Executive compensation has always been a highly controversial topic. Shareholders of public companies have often been critical of pay packages that appear to have little connection to underlying business performance while politicians and activists have criticized high executive pay in the
The Coca Cola Company is in the midst of a major controversy prompted by shareholder objections to the company’s equity compensation plan which is outlined in the company’s 2014 proxy statement. Read this article for our view of the controversy.
Most companies on a calendar fiscal year have released proxy statements over the past month. In addition to annual reports, intelligent investors must pay close attention to proxy statements to determine the company’s philosophy on executive compensation. Nearly every compensation committee includes what seems like boilerplate statements regarding aligning the incentives of management and shareholders. However, as we have seen on many occasions, such as the example provided by Kraft’s absurd compensation policies, shareholders must be vigilant when it comes to matching rhetoric with reality. Read this article for more details.
Berkshire Hathaway’s 2010 Proxy Statement was released yesterday and much attention has been devoted to the low compensation provided to Warren Buffett and Charlie Munger. Mr. Buffett’s total compensation remained at $175,000 which included $100,000 of salary and $75,000 in director’s fees from the Washington Post. In addition, the company paid $344,490 for Mr. Buffett’s personal security during 2009. Mr. Munger’s salary remained at $100,000. Mark Hamburg, Berkshire’s Chief Financial Officer, received $874,750 in total compensation. The $100,000 salary for Mr. Buffett and Mr. Munger has remained constant for 29 years, during which time inflation has eroded over 60 percent of the purchasing power of a dollar. Read this article for a closer look on Berkshire’s executive compensation policies.
As the Wall Street Journal reminds us today, in early 2009 Google re-priced a large number of options at much lower strike prices. 7.6 million options with an average strike price of $522 were exchanged for an equivalent number exercisable at $308.57. This narrowly missed the low for the year of $282.75. Google now trades at just under $600. Is this consistent with Google’s pledge to “do no evil”?