New SEC-mandated disclosures give a fresh view on the nonetheless still confusing world of CEO pay.
And for the CEOs themselves, the reports of big paydays are guesses at just how much money they will eventually take home — guesses that however inaccurate will serve to benchmark them against their peers and leave them open to criticism from many people.One of the problems is that there is no easy answer as to what CEOs actually make given that compensation packages include salary, incentive pay, perks and, overwhelmingly, stock awards and options.
“I think that this rule will help investors receive the consistent, comparable, and decision-useful information they need to evaluate executive compensation policies,” Gensler said. That’s one of the benefits of stock-based compensation — it gives the CEO an economic incentive to drive the company’s stock price higher so investors benefit as well.
By this measure, a WWD study of 13 prominent companies that have had the same CEO over the past three years showed that Brian Cornell, chief at Target Corp., comes out on top with “actual” pay of more than $126 million, followed closely by Nike Inc. CEO John DonahoeBut the new stat only tells part of the picture as it shows the changing value of equity grants that are going to continue to change.
But as the stock reset — it’s lost about 75 percent of its value since the offering — so has the value of the co-CEOs unvested equity, leading to “compensation actually paid” of a negative $98 million last year. Over the past two years the co-CEOs “actual” pay tallied $38.8 million each, well short of the the nearly $137 million target pay envisioned for each of them.
It’s the comparison that — potentially — speaks to the effectiveness of a company’s compensation practices. Further, the company pointed out that Gennette’s realized pay over the past five years has only been about 79 percent of his target pay. He also hasn’t exercised any stock options over the past five years, except to cover the taxes on those shares, making the actual take-home value wrapped up in a lot of his pay still very theoretical.
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