eBriefing

The CEO Pay Seesaw

Balancing CEO comp satisfaction, pay ratio disclosure fallout, and intensifying scrutiny over big and inequitable paychecks.

By Eve Tahmincioglu

Few boards would appreciate the recent national headline on Time.com: “This CEO Makes 900 Times More Than His Typical Employee.”

The story focused on Marathon Petroleum’s CEO’s nearly $20 million compensation, the requirement this proxy season for corporations to report CEO pay, and how that compares to the median play for employees.

In local news, the Kansas City Star covered the disclosures by calculating how long it would take an employee to earn one year of what a CEO’s pay. For example, Commerce Bancshares’ median employee would need to work 90 years at 2017’s pay to equal CEO David Kemper’s $4.87 million.

Corporate leaders across the country have been preparing for the fallout from the new CEO pay ratio disclosure requirement, a rule that was part of the Dodd-Frank financial law. Unfortunately, it comes at a time when boards are facing pressure from many sides.

It’s like a compensation “seesaw” directors are trying to balance, says Aubrey Bout, managing partner for Pay Governance, a compensation committee advisory firm.

Uncle Sam's Tax Gift Basket

By Maureen Milford

How boards can capitalize on the bonanza, avoid the traps.

The sweeping rewrite of the tax code in late 2017 is set to bestow a bonanza on U.S. corporations. 

Part of the gift basket from Uncle Sam is the biggest cut in the top corporate tax rate in U.S. history, slashed from 35% to 21%. Other significant highlights of the bill provide for full write-offs on qualifying capital expenditures, a reduced rate to repatriate deferred profits earned overseas and a break on future profits earned abroad.

Because the more-than-1,000-page Tax Cuts and Jobs Act (TCJA) barreled through Congress like a high-speed train, more time is needed to fully understand the ramifications for corporations.

But it’s clear, directors and top managers will have to respond to the bill and take actions that will shape the future direction of their organizations. It could make for a challenging year as directors and top leaders attempt to seize opportunities and avoid any traps.

SEC Chair Offers ESG Disclosure Guidance

By Eve Tahmincioglu

Environmental, social and governance, commonly known as ESG, is a hot topic today in the boardroom, but what should companies be disclosing as far as these efforts?

Directors got a bit of direction from the nation’s top securities regulator recently.

It all comes down to “what helps the investor make an informed investment decision,” stressed U.S. Securities and Exchange Commission Chairman Jay Clayton who spoke at Drexel University’s Directors Dialogue Dinner where the establishment of the Raj & Kamla Gupta Governance Institute was announced.

The question about ESG disclosure came from F. William McNabb, the Institute’s first executive in residence and chairman Vanguard Group Inc., during a conversation the two men had before the Drexel audience earlier this month.

May 16-18

Boards & Business Disruption

How private and family businesses build an engaged and effective board of directors to copilot through today’s turbulence, including blockchain, sexual harassment, cybersecurity, the ‘Amazon’ effect, and more.

Learn from directors, business owners, investors and experts who have been there and can guide you on the governance path to success.

Directors & Boards, Family Business Magazine and Private Company Director invite owners, shareholders and board members of privately held companies to the Private Company Governance Summit 2018, May 16-18, 2018, at the Westin City Center, Washington, D.C.

Reserve your seat at the governance conference for directors, owners, and advisors of family-owned, closely held and private-equity owned businesses of all sizes.

Click here for more information.

Age Diversity a Board Priority, Not a Reality

By April Hall

Finding young blood for boards is a priority for sitting directors but despite that, only 6% of board seats are occupied by individuals who are under 50.

Of the S&P 500, only 43% (217 companies) have a younger director and for 50 of those companies’, the younger director is also the CEO, according to a PwC report titled  Board Composition: Consider the value of younger directors on your board released Tuesday.

The study found age to be the most important diversity issue facing boards, rising above gender and race. But that hasn’t translated into an influx of young directors into the nation’s boardrooms.

“It’s a very narrow population,” points out Paula Loop, Governance Insights Leader for PwC. “Not a lot of people retire at 50.”