Wednesday October 1, 2014

Executive pay gets new spin

Companies are increasingly producing alternative measures of their top executives’ pay, with at least 228 companies mentioning “realizable” or “realized” compensation in proxy materials this year.

“A growing number of companies are producing alternative measures of their top executives’ pay,” the Wall Street Journal reports, “seeking to persuade investors that compensation isn’t as high as the government’s yardstick implies.” An analysis by the Journal found that at least 228 companies mentioned “realizable” or “realized” pay in their proxies or proxy supplements this year — an increase from 83 just two years ago. Compensation experts expect even more firms to go this route next year. According to the Journal, “the measures try to capture what the executives pocketed — or could have pocketed — in a given year. Realized pay, for example, often includes stock that vested and the value of any options that were exercised during the year. Realizable compensation may include old stock or option grants that have vested but haven’t been cashed in.” However, the definitions of such measures can vary from firm to firm. This, in turn, limits investors’ ability to compare them, raising concerns that some companies are only trying to highlight lower pay numbers.

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