it turns out that the performance goals were too easy, either because the economy was better than expected, or vice versa. It means executives would commit to never coming back and asking for special exceptions to the way the plans work," he said....

"I don't think there's any argument for balance at all [between long-term and short-term shareholders]. I think in this analysis lies the roots of schizophrenia." He added that as soon as a board attempts to appeal to one particular group, the result is a situation where a board is trying to manipulate results to meet the needs of that particular group-and it can't be done. "You cannot manage for maximum share price appreciation in one year, two years, three years," Swinford said. "You can try. But in the long run, you will not succeed at doing that."

BusinessWeek
February 12, 2010

Sarbanes-Oxley Lifts Some Directors' Pay Higher Than $1 Million

According to compensation consultants Pearl Meyer & Partners, the typical director of a large corporation made $216,000 last year, up from $129,667 in 2003.

ABA Banking Journal
January 28, 2010

FDIC's Comp Proposal Raises Questions and Concerns - Plan Would Link Compensation to Deposit Insurance Assessments

"Compensation has become a lightning rod for the financial crisis, but the financial crisis' roots goes beyond compensation in my opinion," said Susan O'Donnell, managing director at Pearl Meyer & Partners, a leading compensation consulting firm.

"Most of my bank clients are either in a state of panic about this, or are trying to put processes in place without really knowing exactly what they have to do or what the regulators are going to ask for," O'Donnell added, reflecting on the mass of concern over pending legislation, the Fed proposal, and the FDIC announcement.

For O'Donnell, the FDIC's fixation on restricted stock as part of the "safe" structure is puzzling and problematic. Compensation programs are best when matched to corporate strategies, O'Donnell said, and many plans, in her experience, are not stock-based and yet don't encourage excessive risk taking. As published, she said, the FDIC concept "is very, very TARPish."

The flip side of not encouraging risky behavior in the short-term, added O'Donnell, is "sustainability of performance in the long-term. And you can get at that through many means."

CFO.com
January 26, 2010

Compensation Restoration

In general, executive pay cuts have been "modest," in the 5% to 10% range, says Steven Van Putten, managing director at Pearl Meyer and Partners. "You're focused on cost control and you're focused on perception," he says. "You want to show executives are sharing in the pain."

A number of companies that announced executive salary reductions in 2009 after the Equilar count have already restored those salaries as well...."As economic activity picks up generally, there's concern about retention, irrespective of what's going on in a particular company," notes Van Putten.

FinCri.com Advisor
January 17, 2010

Money Talks: Community and Money Center Banks Clash as Do Regulators Over Incentive Pay

The Fed's approach - shifting to more salary-based pay - also runs counter to the shift toward pay-for-performance, offers CEO David Swinford and Managing Director Susan O'Donnell of Pearl Meyer & Partners, an executive compensation consulting firm in New York. "Removing or obfuscating the line of sight between concrete actions and outcomes may eviscerate incentives to achieve important goals," they write. "We fear that the unintended consequences of these burdens will be abandonment of any incentive compensation programs whatsoever, and perhaps higher salaries.... to make up for the difference."

Reuters
January 14, 2010

Will Hearings Alter Big Bank Bonuses? Pay Experts Say, "No"

Susan O'Donnell, a managing director at compensation practice Pearl Meyer & Partners LLC, said what while claw backs are emerging as a way to promote a focus on long-term performance, they can be difficult and costly to enforce. Instead, she said, financial-services firms are talking more about so-called bonus banking, where part of the bonus is "banked" in a savings account and paid out incrementally over a number of years. "The idea is to hold back some of the performance bonus, and pay it out after that performance is sustained," she said.

Atlanta Business Chronicle
January 9, 2010

ICE Raises Bar on Shareholder Disclosure

"Increasing shareholder accessibility to information is a good thing," said Greg Stoeckel, managing director at corporate governance consultant Pearl Meyer & Partners LLC's Atlanta office. "Helping other shareholders understand the totality of their stake in the company and 'Are they making money by doing this?' adds transparency."

The Charlotte Observer
December 9, 2009

Pay for Top Carolinas CEOs Rose Last Year - Trend Not Likely to Continue in 2009

"It's harder and harder to be a CEO right now, with all the pressure to perform in a down economy," said Mark Rosen, managing director in Charlotte for Pearl Meyer & Partners, an executive compensation consulting firm.."Through the third quarter of last year, many organizations had record years. Then everything fell off the cliff."

ABA Banking Journal Podcast
October 30, 2009

Click here to listen to an interview by ABA Banking Journal Executive Editor Steve Cocheo with Managing Director Susan O'Donnell on how the Federal Reserve's proposal on executive pay is likely to affect community banks and what boards and management need to do.

ABA Banking Journal
October 30, 2009

Meet Your New Pay Consultant — The Fed

All in all, the Fed's [proposed guidance on pay practices at certain financial institutions] shouldn't come as a great surprise, said Susan O'Donnell, managing director at the Pearl Meyer & Partners consultancy. She added that even clients who believe that they won't be affected directly by the Fed proposal have called asking for guidance, in the belief that their institutions will eventually need to follow suit simply as a "best practice."

MarketWatch
October 20, 2009

Pay Czar Says There is a 'Chasm' Between Wall and Main St

David Swinford, president and CEO Pearl Meyer & Partners, a compensation consultant, told conference attendees that companies are still focusing too heavily on short-term incentive schemes.

"I consider short term as anything under five years," Swinford said. "We've gotten too short term in our thinking."

CNNMoney.com
October 20, 2009

Wall Street Fat Cats Fear the Pay Czar

"Everyone is interested in hearing the 'blueprint' and guidelines that he is setting for these large companies," said Susan O'Donnell, managing director at compensation consultancy Pearl Meyer & Partners.

Corporate Board Member
September/October 2009

The Comp Committee Takes its Turn on the Barbie

According to David Swinford, CEO of Pearl Meyer & Partners, a New York City-based compensation consulting firm that helps comp committees put pay proposals together, boards are demanding more of these committees. "Increasingly they're insisting that comp committees justify their pay recommendations," he says...Boards are putting pressure on the committee members to explain how and why they've come up with certain compensation proposals — proposals that could become the subject of external debate or perhaps litigation. "We have to convince them of our recommendations," says Swinford, "and they have to be able to convince the board."

ABA Banking Journal
September 2009

Pay in the Spotlight

Over the last year, much has just been "slapped on banks quickly," says Susan O'Donnell, Boston-based managing director for the Pearl Meyer & Partners consultancy. "We'll see the repercussions of this on the back end." The irony, O'Donnell hears from bankers, is that they are facing potential limitations, or major shifts, to their compensation when many of them are working the hardest of their careers.

The reaction in many community banks, in the short term, has been to excuse themselves from as much of the current trouble as possible, says O'Donnell. "There has been a huge shift towards increasing base salaries," she says, and pulling away from incentive pay and long-term compensation.

That's a boomerang from the immediate previous trend, towards an emphasis on performance-based pay for top officers. Boards liked that, O'Donnell says, because it encouraged results. Over time, however, when the tide was rising, a certain level of performance pay began to be regarded as an "entitlement," to use O'Donnell's word. "Now, that entitlement mentality has to be readjusted," she says. The other paradox is that as base pay has become reemphasized among community banks, some wonder, 'Does the shareholder want to pay salaries to executives when they are not making money for them?'" she asks.

The Charlotte Observer
September 20, 2009

Perks Getting a Second Look

Mark Rosen, with consultants Pearl Meyer and Partners in Charlotte, expects many perks to vanish. Compensation committees "are asking the question, 'Why can't you (cover perk expenses) with the money we are paying you?'" he said.

Plastics News
September 8, 2009

Cash Key to Short-Term Survival

"Companies are setting broader ranges for short-term performance targets and lowering the threshold that needs to be reached for an initial payout," said Joe Mallin, the managing director of the Atlanta office of New York-based compensation firm Pearl Meyer & Partners. "Companies had a great deal of difficulty in setting target plans this year because of the uncertainty in the economy," he said. "So most companies widened the range and moved the target for the first payout under short-term incentive plans lower, because the potential range of outcomes was so wide and difficult to forecast."

"If a company in the past set a range of $40 million to $60 million for an operating-income performance metric", he explained, "it would be prone to change the range to $30 million to $70 million, with the first payout under the plan occurring at $30 million."

..."Executive compensation is unfairly painted with a dark brush in the United States, and I disagree with that assessment of it," Pearl Meyer’s Mallin said. "In general, I think the plans worked. I think most companies do compensation pretty well. There is a lot more pay for performance than the business world is given credit for. Unfortunately, it is the pay for non-performance that winds up getting the headlines."

Agenda
September 8, 2009

Wal-Mart’s Comp Committee Adopts Tally Sheets

"There was a huge movement during the 2004, 2005, 2006 time frame" for boards to start using tally sheets because at that time companies weren't required to disclose a tally or a single number indicating what an executive was making, says Michael Enos, a compensation consultant with Pearl Meyer & Partners.

In 2006, the SEC's expanded compensation disclosure rules may have reduced the urgency boards feltby requiring that boards include the information typically contained in a tally sheet in their proxy statements, Enos says. With scrutiny of executive compensation heightening, however, a board might decide to adopt a tally sheet policy to improve corporate governance and for optics purposes. "I think [disclosing the use of tally sheets] demonstrates for shareholders that boards are going to be making informed decisions," Enos says.

Boardroom Insider
September 2009

5 Board Risk Management Tools

Ask tough questions on the dangers of risk and pay elements, says Pearl Meyer comp consultant Deborah Lifshey. "Is there any piece of the comp plan that could take down the company? Also, run the numbers on the plans at the most outrageous levels of achievement possible. If they really do look outrageous, there's probably too much risk."

Directorship
August 20, 2009

Economic Ills Spur Greater Board Scrutiny

David Swinford, president and CEO of Pearl Meyer & Partners, an executive compensation consulting firm, said the recent collapse or near-collapse of so many once venerable firms serves to remind directors that "preserving the corporation" should be their top concern. To do that, he suggested that boards work to avoid "group think."

The upcoming January through March "pay decision-making season" should also see directors "worried about how to balance pay for non performance," Swinford said.

Compliance Week
July 31, 2009

Comp Bill Passed, Poll Reveals Companies Unprepared for SOP

Preliminary results of a SOP survey due out shortly by compensation consultancy Pearl Meyer & Partners shows that nearly 70 percent of 127 respondents haven't taken any steps to prepare for a "Say-on-Pay," and only a quarter say their companies are either "prepared" or "very prepared" for such votes.

Just 7 percent of respondents say they're "very concerned" about a SOP vote, while more than half are either "somewhat concerned" or "not at all concerned." Meanwhile, 44 percent say they expect an SOP requirement in the 2010 proxy season.

"At this point it doesn't appear that there's a tremendous amount of concern around SOP," says Michael Enos, a managing director in PMP's Boston office. That's somewhat surprising, says Enos, since the pay decisions being made about 2009 pay could potentially be subject to a shareholder vote as early as next year.

"Given that the TARP companies that had to implement say-on-pay votes this year were caught by surprise and had to scramble to put it in the proposals, you’d expect people to learn from that," says Enos.

Pension & Benefits Daily
July 28, 2009

Practitioners Assess House, SEC Proposals To Manage Risk-Taking in Setting Exec Comp

Deborah Lifshey, managing director of Pearl Meyer & Partners in New York, told BNA July 23 that although the SEC's power is limited to disclosure, when disclosure rules change, "companies carefully scrutinize the optics of their programs." Unfortunately, Lifshey said, in many cases this may lead to the "tail wagging the dog" — compensation programs designed to be pleasing to the investor's eyes, rather than compensation designed to attract, retain, and motivate an excellent management team that is in fact intended to foster long-term benefits for shareholders."

"If risk must be disclosed and it is perceived as 'bad,' companies may lean towards elimination of the good kind of risk that encourages innovation and expansion," Lifshey said.

Corporate Board Member
July 23, 2009

Say on Pay is Heading Your Way

"[This legislation] will have a tremendous impact on boards. The goal is transparency and accountability and this will force companies to be transparent and accountable in their compensation programs," says Deborah Lifshey, managing director, Pearl Meyer and Partners. If signed into law, she thinks the mandate will help companies to be clearer about pay in their CD&As and have more confidence in their pay programs.

Wilmington Star-News
July 5, 2009

Salaries for some top executives are public

"In North Carolina about 27 banks took TARP money," said Laura Hanf, vice president of Pearl Meyer & Partners, a compensation consulting firm based in New York with offices in Charlotte. There are more than 200 state-chartered banks. "But what will happen is you're going to see some trickle down effect based on" what the Obama administration is proposing as a platform on executive pay, she said.

Indeed, the pressures on perceived excesses in executive compensation extend beyond bank firms. "What you really are going to see is pressure for companies to eliminate most of the perquisites for executives, especially ones that are seen in the public eye as luxury expenditures," Hanf said. "Personal use of aircraft, redecorating expenses for your office. In this economic environment it is going to be very difficult for companies to defend those perquisites."

St. Louis Business Journal
July 3, 2009

Smit paid well to run bankrupt Charter

"Where there is an urgency around a certain course of action or result, it is not uncommon to see a board say, 'For this year we are going to put all our eggs in one basket. This is the one thing we want management to focus on and what we will reward them on,' " said Jannice Koors, managing director of Pearl Meyer and Partners, a New York-based executive compensation consulting firm.

Investment News
June 21, 2009

Directors' Role at Center of "Say on Pay" Debate

Now that companies receiving Troubled Asset Relief Program funds are required to allow say-on-pay votes, it is only a matter of time before the requirement is expanded to include all public companies, said Susan O'Donnell, managing director in the Southborough, Mass., office of New York executive compensation consulting firm Pearl Meyer & Partners LLC. “Nobody's going to escape this, ” Ms. O'Donnell said.

Agenda News
June 16, 2009

Exec Comp Proposals May Mark Huge HR Change at Financial Firms

“The days of an individual producer making a $20 million bonus in a year are going to decline,” said David Swinford, president and CEO of Pearl Meyer Partners, a New York-based executive compensation consultant....“I do think that HR will put more emphasis on people who follow rules well as opposed to the super-entrepreneurial types.”

CNNMoney
June 10, 2009

Obama Administration Wants to Give Investors More Say on Executive Compensation - But Will the Changes Go Far Enough?

One expert warned, however, that it would be troubling if Feinberg was given too much power. "Should [Feinberg] oversee, supervise and control compensation at these companies? Sure. Should he actually be designing programs and setting individual pay levels? That's concerning," said Susan O'Donnell, managing director at compensation consultancy Pearl Meyer & Partners.

Reuters
June 8, 2009

Treasury to sketch pay rules on Wednesday

"I think we're going to see more [performance] measures on things like liquidity and capital that in the past weren't as big an issue," said Susan O'Donnell, a Boston-based managing director at compensation consultant Pearl Meyer & Partners.

Mercury News
June 6, 2009

What the Boss Makes: Silicon Valley Companies Relying Less on Stock Options

As soon as it became clear that options would carry an expense, they were the first thing compensation committees re-examined, said Jim Heim, managing director in the Boston office of executive compensation consulting firm Pearl Meyer & Partners. "We're nearing a tipping point at tech firms where time-vested restricted shares may make more sense than options," Heim said.

Boston Business Journal
May 15, 2009

Community banks fight an image problem

Susan O'Donnell, a banking consultant and managing director in the Boston office of Pearl Meyer & Partners, agrees with [community bankers'] sentiments regarding guilt by association. "All banks are being painted with the same brush — inappropriately so," she said. "The small community banks were not the drivers of the banking crisis, but they are living with the repercussions."

Treasury & Risk
May 1, 2009

Compensation Cyclone

Indeed, more companies are considering such special retention arrangements as cash contributions made to deferred compensation accounts for CFOs than for other top executives, according to David Swinford, president and CEO of Pearl Meyer & Partners, a New York-based compensation consulting firm.

Recent surveys of company pay practices reveal a spate of salary freezes and, in some cases, reductions. "Companies that were talking about 4% to 5% increases in October are now talking about freezes," says Pearl Meyer's Swinford. As financial results continue to suffer, the decline in annual performance bonuses is likely to accelerate, especially in hard-hit industries such as retail and construction.

Associated Press
APril 30, 2009

Changes may be afoot in '09

"The message to companies: Their programs are biased (toward executives) over the long term," said David Swinford, who heads the compensation consulting firm Pearl Meyer & Partners.

Associated Press
APril 29, 2009

CEOs still get lavish perks in tough times

"Companies are looking for stuff that isn't central to their pay programs," said David Swinford, chief executive of the compensation consulting firm Pearl Meyer & Partners. "Optics are very critical right now."

HR Magazine
April 4, 2009

Executive Pay: Perception and Reality

The mix [of long-term incentives] a committee chooses depends on its priorities. For retention, look to time-based restricted stock; for performance, look to options, says Jim Heim, managing director at Pearl Meyer & Partners in Southborough, Mass.

Corporate Secretary
APril 2009

State of pay

'If you're a company that's accepting Troubled Asset Relief Program (TARP) funds, you're now subject to a set of very, very strict regulations under the American Recovery and Reinvestment Act (ARRA),' says Deborah Lifshey, a managing director at Pearl Meyer & Partners, an executive compensation consulting firm in New York. Over the past few months, it's become abundantly clear that government help comes "with a lot of strings attached," she says. Just how onerous the new executive compensation regime will be remains to be seen. "The ARRA has so many holes you could drive a truck through it," laments Lifshey.

Lifshey recommends considering say on pay a year in advance because a vote during the 2010 proxy season will be a referendum on the practices of 2009. In other words, says Lifshey, "as compensation committees make their decisions this year, they have to know the decisions will be under the microscope and may well be subject to a shareholder vote next year."

Charlotte Observer
March 20, 2009

Banks rethink their pay structure

[Some] say that, in a good economy, bankers began to view their bonuses as entitlements instead of as performance pay – another incentive against being prudent.

"People were incented to bet big," said Laura Hanf, vice president of Pearl Meyer & Partners, a compensation consulting firm with offices in Charlotte. "If you win, you make millions. If you lose, there's always next year, or there's always another job, and by the way, the job probably comes with a six-figure sign-on bonus."

Washington Post
March 19, 2009

In Slump, Firms Move Performance Goalposts - Companies Reward Executives Despite Poor Results

Four in 10 companies surveyed by compensation consultancy Pearl Meyers & Partners last month said they might pay out less than what the executives would have been entitled to based on corporate performance.

Compliance Week
March 17, 2009

Crafting Proxy Language for the Say-on-Pay Vote

"Most of these companies are small community banks, and this is the first time a lot of them have heard of say-on-pay," says Susan O'Donnell, head of the banking practice at compensation consulting firm Pearl Meyer & Partners. "A lot of the calls I've been getting have been, 'What's say-on-pay and what does it mean?'"

Most small community banks actually have conservative pay practices, O'Donnell says. "[But] there's such ire against banks generally, even healthy banks are getting a bad rap. My concern is that they'll all get tarred with the same view."

Pension & Benefits Daily
March 5, 2009

Bad Economy Injects New Reality into Executives' Pay Expectations

David N. Swinford, president and CEO of Pearl Meyer & Partners, noted that since [a similar survey taken by the firm in November], Directors and executives have moved closer together in their expectations for change. "It is difficult to fix a problem until both parties acknowledge that something is wrong," he said. "This suggests a positive coming together of minds on the need for significant change."

Compliance Week
March 4, 2009

Firms Mull Salary Freezes, Bonus Cuts, More

The market turmoil and increased public scrutiny of executive pay continue to impact companies' compensation decisions, with more companies mulling freezing salaries, lowering bonus payouts, and cutting stock-based awards, according to the latest survey by compensation consultancy Pearl Meyer & Partners. Among 436 board members, executives, and human resources professionals surveyed in February, 90 percent say the troubled economy will color their compensation decisions over the next six months. The poll, Executive Pay in the New Economy, updates a similar study of 410 participants conducted by Pearl Meyer & Partners last November.

Boards and management are increasingly moving to reexamine executive pay design even in industries not directly affected by the executive pay restrictions imposed by Treasury on companies that have taken federal TARP funds, says David Swinford, president and CEO of Pearl Meyer & Partners.

Directorship
March 3, 2009

More Companies Making Cuts to Pay Plans

Fully 90% of respondents in February [to the Executive Pay in the New Economy survey series] said the troubled economy will color their compensation decisions over the next six months. "That suggests that in contrast with the sustained economic and executive pay growth of the previous decade, many Boards realize they will have to better manage executives' expectations about their likely career earnings," said David N. Swinford, president and CEO of Pearl Meyer & Partners.

Financial Week
March 2, 2009

Hot trend: Companies freezing executive pay

"It is difficult for companies to justify executive salary increases when growing numbers of employees face layoffs and more firms are struggling just to survive," said David N. Swinford, president and CEO of Pearl Meyer & Partners, in a press release.

Boards also are less willing to cushion executives from plummeting market prices..."Boards are rejecting the argument that larger grants are needed in 2009 to replace the retention 'glue' provided by past stock awards that have lost enormous value in the market downturn," Swinford said.

Compliance Week
February 24, 2009

Confusion Reigns Over Pay Restrictions

Susan O'Donnell, a managing director at compensation consulting firm Pearl Meyer & Partners says a troubling aspect is that the law "takes a broad-brush approach and puts all of the banks in the same group," unlike the Treasury rules, which differentiated between healthy firms and those that need "extraordinary assistance."

The restrictions essentially "eliminate pay for performance and eliminate the ability of compensation committees to make pay decisions other than base pay," O'Donnell says. Under the new restrictions, she says, "Even small, local community banks with conservative pay programs will see pay cuts."

Reuters
February 9, 2009

Comp and circumstances changed, bankers may move on

Jannice Koors, managing director at pay consultant Pearl Meyer & Partners, said banks have to make sure that even for the executives they keep, pay is not slashed too much. "It is a 'deferred brain drain' risk," she said. "The minute this market turns around, and those executives' phones start to ring with other opportunities, they will be more willing to listen."

Pension & Benefits Daily
February 6, 2009

Practitioners Critique Treasury TARP Rules Designed to Curb Excessive Executive Pay

"It's entirely reasonable to expect some sort of restraint with respect to executive compensation when you take government funds," Mark Rosen, managing director in the Charlotte, N.C. office of the compensation consulting firm Pearl Meyer & Partners. However, Rosen was critical of Treasury's policies, especially a proposed rule that would permit restricted stock for TARP executives to vest only after the government had been repaid the money it invested. Treasury effectively established a single performance measure to trigger the vesting of restricted stock, "which is thou shalt repay the government as soon as possible," Rosen said. "Is that in the best interest of creating jobs? Is that in the best interest of loaning money and doing the things that banks are supposed to be doing?"

New York Post
February 5, 2009

On Wall Street: Who Could Live on $500K?

Mark Rosen of Pearl Meyer & Partners, a compensation consulting firm, said the move [to cap salaries for executives of companies receiving federal rescue money] has pros and cons. "I personally think it's reasonable to put some sort of restraint on executive compensation when you use government money," Rosen said.

Reuters
February 4, 2009

Wall Street faces new frontier on bonuses, perks

Jannice Koors, managing director at pay consultant Pearl Meyer & Partners, said banks have to make sure that even for the executives they keep, pay is not slashed too much.

"It is a 'deferred brain drain' risk," she said. "The minute this market turns around, and those executives' phones start to ring with other opportunities, they will be more willing to listen," she said.

Directorship
February 3, 2009

Directors' Pay: The Median Is the Message

"Being in the middle is the safe ground," says Jannice Koors, Pearl Meyer & Partners managing partner. "Companies can attract and retain highly qualified directors and not worry about being accused of overpaying. Meanwhile, companies in the middle are perceived as not paying so much that their directors have lost the veneer of independence."

Two places where there were double-digit increases this year over last, notes Koors, are at opposite ends of the spectrum: the largest and smallest companies on the Top 200. This year's analysis underscores how the competition for director talent among the largest Top 200 companies has pushed up the rate of compensation. "The smaller companies— in the wake of SOX and the increased exposure to directors as a result—are still playing catch-up to what is a minimum level of pay required for the agony for being on any public company board today," Koors says.

CFO
February 1, 2009

Losing It - Holding a Personal Financial Stake in their Companies Has Cost Many Managers a Bundle

"If the stock price is down 30 to 40 percent, even if it's a market issue and you're hitting internal targets," says compensation consultant Jim Heim at Pearl Meyer & Partners, "there's a perception of misalignment between shareholders and executives" if executives reap rewards.

Compliance Week
January 27, 2009

Reversal of Fortunes: CEO Salaries Now Squeezed

Salary freezes are on the table at hundreds of companies, according to the results of a November survey conducted by compensation consulting firm Pearl Meyer & Partners... Moreover, 36 percent of respondents to the survey said they plan to pay a bonus that's "below formula"—that is, less than what executives would have earned based on achievement against the plan's stated objectives. "Compensation committees aren't just relying on poor performance to produce lower results," says Jim Heim, a managing director in Pearl Meyer & Partners' Boston office. "In some cases, they're giving executives a haircut on top of an already small bonus based on performance."

Agenda
January 12, 2009

Sector Outlook: Energy Boards Seek New Comp Incentives

Utilities may find it easier to develop incentive pay packages because of their relatively stable revenue flows. Regulatory agencies set utility rates on a 12-month or longer time period, which can include fuel price pass-alongs, facilitating long-term incentive planning. "Utilities have been more protected from the Wall Street slump," says Jim Heim of Pearl Meyer & Partners. "There isn't the same level of panic [as in other sectors].

Reuters
January 6, 2009

Bank of America CEO skips bonus

As long as banks are getting government support, it will be harder for them to pay out large bonuses to senior executives, said Jannice Koors, managing director at compensation consultancy Pearl Meyer & Partners. "There's a recognition that paying large bonuses now does not look good," Koors said.

Midwest CEO
January 2009

Lessons Learned: The Play on Pay

Pearl Meyer & Partners CEO David Swinford was the focus of a Q&A on how the economic downturn will affect compensation programs, including why some executives aren't complaining about the lack of a bonus in 2008.

Nobody wants to be the poster child for greed. There are a lot of executives out there who recognize that they're in this for the long haul, and the last thing they want to do is damage relationships with the board or with shareholders when times are tough for everybody.

Directorship
December 2008 / January 2009

The Median is the Message - Director Compensation at Large-cap Companies is Beginning to Moderate

The Top 200 companies tend to be leading indicators and thus provide relevant guidance for all comp committees, according to Jannice Koors, PM&P managing director. Contributing to the middling trend is an increasing fear of being an outlier. "Being in the middle is the safe ground," Koors says. "Companies can attract and retain highly qualified directors and not worry about being accused of overpaying. Meanwhile, companies in the middle are perceived as not paying so much that their directors have lost the veneer of independence."

"When you look at the increase in compensation, it is coming in the form of equity rather than cash, and if I'm a shareholder, I probably think that's a good thing," says Koors...Boards among the Top 200 also seem to have found a pay mix that is working. It consists of about 60 percent equity and 40 percent cash. "I think companies today would have a very tough time coming up with a viable rationale why it made sense to move away from a pay structure that is at least 50 percent equity. That would be a very tough sell," Koors explains.

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