Dim the Spotlight
It is common knowledge that people are not driven solely by the prospect of financial rewards. Yet, in business, motivational tools for top executives—particularly the CEO—almost singularly comprise financial incentives. In 1980, only 10 percent of the UK’s largest FTSE100 companies utilized incentive arrangements (in the form of cash and stock-based variable pay). Today, they are universally employed as a matter of best practice and variable pay accounts for approximately two-thirds of total compensation.
Widespread adoption of financial incentives has contributed to substantial pay increases, in absolute and relative terms. In the United Kingdom, the average compensation of FTSE100 CEOs climbed from £1 million in 1998 to £4 million a decade later, with the ratio of CEO pay to average employee pay nearly tripling. (The figures are, of course, higher for American executives.) The rise in top executive pay has far outstripped growth in share price and other indicators of company performance, with certain incentive arrangements proving counterproductive by encouraging excessive risk-taking and accounting manipulation. Read the rest of this entry »
rs should have a right to include their own nominees in the annual proxy statement of a public company. Federal law now gives stockholders a right to require a publicly traded company to include stockholder nominees in its proxy materials for up to 25 percent of the directors. The Rules also provide “access to greater access” by allowing stockholders to put proposals into a corporation’s proxy materials that call for an even more liberal proxy access regime than the Rules themselves contemplate.