The WCI seeks to measure companies that generate real economic value—as opposed to mere GAAP accounting value. The index relies heavily on the idea of Economic Margin (EM), which measures the degree to which the company is making money in excess of its risk-adjusted capital cost. It’s expressed as a percentage of invested capital and calculated as operating cash flow minus a capital charge all divided by invested capital. Companies with positive EM (greater than zero percent) are creating wealth; those with negative EM are destroying it.

This article originally appeared in Chief Executive magazine. Click here for the article and complete ranking charts.

While no single metric is the Holy Grail in running one’s business, EM comes closer than most, as it looks at a business the way any true owner would. How effectively is every dollar invested in this business working? It’s a discipline that applies to any firm, public or private, from a local chain of dry cleaners to General Motors. Many private equity firms use some variation of EM in doing their own evaluations; it is useful to know how people whose careers depend upon it size up one’s performance. The rankings look at public companies (minus REITs) in the S&P 500, where the CEO has been running the enterprise for at least three years, in order to fairly judge a leader’s impact on the company.

St. Louis-based Express Scripts, a large pharmacy benefit manager (PBM), landed the top position in 2011, following previous years where it was ranked #57 and #47. The company rose through the ranks largely due to to its success delivering growth through acquisitions, notably the PBM business of WellPoint in 2009, while maintaining and improving profitable operations. Express Scripts has proved skillful in integrating acquisitions, something few companies are capable of getting right.

If the proposed Express Scripts merger with Medco Health goes through, it will be a game-changing deal, doubling ES market share to about 35 to 40 percent in this industry—one where scale is everything. Needless to say, there is much potential synergy on costs, once the two are combined and retail pharmacies are potentially squeezed further. [This explains why the National Community of Pharmacists Association (NCPA) has testified before a Congressional subcommittee against the merger.]

CEO George Paz points to two factors that contribute to his company’s performance: its independence from Big Pharma and its diligence in using research to drive out waste and to make medicines safe and affordable in order to optimize health outcomes. “You can look across the healthcare industry and be hard-pressed to find any sector that makes money when it saves its clients money, yet that is exactly what we do,” he says. “We offer clients innovative ways to lower prescription drug costs and, more importantly, improve health outcomes of members.”

Other firms that consistently rank among the top performers in recent years are Aflac, Apple, Autozone, Gilead Sciences and C.H. Robinson Worldwide. Mike Burdi, Applied Finance Group senior analyst, points to several common elements that these enterprises share. “Do your customers care whether you stay in business?” he asks. “It’s one thing to say that one is customerfocused; most claim to be as a matter of course. But would your customers really miss not having access to what you offer?”

Apple (#5) is a poster child for using these elements, as is Amazon.com (#87). Meanwhile, Netflix (#25) will soon find out where it stands on that front. Apple’s challenge will be to maintain its allure after the loss of Steve Jobs. “In most research on what high-capital-return companies have in common, the common thread is the ability to consistently fulfill an unmet customer need, often when the customer didn’t really realize the need was unmet,” notes Burdi. “This is equally true whether one is big cap or small cap.” – J.P. Donlon

Top 10 Wealth Creators

1. Express Scripts, CEO George Paz
2. Exelon, CEO John W. Rowe
3. Priceline.com, CEO Jeffery H. Boyd
4. Varian Medical Systems, CEO Timothy E. Guertin
5. Apple, [former] CEO Steven P. Jobs
6. Philip Morris, CEO Louis C. Camilleri
7. Halliburton, CEO David J. Lesar
8. Gilead Sciences, CEO John C. Martin, Ph.D.
9. Linear Technology, CEO Lothar Maier
10. MetroPCS, CEO Roger D. Linquist

Top 10 Wealth Destroyers

1. Monster, CEO Salvatore Iannuzzi
2. Alcoa, CEO Klaus Kleinfeld
3. Dean Foods, CEO Gregg L. Engles
4. PerkinElmer, CEO Robert F. Friel
5. Micron Technology, CEO Steven R. Appleton
6. Nasdaq OMX Group, CEO Robert Greifeld
7. Tenet Healthcare, CEO Trevor Fetter
8. Stanley Black & Decker, CEO John F. Lundgren
9. Nisource, CEO Robert C. Skaggs, Jr.
10. Electronic Arts, CEO John S. Riccitiello

Ranking CEO Wealth Creation by Drew Morris and Michael Burdi
Our ranking is based on the performance of companies in the S&P 500 Index (and their CEOs) for the three years ending on June 30, 2011. It considers reported financial results during that period and estimates for the next 12 months. Only companies whose CEOs were in their roles for the entire July 2008 through June 2011 period were ranked. Not ranked are the 13 REITs in the 2011 S&P 500.

The four components of the ranking, explained below, were developed and calculated by the Applied Finance Group (AFG), an independent equity research advisory firm, using their proprietary metrics and data. An again-proprietary weighted combination of each company’s component rankings, taking into account the industry the company is in, is used to produce an overall score: 100 is awarded to the best wealth creator; 1 to the worst. (The list itself shows these overall scores as a sequential ranking.) The component rankings are shown as letter grades with companies in the top 20 percent of each component metric receiving an A grade; the bottom 20 percent receiving an F.

Market (or Enterprise) Value/Invested Capital (MV/IC)
This measure shows the degree to which investors consider the company’s assets valuable, relative to their cost. Market value is what a buyer would have to pay to buy the company outright, that is, to purchase all of the stock and pay off all of the loans, leases and other obligations. Note that market value depends on the stock price. Invested capital is the inflationadjusted total of all of the investments in the business. It does not depend on the stock price. So by its nature, MV/IC reflects the market’s take on the value of the investments made in the business.

The Average of the Past Three Years’ Economic Margins
Economic Margin (EM) measures the degree to which the company is making money in excess of its risk-adjusted capital cost—riskier businesses get relatively higher capital costs. EM is expressed as a percentage of invested capital. It’s calculated as (Operating Cash Flow – the Capital Charge)/Invested Capital. Companies with positive EM (greater than 0 percent) are creating wealth; those with negative EM are destroying it.

EM Change
This is a 12-month forecasted EM, based on the ratio of the most recent EM to the 3-year average.

Management Quality
This AFG-proprietary measure rewards a company with positive EM for growing its asset base, and penalizes one with negative EM for doing the same thing. In other words, if a company is making money and it adds assets in such a way that it can make even more, that’s good. So is selling off a money-losing division. That said, it’s also valid that adding scale can dramatically increase profitability in a business with high fixed costs.

A Validity Check on the Ranking Method
The top 50 companies in the ranking delivered an average Total Shareholder Return (TSR) of 68.5 percent between January 2008 and June 2011 (the period covered in the reported financials). The bottom 50 companies’ TSR averaged -9.3 percent, while the S&P 500’s average was 14.9 percent (without its 14 REITs). The top 50’s median TSR was 40.7 percent; the bottom 50’s was -11.7 percent.

Total Shareholder Return

As the table above shows, the top 50 companies in the wealth creation ranking far outperformed the bottom 50 companies and the S&P 500 between July 2008 and June 2011. Note: TSR = (Change in Share Price over Period + Dividends)/Start-of-Period Share Price.

For more on Economic Margin and how companies scored, see http://www.economicmargin.com/moreinfo.htm.

“The number of firms using ESG disclosure is fairly rapidly increasing, they’re taking a very proactive stance,” said GMI CEO Jack Zwingli in a recent interview about the new metric. “All they have to do is look at BP, at NewsCorp, at Massey, to see that it’s not just the finances that pose very serious risks. They need to recognize that ESG concerns do impact risk in the long term.”

The GMI Analyst platform is the flagship product of the corporate governance research firm forged in December by the three-way merger of GovernanceMetrics International, The Corporate Library and Audit Integrity.

“With this merger we are in a great position,” continued Zwingli. “We were a little bit like kids in a candy shop. We have a tremendous amount of info, the question was how to drill it down into a product that people can use, understand and apply. We started at a high level and drilled down to the underlying data. Future versions will layer in additional content, tools for peer comparisons, advanced searches and screenings, more company and information coverage. We’ll continue to make the product easier to use and more informative.”

The service currently offers risk analyses for more than 20,000 corporations, including most large and mid-cap firms and some small cap companies, with 4,200 of those containing a more specific research-based ESG risk rating. The organization identified and tracks over 50 ESG+ (with the plus sign standing for “accounting transparency”) metrics that are most likely to affect performance.

The GMI Analyst also complies with the United Nations-backed Principles for Responsible Investment (PRI) initiative, providing PRI investors with an efficient comparison utility. Over 900 investors and investment funds have signed on with PRI since its launch in 2006.

“Of course, the trickle-down effect is now corporations are looking at the nontraditional measures of performance, and are recognizing that the investors are asking more about ESG,” explained Zwingli. “Recent statistics show that 80 percent of the Global Fortune 250 now all report on ESG.”

Jack Zwingli

GMI joins a growing number of organizations evaluating companies’ ESG risk ratings, including Institutional Shareholder Services’ ESG Solutions. ISS, an MSCI brand, uses findings from MSCI’s ESG Research department in its proxy assessments. MSCI’s team includes over 70 dedicated ESG analysts and researchers. Glass Lewis’ Risk Monitor also tracks and provides alerts for possible risk red flags.

The Global Reporting Initiative, which produces a sustainability reporting framework, finds that the number of companies using this reporting framework is steadily increasing internationally, with a 22 percent increase from 2009 to 2010 after a 34 percent increase from 2008 to 2009. Companies in the financial services and energy industries had the highest numbers of reports.

In addition, the Carbon Disclosure Project (CDP), recently issued a report produced in conjunction with PwC finding that companies reporting climate change policies as an integral part of their strategy doubled, up from 35 percent of respondents in 2010 to 65 percent in 2011. Board or senior executive oversight of climate change programs increased as well, with 87 percent of responding companies delegating oversight to the highest levels of the organization.

The GMI service, Zwingli said, can be used in many different objectives, from boards seeking peer comparisons, to investors, to insurers seeking a quick risk evaluation. “It’s a very pragmatic view for the corporation to look at these factors, know what the ratings are, all investors are using ESG-type research to evaluate company performance and standards.”

Since some of the ESG+ metrics are of a more subjective nature than traditional financial performance metrics, “Companies may disagree with us,” noted Zwingli. “But it’s still valuable to say to investors ‘we have a copy of the report, and we have a different story.’ And that’s fine, that’s their prerogative. You can then be proactive about it, and include in disclosures that we looked at the report and disagree with it and why, or are planning on improving on these measures.”

Zwingli encourages companies to remember that ESG risks can be as devastating to a company as financial difficulties: “Reputational risk can have a high cost of capital. Companies are very concerned with reputational risk, and don’t want to show up on the front page of the Financial Times or Wall Street Journal.”

Proxy Access MIA
First, let’s read the gaps. Conspicuous by its absence is proxy access, not available for spring season. The Securities and Exchange Commission had passed rules last year but the U.S. Chamber of Commerce and the Business Roundtable got them stayed legally, arguing that by preempting state law and shareholder rights the rule violates the first amendment to the United States Constitution: “Congress shall make no law respecting or… abridging the freedom of speech.”

Proxy ballots are distributed to shareholders at the H. J. Heinz Co. annual meeting in Pittsburgh. AP photo/Keith Srakocic

The SEC will argue that its proposed rule does not restrict free speech but rather can “enable the federally regulated proxy process to more closely approximate the conditions of the shareholders’ meeting.” An amicus curiae letter from 36 law professors adds that the proposed proxy access rule “neither compels a company to carry speech by third parties nor restricts a company from engaging in speech.” Oral arguments were scheduled to begin April 7, 2011.

Even without direct access, shareholders are making their views on director candidates known. As proxy advisor Patrick McGurn reported in the last issue of NACD Directorship [“Proxy Season Preview: Seven for Yo-Leven,”] the Connecticut Retirement Plans and Trust Funds plan to propose a board diversity resolution and The United Brotherhood of Carpenters and Joiners has launched a letter campaign to get nominating committees to meet with 1 percent holders. McGurn, an executive director at Institutional Shareholder Services (ISS), also predicts that New York City pension funds will be pushing for greater expertise on boards. Companies that listen to such concerns early on will ease their transition into proxy access, should it return from legal exile.

Hot Social Issues
In 2011, one-quarter of the first 359 shareholder resolutions address environmental issues. Forty-one proposals address climate change, most of which request that companies set green house gas reduction goals or adopt public policy principles on climate change issues, including deforestation and renewable energy. Meanwhile, in Congress, 15 current bills address greenhouse gases—including the Defending America’s Affordable Energy and Jobs Act, which has versions in both the House and Senate.

A re-emerging issue has been controversy over the influence and independence of proxy advisors. Almost one year ago, the SEC included this issue in its concept release on the proxy system. NACD joined corporations and shareholders to ask for a closer look at proxy advisor conflicts of interest. Since then, consolidation has increased the clout of the two leaders Glass Lewis (now serving the customers of Proxy Governance) and ISS. Meanwhile, Governance Metrics International (GMI) merged with The Corporate Library, a research organization, increasing its influence in the sphere of governance ratings.

Even without direct proxy access, shareholders are making their views on director candidates known. Companies that listen will ease their transition into proxy access, should it return from legal exile.

Washington will be paying more attention to this issue. The Obama Administration has been relatively active in antitrust (per Global Competition Review, February 2011). Lawmakers in both parties listen to corporate leaders—who continue to be unhappy that some institutional voters follow recommendations from the advisors rather than listening to what companies have to say. Another related and important issue raised by the SEC’s concept release is the fact that many companies cannot reach their shareholders due to the rules that, by default, make brokerage customers objecting beneficial owners (OBO) rather than non-objecting beneficial owners (NOBO). Watch for a revival of this issue.

Say on Pay at Last
Now let’s see what’s right in front of us: say on pay. That’s the big issue this season, thanks to Dodd-Frank. Section 951 of the 2010 law requires public companies holding an annual meeting on or after January 21, 2011, to give shareholders an advisory vote approving the compensation of the company’s top executive officers (including parachutes). The SEC approved final rules January 25 and they are effective now—60 days after publication in the Federal Register. There’s a two-year exemption for “smaller reporting companies” (with revenues and public float of less than $25 million) but the free pass to procrastinate goes only so far. The definition of “smaller reporting companies” under relevant law does not apply to investment companies, asset-backed issuers or corporate subsidiaries (unless the parent is also “small”). According to a new free website, proxymonitor.org, 2010 saw winning votes for say on pay at 14 of the 100 largest public companies in the three proxy seasons leading up to Dodd- Frank (2008-2010)—no doubt encouraging the law and subsequent rules in this regard. Behind the scenes and below the Top 100 ice cap, ISS has identified 220 companies that have revised their pay plans in preparation for this voting season.

A negative recommendation from a proxy advisor can sway up to one in five shareholders, according to the Center for Executive Compensation (CEC) in Washington, D.C., as cited in a February 7 Wall Street Journal article. Since sayon- pay votes became mandatory, ISS has recommended a no vote on 10 percent of the proposals it has reviewed (13 out of 129); Glass Lewis recommended a no vote on 11 percent (18 of 171). In most cases, plans pass despite no votes.

Other Comp Rules on the Way
But say on pay is not the only new issue for 2011. Later this year, the SEC will be issuing final rules on compensation committee and advisor independence (already out in proposed form) and will propose new rules on clawbacks. These parts of Dodd-Frank are considered to be inevitable. Last season’s votes on clawbacks were not lost on legislators. A Master Trust’s clawback resolution at Morgan Stanley last year got 29.84 percent and at Bank of America a clawback proposal got 43.85 percent of the vote. Interestingly, the 2011 policy for ISS says they will proceed “case-by-case” on clawbacks. This may be in part because 73 percent of Fortune 100 companies already have clawback policies—up from 18 percent in 2006, according to the CEC.

Pending Indefinitely
Still up in the air are two other parts of Dodd-Frank: pay for performance and pay ratio. In a recent write-up of regulatory trends, the CEC predicts that House Republicans will push back on both issues, particularly pay ratios. The CEC anticipates that lawmakers may reword these provisions—or possibly ban funding for them. Congress could “prohibit the SEC from using funds to implement the provisions,” notes the CEC in a recent letter to its members.

Pay disparity appears to be a low-priority issue among larger shareholders and therefore could become moot legally. The 2011 ISS Voting Guidelines say: “Generally vote AGAINST proposals calling for an analysis of the pay disparity between corporate executives and other non-executive employees.” But this is a popular issue with members of the Interfaith Center on Corporate Responsibility. According to the Center’s 2011 proxy report, members have filed pay disparity measures at AOL-TimeWarner and General Electric.

Success would be a stretch. Last year, according to proxymonitor.org., the Sisters of Charity of the Blessed Virgin Mary received a 9.82 percent vote on a pay disparity measure at General Electric and The Franciscan Sisters of Perpetual Adoration received a 7.7 percent vote at Allstate—not as low as some have received but hardly a majority.

Policymakers Jaded
If regulators give companies a break from burdensome regulations or go after proxy advisors it will probably be based more on their pro-shareholder sentiment than any compassion for boards or corporate executives. Despite NACD’s many comment letters and meaningful dialogue with key staff on both sides of the aisle, the regulatory mood does not accord boards much importance. Policymakers surveyed in early 2011 for the second annual What Society Thinks? survey, show a jaded view of directors. Recent allegations of illegal insider trading by a prominent director do not help.

The cautious attitude of policymakers may be a hangover from the recent financial crisis. Some policymakers and their staffs are no doubt still reading The Financial Crisis Inquiry Report: Final Report of the National Commission on the Causes of the Financial and Economic Crisis in the United States, an unsparing 600-plus pages naming culprits for the financial crisis, including financial company boards.

Interestingly, the 2011 policy for ISS says they will proceed “case-by-case” on clawbacks. This may be in part because 73 percent of Fortune 100 companies already have clawback policies.

Why the tome? Recall that two years ago, with passage of the Fraud Recovery and Enforcement Act of 2009, Congress vowed to study the causes of the financial crisis; this report released in late January, is the result. The Commission was composed of 10 “prominent United States citizens with national recognition and significant depth of experience in such fields as banking, regulation of markets, taxation, finance, economics, consumer protection and housing”—six appointed by the majority leaders of the House and Senate (then Democrats) and four appointed by Republican leaders.

The 2011 report sets the stage by recounting early reforms at Freddie Mac and Fannie Mae and AIG, but similar to the reports surrounding the collapse of Enron, this one goes on to tell of apparently imprudent decisions at a number of financial institutions, including AIG, Bank of America, Bear Stearns, Citigroup, Countrywide, Fannie Mae, Freddie Mac, Lehman Brothers, Merrill Lynch, Moody’s and Wachovia. (The dissenting report written by the four Republican appointees also mentions board decisions but focuses only on failures at the quasi-governmental institutions Fannie Mae and Freddie Mac.)

The main report finds that in institutions extending credit, “lending standards collapsed, and there was a significant failure of accountability and responsibility throughout each level of the lending system. This included borrowers, mortgage brokers, appraisers, originators, securitizers, credit rating agencies and investors, and ranged from corporate boardrooms to individuals.”

With respect to the crisis, it does levy some general blame in the areas of compensation and lending: “Compensation systems—designed in an environment of cheap money, intense competition and light regulation—too often rewarded the quick deal, the short-term gain—without proper consideration of long-term consequences… Often, those systems encouraged the big bet. This was the case up and down the line—from the corporate boardroom to the mortgage broker on the street.”

Dynamic Interplay
The interplay between proxy season and proxy regulation is truly dynamic. Right now, proxy votes are leading and regulations are lagging, but that could switch. All it will take is another crisis. That is why all wise directors and shareholders are looking ahead to prevent one.

Oracle's headquarters in Redwood City, Calif.

two derivative suits brought against the business software and hardware company because they were not filed in the Chancery Court of Delaware.

In the first ruling of its kind, Seeborg wrote that specifying where a lawsuit could be brought is permissible in a contract, in which both the defendant and the plaintiff would have had a say. “A bylaw unilaterally adopted by directors, however, stands on a different footing,” he wrote in the January 3 order denying the motion to dismiss on the grounds that the shareholders had no say in the bylaw, which was passed after the suit was filed.

“Particularly where, as here, the bylaw was adopted by the very individuals who are named as defendants,” Seeborg wrote in the decision.

It is alleged in the suits that Oracle, between 1998 and 2006, utilized fraudulent and improper practices to apply discounts on the sale of software and licenses to the U.S. government. The sales totaled $1.08 billion and the suit alleges that the breach of fiduciary duty and abuse of control resulted “in millions of dollars of overcharges.”

Governance Experts Merge
The Corporate Library and GovernanceMetrics International (GMI) announced they will merge with Audit Integrity, operating collectively under the GMI name. The combined firm will continue to provide investors and share-owners with objective governance ratings and research. Jack Zwingli, former CEO of Audit Integrity, will become CEO of GMI, and Richard A. Bennett, former CEO of The Corporate Library, will serve as executive chairman. The combined firm’s board will consist of The Corporate Library cofounders Nell Minow and Robert A.G. Monks and James A. Kaplan, Ric Marshall, Howard Sherman, Gavin Anderson, John Higgins and Laurie Adami.

Farient, Patterson to Align On Pay for Performance
Two independent compensation consultants have joined forces to publicly disclose how executive compensation is aligned with performance. The founding partners —U.K.-based Simon Patterson of Patterson & Associates and U.S.-based Robin A. Ferracone of Farient Advisors—first worked together at Booz Allen and more recentlly at SCA Consulting and Mercer—started their own firms in 2007. A five-year study of executive pay at FTSE100 companies conducted by Patterson’s firm shows that during a period of “enormous value destruction for shareholders,” overall executive pay levels remained high. Even so, the relationship between pay and performance is improving, reports Patterson. Patterson’s analysis has been useful at highlighting overall trends, but cannot be used in the same way as the Farient’s approach, which is increasingly being used for official reporting to shareholders. “This alliance will ensure that our clients are provided with the most reliable compensation solutions wherever they do business,” said Ferracone.

Budget Crunch Delays Creation of SEC Whistleblower Units
Budget limits have caused the SEC to delay the creation of an independent whistleblower office as detailed in the Dodd-Frank Act, which required that the SEC implement new rules by April 12, 2011. In the meantime, current SEC officials will be handling the expected influx of whistleblower tips. In addition to the whistleblower office delay, the agency has also delayed creation of the Office of Women and Minority Inclusion, the Investor Advisory Committee, the Office of Investor Advocate, the Office of Credit Ratings and the Office of Municipal Securities.

More Women at the Top At Big Banks
Women hold 17.4 percent of executive positions at the top 50 commercial banks in the United States, a five-percent increase from 2004 when women made up 12.6 percent of the executive suite, according to a recent Women at the Top (WATT) survey. At the time the companies were sampled, there were no female CEOs (down from one in the 2009 study), three COO women and four female CFOs. WATT, a network of women in or aspiring to be in the C-suite, is opting to wait two or three years before conducting the next survey to allow time to determine if the Dodd-Frank Act, which mandates the creation of the Office of Minority and Women Inclusion in the financial services industry, has any effect.

CEOs Differ From VCs On Prospects for Cash
CEOs and venture capitalists have not been seeing eye-to-eye in regards to raising funds in the coming year, finds a survey from the National Venture Capital Association and Dow Jones & Co. Sixty-four percent of CEOs surveyed planned to raise funding from VCs, with 58 percent believing venture investments will increase and just 14 believing that figure would decrease. Of the group of VCs surveyed, 24 predicted a decrease in investments, while 51 percent believed there would be an increase. The VCs were also confident that more companies would go public, with 67 percent anticipating an increase in IPOs.

FASB Names Seidman Chairman
Leslie F. Seidman has been named chairman of the Financial Accounting Standards Board (FASB). Robert H. Herz, the previous chairman, retired from the organization on Sept. 30, and Seidman had served as acting chairman in the interim. Seidman was a member of the FASB staff from 1994-1999 and then rejoined the organization in 2003 after founding and managing a financial- reporting consulting firm.

Letter Grade ‘C’ For Corporate America
Americans believed Corporate America conducted itself poorly over the past year, according to a study from Strategy-One, a research division of PR firm Edelman. Only 17 percent of respondents gave Corporate America an ”A” or “B” grade when asked to rate how well they met expectations and 82 percent gave a grade of “C’” or lower, with 40 percent assigning a “D” or “F.” Although there was widespread dissatisfaction, the survey found that a majority of people have higher expectations for next year, most believing that those expectations will be met. Respondents noted that companies can improve by assisting in reducing unemployment, investing in the economic recovery, promoting ethical corporate behavior, paying back TARP funds and improving product quality. “With consumers highly dissatisfied with U.S. businesses, the 2011 strategy for Corporate America needs to be ‘back to basics’,” said Bradley Honan of Strategy-One in a statement. “Explaining not only ‘what’ they do for the country, but ‘how’ and ‘why’ they do it needs to be the game plan for how to rebuild corporate reputation.”

Lip Service To Succession
The majority of global companies don’t have a CEO succession plan in place, despite valuing the importance of succession planning, finds a Korn/Ferry Executive Survey. Some 98 percent of those surveyed believe succession plans are an important part of the corporate governance process, but only 35 percent reported having a plan in place if their CEO were to leave. Almost half of the respondents’ companies had no succession plan in place in the past three years.

“Given the number of abrupt, high-profile executive departures this year, it’s surprising that more companies are not acting with greater urgency to put a CEO succession plan in place,” said Joe Griesedieck, vice chairman and managing director of Korn/Ferry Board & CEO Services Practice.

Women Plateau
Despite an ever-increasing call for greater diversity, 2010 was a relatively stagnant year for women in the boardroom, according to two recent and separate reports from Catalyst. The women’s business-advocacy nonprofit conducts an annual census of Fortune 500 women board directors and a second census of F500 women executive officers and top earners. The studies found that in 2010, women held 15.7 percent of board seats, an increase of 0.5 percent from 2009, and 14.4 percent of executive officer positions, a 0.9 percent increase. Consistent with other surveys, Catalyst reports that pay for women directors and officers also remained relatively flat. Women executive officers held 7.6 percent of top earner positions, an increase of just 1.3 percent over 2009.

Dividend Payments on Rise
Just over half of S&P 500 companies increased dividend payments in 2010, with 255 increases, as compared to 157 in 2009. Only four firms reduced their dividends, reported Howard Silverblatt, a senior index analyst at S&P. During 2008 and 2009, 140 firms reduced dividends. “The problem, at this point, is that the dividend commitment is long-term, and the prospects for economic stability over the next year or two are not at a comfort level that encourages strong long-term commitment,” Silverblatt explained to the International Business Times. “So we believe we’re more likely to see smaller increases that correspond to actual improving conditions.”

Business Roundtable: CEOs Optimistic, Engler Appointed
CEOs are more optimistic this quarter, planning to increase hiring, sales and capital expenditures in the coming months, according to the Business Roundtable’s fourth quarter 2010 CEO Economic Outlook Survey. The CEO Economic Outlook Index increased to 101, up from 86 in the third quarter of 2010. Meanwhile, Business Roundtable named former Michigan Governor John Engler president, effective January 15. Engler was most recently president and CEO of the National Association of Manufacturers. Engler succeeds John J. Castellani, who left the organization of CEOs at leading U.S. companies in September 2010 to become president and CEO of the Pharmaceutical Research and Manufacturers of America.

Hay Group Finds Only Modest Salary Increases Expected
Companies are planning slight increases in salary budgets for 2011, according to a survey conducted by the Hay Group, which reported that salary budgets would increase by a median of 2.4 percent. The proportional salary-increase percentage was similar for executives and lowerranked employees. Four percent of companies are either in the process of performing or are considering performing salary cuts, while 18 percent have or are considering pay freezes. Financial services firms planned for the smallest raises, at 2.9 percent, with energy and life-sciences industries planning to increase employee rewards at 3.6 and 3.3 percent, respectively.

Securities Class Actions May Hurt Shareholder Value
Few securities class-action lawsuits improve the value of the underlying security for investors, according to a new study published in the Financial Analysts Journal that examined the effects on stock value at 650 companies after they faced suits. Insider trading cases were the only examples of improved shareholder value after the suit had closed. The study noted that this was most likely because those executives would also be removed from the company, thereby improving corporate governance. Most cases are settled for a fraction of damages claimed in the suit and do not result in a statistically higher return on investment for shareowners.

Succession Issue Raised Anew As Jobs Withdraws from Apple
Apple CEO Steve Jobs is taking medical leave for the third time since 2004. Apple, which disclosed the news early on the Martin Luther King holiday when U.S. markets were closed, did not specify why its visionary leader would be absent. The computer maker had record sales and revenues through the holiday season driven largely by iPad and iPhone sales. Apple also did not say when Jobs would return, driving up the worst fears about Jobs’ medical condition. Jobs, a survivor of pancreatic cancer, said in an email to employees that Chief Operating Officer Tim Cook would again be responsible for day-to-day operations. Jobs said he would remain CEO and be involved “in major strategic decisions.”

Left to right: Patrick McGurn, William Ackman and A. G. Monks

The threat of proxy access, said Patrick McGurn, will always be greater than its use. “The critical issue going forward, and as we enter this age of proxy access, is for boards to engage, to show their value add, and to communicate aggressively that they are in charge of oversight.”

Monks, an early activist shareholder who co-founded ISS in 1985 and The Corporate Library in 1999, encouraged directors to understand their company’s policy for director nominations. “There’s nothing traitorous about the idea of somebody from outside of management nominating themselves for the board of directors and I stand here as witness to that,” Monks said.

Moderator:
Robert A.G. Monks, principal, Lens Governance Advisors

Panelists:
William Ackman, founder, Pershing Square Capital

Patrick McGurn, executive director, ISS Governance Services

The panelists agreed that the intent of Dodd- Frank is to improve board-shareowner communications. Janice Hester Amey said she believes that Dodd-Frank, along with additional proxy disclosure requirements, will encourage greater engagement with members of the compensation committee. William McCracken agreed that board-shareowner communications is “vital” for the chairman and CEO but thinks that proxy access, as set out in Dodd-Frank, is not well thought out. He believes that, as written, proxy access gives too much emphasis to a minority of shareowners. Marvin Sims weighed in by saying he believes the regulations that come from Dodd-Frank will result in more board-shareowner conversations, and suggested that technology could help manage those discussions in a balanced way. It was noted that, for the time being, proxy access is on hold, following the SEC’s stay on the measure in response to a lawsuit filed by the U.S. Chamber of Commerce and Business Roundtable.

Nell Minow said she was sorry to see the majority voting standard dropped from Dodd-Frank, and had it been kept in the bill, the standard would have made majority voting mandatory in the election of directors. Minow said companies should not insure directors who don’t receive majority votes from its shareowners. On the topic of separation of the chair and CEO, Minow said that it was now the prevalent system in the U.K., where it is very successful.

The panelists also discussed “say on pay” and executive compensation. While consensus on these topics was elusive, panelists did agree with The Corporate Library’s Minow when she quoted Bette Davis in the film All About Eve, by saying that next year will be a “bumpy night” for both boards and shareowners.

“Wall Street engineers must get ahead of what comes down the pike,” said Becky Quick, co-anchor of CNBC’s “Squawk Box,” who introduced Hu. Quick noted that SEC Chair Mary L. Schapiro tapped the University of Texas professor 13 months ago to head the first new division created by the Commission in 37 years because she had “identified someone that first started warning us about derivatives.”

Hu’s remarks focused on his “decoupling” concept as well as the importance of the Dodd-Frank Act, which he labeled the “most comprehensive change in generations… representing a new era for corporations and boards that introduces new challenges and opportunities. It is important to get the balance between corporate governance and financial innovation right.”

Less than two weeks after Hu addressed the NACD audience, his resignation was announced by SEC Chair Mary Schapiro. No replacement was immediately named and Hu told Bloomberg News the decision to depart was “completely my own. This seemed like a very natural point in terms of having accomplished the very basic goals” of setting up a new division, he said. Hu’s unit was created through the merger of separate SEC units that conducted economic analysis and identified emerging financial risks. He hired people who previously worked at hedge funds and on Wall Street, adding to an SEC staff primarily made up of securities lawyers. “I am deeply grateful to Henry for the great start that he has given the division, and for his valued judgment on a wide range of important substantive issues,” Schapiro said in the SEC’s statement. Hu told Bloomberg he looks forward “to going back to what I have loved for 20 years, which is research.”

Sugar Joins Apple Board
Apple Inc. has appointed Ronald D. Sugar, former chairman and CEO of Northrop Grumman Corp., as its board’s audit and finance committee chairman. The appointment expands the board to seven members, including Apple CEO Steve Jobs, Intuit Inc. Chairman Bill Campbell and former U.S. Vice President Al Gore.

Gender Differences Noted in Board Decision-Making
Greater board diversity may help improve the public’s trust in corporate boards after the financial crisis, perhaps in part because there are strong differences in opinion between how men and women directors view certain issues. A study conducted by Heidrick & Struggles, WomenCorporateDirectors and Dr. Boris Groysberg of Harvard Business School found that 65 percent of women and 35 percent of men believe increased boardroom diversity would be beneficial. However, only half of both groups believed that their board was adequately advancing diversity. Female directors were also more critical of their board’s performance and competitive compensation practices, but had greater faith that executive compensation and proxy access regulations would have positive effects.

Rise Seen in Third-Party Litigation Funding
Investors are looking to court battles as a new way to earn profits, by supporting medical malpractice claims, divorces and class action lawsuits and retaining a portion of the winnings, The New York Times reports. A review by the newspaper and the Center for Public Integrity found that while funds from banks, hedge funds or private investors make it possible for those with minimal financial resources to take their cases to court, investors can also become too involved in the court proceedings; interest paid to the investor could eventually total more than the winnings.

Director Comp Steady
Director compensation has remained relatively constant this year, according to a survey of board compensation practices of 600 mid-market public companies by the accounting firm BDO. The annual study found that directors had a median compensation increase of just two percent. Last year’s study predicted that compensation would normalize as the current economic situation and boards’ reactions to it shifted. The stability of director pay this year “can be attributed to the survival mode that a lot of companies are in, a lot of them are just holding the line,” said Randy Ramirez, Northeast practice leader for the Compensation and Benefits Practice at BDO. “They’re not trying to push the envelope.”

FedEx Giving 1.5 Percent of Profits
FedEx designates about 1.5 percent of its pretax profits for corporate giving, compared with the average 0.9 percent, a fact that CEO Frederick W. Smith said in a recent interview with The New York Times pays off for those they help as well as for shareholders. “It’s good business to be a good corporate citizen,” said Smith. “People absolutely make business decisions toward companies that have good corporate responsibility records.”

CalPERS to End ‘Focus List’
The California Public Employees’ Retirement System (CalPERS) has decided to change its method of pursuing companies that it feels are underperforming or have poor corporate governance practices. Previously, CalPERS released an annual “Focus List,” spotlighting companies that were unwilling to make improvements in corporate governance. Because a Wilshire Consulting study found that the firms CalPERS worked with privately to make changes outperformed the ones named on the publicly released Focus List, CalPERS has decided to dedicate more effort to private collaboration.

M&A on Track for Biggest Year Since 2007
The increase in mergers and acquisitions will continue in 2011, with global M&A deals expected to reach $3.04 trillion, according to a report from Thomson Reuters and Freeman Consulting Services, based on interviews with 150 executives. Although the numbers are unimpressive when compared to pre-recession figures, it would be the biggest year for M&A since 2007, when deals reached $4.28 trillion. Deals are expected to finish out this year at $2.23 trillion, an increase of 12.6 percent from the recent low achieved in 2009.

Moving On Up
The number of public company directors being promoted to CEO has significantly increased, a new study from Heidrick & Struggles finds. Between July 2009 and mid-October, 2010, 13 Fortune 1,000 companies named their own directors as permanent CEOs, and three were named interim CEOs. Four directors were named to the CEO position in the previous year.

To Thwart Poaching, Google Raises Salaries
Google bumped all 20,000 employees’ salaries up by 10 percent and promised a $1,000 holiday cash bonus, according to an internal email from CEO Eric Schmidt that was sent to Business Insider by an employee, who later was fired for the leak (and will not be receiving the salary increase or bonus). The move, which is expected to cost the internet giant around $1 billion a year, is described by analysts as an attempt to retain employees being wooed by Facebook and other competitors.

Director Quits Metha Energy Over Governance Issues
David P. Meachin resigned from the board of Metha Energy Solutions because of “disagreements with the company in relation to corporate governance matters,” according to the company’s 8-K filing to the SEC reporting his resignation, filed on November 9. Meachin’s resignation letter, dated October 11, specifies that he “lost confidence in Jesper Toft’s role as the CEO of the company based on his performance.”

CEOs More Confident
CEOs feel positive about the economic outlook for the next six months, according to a quarterly study on CEO confidence from the Young Presidents’ Organization. Only 12 percent of CEOs surveyed felt that economic conditions would worsen, while nearly half of executives were optimistic. CEOs also reported more frequently that their companies are planning on hiring; one in four had hiring plans this quarter, while only one in three did in the previous study. Sixty percent believed sales would increase over the next year.

Pressure to Donate
Sixty percent of business leaders surveyed feel pressure to contribute to political efforts, finds a poll conducted by Zogby International, commissioned by the Committee for Economic Development. Business leaders also reported concern about undisclosed donations to third-party political organizations, with 77 percent believing that companies should disclose all political spending. Half of the respondents familiar with the Supreme Court’s Citizens United decision in January to allow unlimited and undisclosed political spending disagreed with the ruling.

Fewer New Directors Are Also CEOs
Only 26 percent of new directors are active CEOs, compared with 53 percent 10 years ago, according to the latest edition of Spencer Stuart’s annual board study. The report finds that boards are more independent now, with a ratio of 3:1 outside to inside directors when the firm began its studies, to 5:1 today. Diversity has become more important to boards, with 44 percent seeking women and 47 percent reporting looking for minorities. In contrast, only 21 percent of new directors this year are female, and 12 percent are minorities.

McChrystal Joins JetBlue Board
JetBlue Airways has appointed retired General Stanley A. McChrystal to its board of directors. McChrystal is a 34-year U.S. Army veteran who most recently commanded the U.S. and NATO security mission in Afghanistan. McChrystal retired from the Army shortly after a Rolling Stone article earlier this year portrayed him in a light that “does not meet the standard that should be set by a commanding general,” said President Barack Obama at the time. JetBlue Corporate Secretary James Hnat cited McChrystal’s “depth of experience and the track record of leadership” as reasons for his appointment.

Total Realized Comp for CEOs Falls
Annual compensation rates for executives edged up 1.6 percent in 2009, while total realized compensation — which adjusts for changes in value realized on stock options and other vested equity income — slipped 0.3 percent, according to a recent report from The Corporate Library.

The results indicate a continued increase in base salaries and a modest increase in the number of bonuses that were handed out last year. Meanwhile, the category of all other compensation, in which companies typically disclose CEO perks, fell 18 percent from 2008, due in large part to fewer CEOs receiving tax reimbursements for certain perks.

Who’s Tops In CEO Pay
The Wall Street Journal released findings from consulting firm Hay Group on the top 10 most highly compensated CEOs in 2009:

• Liberty Media’s Gregory B. Maffei – $87,095,900
• Oracle’s Lawrence J. Ellison – $68,649,800
• Occidental Petroleum’s Ray R. Irani – $52,181,400
• Yahoo’s Carol Bartz – $44,613,900
• CBS’s Leslie Moonves – $38,932,700
• Viacom’s Philippe P. Dauman – $33,728,900
• Thermo Fisher Scientific’s Marc N. Casper – $33,048,200
• Boston Scientific’s J. Raymond Elliott – $32,102,500
• Polo Ralph Lauren’s Ralph Lauren – $27,024,300
• McKesson’s John H. Hammergren – $24,464,800

Jack Zwingli, former CEO of Audit Integrity, will become CEO of GMI, and Richard A. Bennett will serve as executive chairman. The combined firm’s board will consist of Nell Minow, Robert A.G. Monks, James A. Kaplan, Ric Marshall, Howard Sherman, Gavin Anderson and Laurie Adami.

“Our goal in merging these businesses is to establish the clear leader for corporate governance services,” said Richard A. Bennett in a statement. “We recognize the growing importance of corporate governance and the broader set of ESG factors to investors especially. Our combined firm creates a unique pairing of proprietary governance data and research with highly sophisticated analytical capabilities.”

“By joining three leading firms – and uniting our extensive data and research methodologies into a single governance rating – the combined business will provide the insight and supporting tools the market needs to manage this critical risk,” said Jack Zwingli.

The report, written by The Corporate Library’s Senior Research Associate Paul Hodgson and titled “Wall Street Pay: Size, Structure and Significance for Shareowners,” found that the banks’ pay structures rewarded executives who could produce strong performance over the short-term, and notes that this focus on short-term annual growth had damaging consequences for shareowner value over the long-term.

While compensation practices have been more heavily scrutinized over the past two years, the report also finds that banks are still not tying compensation to long-term performance standards.

“While many banks have strengthened their pay practices, there’s still a long way to go,” Ann Yerger, the Council’s executive director, said in a statement.  “The report suggests they need to do more to make sure that executive compensation rewards performance over the long term.”

In anticipation of the new Dodd-Frank Act “say-on-pay” rules going into effect next year, the report also recommends steps that shareholders can take to become better informed on how to vote in order to positively influence pay practices.

What we also discovered in putting the list together was that in some instances, it became impossible to separate the captain from the team. This year’s D100 is a case in point: Our editors and board of advisors were nearly unanimous in our selection of President Barack Obama as this year’s most powerful corporate governance influence. And yet, to do justice to the seismic shift his policies have brought about in the boardroom, we also had to recognize the many other  “New Voices” in the Administration who are now leading the greatest financial reform of American business since the 1930s.

So, we ask that in the pages ahead you pay more attention to who counts, and less to how we count, in arriving at our final selection of individuals and institutions that have met the requirement to be “most influential.” We think you’ll agree it’s an intricate and impressive mosaic where the whole equals much more than the sum of its parts, which may or may not be greater than 100.

Regulators & Rulemakers

Team Obama
It is often written that reasonable people may disagree, and with Americans and their Presidents, it is practically a way of life. But even an unreasonable person could only conclude that this President and his Administration are having a profound and lasting influence over the boardroom. President Barack Obama has demonstrated an enormous capacity for calm in uncertain times. His relative youth leads to frequent comparisons to John F. Kennedy and his communications skills to those of Ronald Reagan. But it is his aggressive response to the unparalleled economic challenges that greeted him at the dawn of his young presidency that harkens back to an earlier figure of towering influence,  Franklin D. Roosevelt.

FDR’s massive social and financial reform programs—the creation of Social Security as part of the New Deal, the establishment of the Securities and Exchange Commission (SEC) and the Federal Deposit Insurance Company (FDIC)—helped restore confidence in the nation’s banking system coming out of the Great Depression. One could plausibly take major portions of FDR’s New Deal and substitute his name with President Obama’s.  The implementation of the $787-billion American Economic Recovery Act one month after Obama took office, coupled with his handling of the Troubled Asset Relief Program (TARP), which sought to strengthen the financial sector by buying up the assets and equity from troubled banks, has clearly helped the nation avoid further financial disaster and put the economy on the path to recovery.

And finally, turning again to the FDR playbook, Obama assembled a team of wise men and women, formidable economic and business minds, whose decisions are having a lasting effect on the role of the corporate director. Preeminent among them was the choice of Rahm Emanuel as chief of staff. Described as a veritable “influence machine,” within the Administration and Congress, the former Congressman from Obama’s home state of Illinois is known as a hard-charging, brutally candid, sometimes combative, acutely intelligent man who can get things done and knows the ways of the Capitol and the boardroom.

The Enforcers
Perhaps second only to Obama in terms of her influence on boards and corporate governance, career regulator Mary Schapiro heads up the 75-year-old SEC. Before the crisis, the agency’s very existence was in question: “Obsolete,” “out of touch,” and “behind the times” were just some of the many terms uttered by detractors. The Commission, under former chairman Christopher Cox, was pilloried for missing the Madoff scandal.

As former SEC chairman and Directorship 100 Hall of Famer, Arthur Levitt described her: “She has the skills, the intellect, and the character to be a superb SEC chair.” But Schapiro will face a new kind of challenge in the role, not just that of proving her own qualifications, but also instituting a significant remodeling of the SEC itself, as she works to bring it into the new regulatory era.

Moving swiftly to address regulatory concerns in the wake of the financial crisis, the SEC has rolled out a series of proposals that could embody the biggest change to the rules of the game for directors in some time. Schapiro, who is no stranger to the boardroom, having served on the boards of Duke Energy and Kraft Foods, has overseen proposed rule changes on proxy access, broker voting, say on pay, and new requirements for disclosure on executive compensation and director qualifications. It’s now up to her and fellow commissioners Kathleen Casey, Elisse Walter, Luis Aguilar, and Troy Paredes to determine the final regulations that emerge from the proposals.

Other key players Schapiro has brought into the SEC include Senior Advisor Kayla Gillan, Chief Accountant James Kroeker, and Director of Enforcement Robert Khuzami. Gillan was a founding board member of the Public Company Accounting Oversight Board (PCAOB) and former general counsel to CalPERS. Kroeker joined the SEC as deputy chief accountant in 2007 from Deloitte and Touche where he had been a partner in the firm’s national accounting services group. Kroeker recently said that the proposed road map for the convergence of International Financial Reporting Standards,pushed to the back burner amid the larger issues of market reform, would be restored as another top priority. Khuzami is a former federal prosecutor, has pledged to improve the SEC’s enforcement performance by creating specialized units to provide “structure and resources for staff to ‘get smart’ about certain products, markets, regulatory regimes, practices and transactions.”

TARP Overseers
Another example of Obama’s preference for brains over politics was his reappointment of Sheila Bair to chair the FDIC. Another fiscally conservative Republican, on Bair’s watch alone this year, 94 banks have failed, creating a new challenge:  how to replenish the fund. Bair has also been an integral part of the team overseeing TARP. Neil Barofsky is a former New York assistant attorney general confirmed by the Senate in December as special inspector general. Dubbed the “TARP Cop,” his job is to figure out how and where the $700-billion TARP funds are spent, reporting directly to the President and providing updates to the Congressional Oversight Panel chaired by bankruptcy expert and Harvard Law School professor, Elizabeth Warren. COP’s first report, released in February, casti-  gated then-Treasury Secretary Henry Paulson for his performance and lack of transparency, reporting that the Treasury Department  had overpaid by $78 billion for the assets it bought from banks.

Interestingly, while Obama sponsored and was a strong proponent of  “say on pay” legislation while a senator, since appointing Kenneth Feinberg special master of compensation, he has appeared unwilling to make the issue a top priority. Feinberg, who has immersed himself in some of the country’s most troublesome and high-profile cases, is considered a superb choice, both in terms of skill and temperament, by Capitol Hill insiders. His most noteworthy case was the 33 months of pro-bono work he did following the 2001 terrorist attacks to determine how much each victim would receive from the federal government’s September 11th Victim Compensation Fund.

Feinberg may in fact be perfectly suited for a job that most compensation specialists see as thankless, and possibly as a “no win” situation. As the Obama Administration’s comp expert, Feinberg was called on to monitor the compensation of executives in what were once some of America’s most prestigious corporations, now TARP recipients, including American International Group (AIG), Bank of America, Citibank, Chrysler, GMAC, and General Motors.

Fed to the Rescue
To prevent American capitalism from spiraling deeper into the abyss, nine months after President Obama made his first Cabinet announcement, he re-nominated Ben Bernanke as Federal Reserve chairman. The former Princeton economics professor was selected by Bush in 2005 to succeed Alan Greenspan. In 2008 after the market crashed, Bernanke invoked emergency powers, slashed interest rates, and spent trillions of dollars to right the financial system. Just last month, he declared the recession “likely over.” Though he seldom gives interviews, Bernanke is never far from the public eye and has been a stalwart in the transition between presidential administrations and in the effort to stem the economic slide.

When then President-elect Obama named his economics team, it included players who, like Bernanke, were already steeped in the crisis details, demonstrated a studied understanding of Depression-era economics, or some combination of both. Enter Treasury Secretary Timothy Geithner and Chief White House Economic Advisor Lawrence H. Summers. Geithner, who is currently pushing legislation to provide more systematic regulation of financial institutions, including new limits on executive compensation, recently told one interviewer that he is optimistic major reforms will be passed.

Prior to his appointment replacing Henry Paulson, Geithner was president of the Federal Reserve Bank of New York and part of the team central to the critical negotiations that resulted in Bear Stearns being tucked into JPMorgan Chase, Merrill Lynch going to Bank of America, Lehman Bros. disappearing, and Citigroup and other struggling banks getting a lifeline.

Summers, the former Harvard University economist who became its president following his tenure as Treasury Secretary to President Clinton, is director of the Cabinet’s National Economic Council. The group was established in 1993 to coordinate and ensure that the President’s economic policy agenda is carried out.

Rounding out the team, Paul Volcker, the former Fed chief under Clinton, was selected to chair the president’s economic recovery advisory board. And Christina Romer, a former UC Berkeley economist, who administration sources suggest is well- regarded by both parties, chairs the Council of Economic Advisers. Her appointment was seen as a further triumph of brain over politics in Obama’s approach to talent recruitment.

Other key findings from the report include:

• The median decrease in total realized compensation was 6.38 percent, which is still well out of line with the economic downturn. (Total realized compensation includes the value realized on vesting of shares, option value realized, pension/non-qualified deferred compensation earnings and pension pay in the last year.)

• Approximately 75 percent of CEOs included in the study received a base salary increase in 2008, up from 73 percent in 2007.

• More CEOs saw declines in realized compensation in 2008 than in 2007 (just over 56 percent and 40 percent, respectively).

• Oracle CEO Lawrence Ellison is the only CEO to appear in The Corporate Library’s list of the top ten highest paid CEOs in both 2007 and 2008, having earned approximately $750 million in realized compensation over the period.