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Tech company CEO compensation raises ire

Efforts at reform proceeding, but slowly
By Ann Bednarz , Network World , 05/09/2008
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Executive compensation has been a hot-button issue for several years, and the final crop of fiscal year 2007 proxy statements filed in March and April did little to quell the cry for reform from industry watchdogs, activist shareholders and the general public.

In the high-tech industry alone, dozens of CEOs came away with multimillion dollar compensation packages, pumped up by huge stock and option awards. 

"Half of these companies had horrible years for their stockholders, yet the CEOs still walk away with sinful amounts of money," voiced one Network World reader in response to our compilation of CEO compensation  at 30 network-industry companies. "As an investor, I would like more accountability from the executives of publicly held firms. By accountability, I don’t just mean that they have to certify their financial reports. I mean they shouldn't get a bonus unless they have improved the investors’ positions."

Click to see: Chart of CEOs compensation

Network chiefs take home the dough
These 12 CEOs (and former chiefs) topped our compensation tallies.

Name, company Salary Bonus Stock awards Option awards Non-equity incentive plan compensation Change in pension value & nonqualified deferred compensation earnings All other compensation Total 2007 compensation

John Chambers, Cisco

 

$350,096 $3,500,000 $0

$7,126,514

$0 $0 $7,677 $10,984,287
Paul Otellini, Intel $770,000 $0 $595,100

$6,034,700

$3,964,200 $0 $178,000 $11,542,000
Jonathan Schwartz, Sun $980,769 $0 $7,582,647 $2,776,603  $2,507,000 $20,559 $246,569 $14,114,147
Joe Tucci, EMC $93.5B $88.2B 6.1% $23.8B  5.5% from Q107
Announced April 28, 2008
$0 $0 $0 $0
Randall Stephenson, AT&T $61.1B $57.4B 6.4% Due in May $0 $0 $0 $0
Sam Palmisano, IBM $51.1B $44.3B 15.4% $14.45B 13.6% from Q307
Announced April 24, 2008
$0 $0 $0 $0
Mark Hurd, HP $46.5B $43.7B 6.4% $11.42B 2% from Q107
Announced April 30, 2008
$0 $0 $0 $0
Ivan Seidenberg, Verizon $40.1B $41.0B 2% Due May 12 $0 $0 $0 $0
Larry Ellison, Oracle $38.3B $35.4B 8.3% $9.7B 9% from Q107 Announced April 15, 2008 $0 $0 $0 $0
Gary Forsee*, Sprint Nextel $36.6B $42.8B 14.5% $7.45B 21% from Q107
Announced April 24, 2008
$0 $0 $0 $0
Edward Whitacre*, AT&T $34.9B $28.5B 22.5% Q308 revenue $9.8B 10.4% from Q307
Announced May 6, 2008
$0 $0 $0 $0
Comcast $30.9B$24.97B23.7%$8.39B, 13.5% from Q107
Announced May 1, 2008
Apple $24B$19.3B24.3%

Q208 revenue 42.8% to $7.51B
Announced April 23, 2008

EDS $22.1B$21.3B4%$5.37B 2.87% from Q107
Announced April 24, 2008Oracle $18B$14.4B
25%Q408 due in June (Q108, Q208 and Q308 total revenue $15.2B, 24.8%)Google $16.59B$10.6B56.5%

$5.19B 42% from Q107
Announced April 17, 2008

CSC $14.9B$14.6B2.1%Q408 results due May 21 (Q108, Q208 and Q308 total revenue $12B) Sun $13.9B$13.1B 6.2%Q308 revenue $3.27B, 0.5% from Q307
Announced May 1, 2008Qwest $13.8B$13.9B
1%$3.39B, 1.38% from Q107
Announced May 6, 2008EMC
$13.2B$11.2B18.5%$3.47B 17% from Q107
Announced April 23, 2008

Such comments echo complaints that have been voiced for years. "Executive compensation is under attack and has been for a number of years," says Nora McCord, a consultant at Steven Hall & Partners, which specializes in executive compensation consulting.

The U.S. Securities and Exchange Commission (SEC) has tried to compel companies to be more transparent about how (and how much) their top executives are compensated, implementing new rules in the past few years around what must be reported.

For example, the SEC now requires companies to not only disclose that a performance-based award is tied to revenue but also to disclose the dollar amount of the revenue target.

This is one of the more controversial new SEC regulations, McCord says. "On the one hand, it's better for shareholders to know how company resources are being spent and how executives are being incentivized. But on the other hand, you run into situations where a company might be giving guidance from an earnings management perspective." Disclosing revenue targets also could conceivably put a company in a compromised position should it find itself the object of a takeover attempt, for example.

Still, most companies accept the idea of making CEOs and other top executives more accountable for their compensation, McCord says.

"What we see among our clients is an attempt to make the earn-outs harder, make the targets tougher," she says. An executive might be required to not only hit the previous year's target but also surpass it by some percentage in order to receive an award, for example. "We also see efforts to create greater accountability around the process."

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Compensation Can't Be Short-SightedBy Anonymous on May 12, 2008, 9:27 amShareholders need to demand long-term assestment of Management performance instead of just short term. Many of the problems seen by the Mortgage industry (as well...

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