That´s right, assume they are wrong. Some will be correct but most will not so if you want to bet with the odds, you´ll come out ahead my way.
What do I mean? I mean that when you read an article in the media over the next few months (well, any time really), it will report executive pay data that is not correct. I won´t write about this every week because it becomes tedious and results in my irritating more journalists than I would otherwise irritate. But we have some real gems this week:
KB Home Chief Gets $34-Million Pay Package (LA Times)
"The chairman and chief executive...earned $34 million in salary and bonuses in its fiscal year." This is an example of not only the headline and introduction being incorrect, but the two being contradictory. He received $1 million in salary and $5 million in bonus. That´s $6 million on my calculator. He got 250,000 stock options at a price of $62.34 (which you will soon see reported in other publications as having a "value" of $15.6 million and added into this year´s pay), a $28 million restricted stock award (which vests over several years), and a payout of $3.53 million under the long-term incentive program (which was paid this year but earned over the previous three years). As an executive compensation expert I could argue several different values for this "pay package" but none of them would add up to $34 million, and I suppose I could count both his annual bonus and his long-term bonus as "bonus" in which case his "salary and bonus" were $9.53 million. But the most important point is that the article´s headline and analyses are 100% incorrect.
Pay for CEOs at KB Home and Adobe (see below) make it interesting for reporters to write things like ""The economy is growing but the profits of that are not being shared with workers. They're going to the CEOs and the people owning stock." BEEP (that´s my incorrect-answer-buzzer, like on the game shows). Unfortunately the government wage data excludes pay that employees earn from stock-based compensation. So it´s correct that profits are going to the "people owning stock" but incorrect to write that profits are not being shared with workers. Give any Google employee a call.
Applebee's CEO Gets No Bonus After Results (Associated Press)
We have a winner, sort of. The writer got one fact correct. The CEO got no cash bonus. And he only got a measly 3.75% salary increase (that´s less than you got, right?). He did however get 47,500 shares of restricted stock (double the value of his restricted stock grant the year before) and 279,000 options (49% more than he got the previous year). But because he received no bonus you will probably see this story reported elsewhere discussing his "pay cut." Please.
Adobe CEO realizes $10.56 million from stock options (Associated Press)
This piece is one of the rare ones that is correct. The CEO realized $10.56 million in gains from grants in previous years. Salary, bonus, and new option grants are reported separately. You will see this CEO´s "pay for the year" reported elsewhere, however, as the total of all of these numbers and will have to wonder which is correct. This one reports the basics correctly.
Alright, enough writing about writers. Here are some other interesting compensation stories from this week. Just remember my caveat.
If this prediction is correct - and there are many corroborating projections and data trends - pay for these jobs will surge as salary increases resulting from the move, signing bonuses, new hire equity grants and other forms of transitional pay occur. Employers who have spent the past couple of years nickel-and-diming employees will get a harsh dose of the real cost of turnover.
The problem of "over-boarding" - sitting on too many Boards of Directors to possible be doing a good job on any one of them, or at your primary job - has already hit corporate America. It sure pays well, though. The UC system is continuing to learn about disclosure and accountability. (Disclosure: I have a graduate degree from UCLA and have no issues with the UC system or its schools. It is one of our country´s great educational systems. But I am a big fan of full disclosure.)
Fred Whittlesey, Chief Compensation Officer. Fred Whittlesey joined PayScale in 2005 as Chief Compensation Officer where he leads PayScale's compensation data acquisition and analysis program with a specific focus on data demographics, database quality and continued refinement of collection methodology. He can be contacted through his website: www.payscale.com
