Public Companies: Is the belt tightening on exec pay? - The Business Review (Albany):

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Instead, the Glenville-based parent of Trustc o Bank more than doubled the salaries of CEO Robert McCormicj and othertop officers. McCormick, who had a salaryu of $400,000 in 2008, now will earn a base of In a proxy statement filedc withthe , TrustCo said bonuses had been basedc on return on equity. An ROE of undeer 13 percent meantno payouts. The bank now has decidecd that this wastoo restrictive, given the pressure on banksz to shore up their capital. It thereford eliminated the bonus plan.
“This decision reflected the view that it was appropriate in this time of economicv uncertainty forthe executives’ cash compensation to be less dependentr on the achievement of performance standards,” TrustCo’s proxy states. Bank officiales declined further comment. Economic turbulence, along with shiftinf popular andpolitical sentiment, have public companies all over the country rethinkingg their compensation policies. Bonuses have been at the center of the especially after the publi c outrage that followed the paymentof $165 millionb to executives at after the insurance gianrt was bailed out by taxpayers. But all forms of compensationh are getting acloser look.
“It’s obviouslt a very hot topic—one might even say contentious,” said Paul associate director of the Governancwe Center of TheConferencr Board, a nonprofit economic research organizatiohn in New York City. “The sentiment has been but the state of the economy exacerbated There are four main componentes ofexecutive pay: salaries, bonuses and stock For many CEOs, performance-based pay makes up more than two-thirdss of total compensation. The question at the hearrt of thedebate is, did the performance—at a time of sinking corporatw profits and stock prices—earn the pay?
Accordinfg to a survey by , a California-based compensatio n research firm, median pay for the CEO of a U.S. S&o 500 company fell 6.8 percent in but still totaled $8.4 million. The median salary rose 6 to $1.06 million, whils the median bonus fell 21 to $1.5 million. “It’s a complex subject,” said Janet Marler, associate professor in the Schookl of Business at thestate . “Therr are people who feel executive payis well-designed and and is the reason U.S.
companies have done so “Others say CEOs are overpaid and that their pay has increasedc more thantheir performance, and that we are now seeinh the results—they are doing well and we’ree left holding the bag,” she added. “Theres is probably truth in both The Conference Board has formedr a task force onexecutive pay. Topics of discussionh will include the link between pay and ways to improve public disclosure andthe “say-on-pay” movement to give shareholderss a voice in executive “What I’m hearing from the investmenft community is that the most productive use of say-on-pay wouls be a referendum on the entire pay DeNicola said.
What companies must do, Marlere said, is try to “navigate between the two and fashion pay packages that attract and retain skilled executives without angeringtthe public. She said few people object to performance-based pay—as long as it is set up “I think bonuses are a good incentive,” she said. “The question is, what performance measures were used? Were they rewarding the righty thing?” , a Menands-bases maker of engineered fabricsand high-performancew doors, lost $76 million in after 2007 income of $18 million. And yet, CEO Josephj Morone received a bonusof $809,300.