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Entries in Salary (12)

Thursday
Aug232012

Best Buy (BBY) Defends Estimated $32 Million Pay Package for New CEO

KAREN BLEIER/AFP/Getty Images(NEW YORK) -- Best Buy (BBY) is giving new CEO Hubert Joly a compensation package valued up to $32 million for three years, including a guarantee of more than $6 million even before he starts work if the deal falls apart.

A native of France, Joly has been guaranteed $6.25 million if he can't obtain a visa to work in the United States by the end of September and the deal falls apart, the Wall Street Journal reported. He will have an annual base salary of $1.175 million, plus additional cash and stock awards.

The company said Monday it had hired Joly, the former CEO of hospitality group Carlson, to replace interim CEO Mike Mikan after former chief executive Brian Dunn resigned because of an inappropriate relationship with an employee.

Best Buy Tuesday announced a near-90-percent drop in profit for the second quarter to $33 million. The company has had struggling sales as customers shop for lower-priced goods online.

Maggie Habashy, a spokeswoman for Best Buy, said in a statement that two-thirds of the amount cited by the Journal "is a one-time payment intended solely to make Mr. Joly whole for the outstanding compensation he left behind in departing Carlson, his previous employer."

A spokeswoman for Carlson, which is a privately held company based in Minnetonka, Minn., declined to comment about his pay.

Even though Joly was already working in Minnesota, he needs to obtain a new visa because he's changing employers.

Habashy said "the amount that can accurately be described as compensation going forward is weighted approximately 90 percent to variable incentives, the value of which will depend on how operational goals are met and movements in share price."

"The cash compensation is squarely in the mid-range for a CEO of a company the size of Best Buy," Habashy said in the statement. "This package was developed in consultation with leading search and compensation firms and is in line with best practice for Fortune 500 companies."

Aaron Boyd, research director with executive compensation research firm Equilar, said Joly's annual target pay figures appear to align with what other top CEOs at the largest companies receive.

The median pay for CEOs of the S&P 500 was at $9.6 million per year, Boyd said. Joly's annual pay will be at about $12 million per year.

"Beyond the annual pay, he'll likely get the most amount of value from make-whole awards meant to compensate him for leaving Carlson and the value he gave up by leaving there," Boyd said.

Best Buy is giving him a grant valued at $20 million, Boyd said.

"It is not unusual for a company to give out awards to make up for what had to be given up," he said.

Recent examples include Yahoo's hiring of Marissa Mayer from Google in July and J.C. Penney recruiting CEO Ron Johnson away from Apple Inc. in November.

Mayer has an annual base salary of $1 million a year plus other awards, including $12 million in Yahoo stock. She could earn up to $60 million if she stays with the company for five years.

J.C. Penney paid Johnson $53 million last year.

Copyright 2012 ABC News Radio

Monday
Jul162012

What to Expect If You're Expecting a Raise

iStockphoto/Thinkstock(NEW YORK) -- How much higher can those fortunate enough to have a job expect their salaries to rise in the next year? The answer is three percent, according to a study by the consulting firm, Hay Group.

According to the consulting firm’s research, executives, middle management, supervisory and clerical positions will see a median three percent pay increase in 2013, based on data collected between May and June this year from 350 organizations.

The study found the vast majority of organizations, at least 80 percent, reported an average increase of between 2.5 percent and 3.5 percent salary.

The oil and gas and luxury retail sectors reported the highest median increases at 3.3 percent and 3.5 percent, respectively.

“Historically many employees saw annual salary budget increases greater than three percent, with a drastic dip or freeze during the 'great recession,' and now we have settled into what may be a new normal of three percent,” said Jeff Blair, Hay Group’s U.S. Productized Services Leader.

In 2000, salaries increased a median of 4.4 percent, followed by an uneven decline in the increases, according to the Hay Group.

Blair said this is not a “sustainable strategy, especially for hot jobs or hard-to-fill positions.”

Employers will have to be committed to creating a positive work climate among other ways to keep employers and stay productive, he said.

Wages and salaries increased 1.7 percent for the current 12-month period ending in March 2012, according to the Bureau of Labor Statistics, compared to 1.6 percent for March 2011.

Copyright 2012 ABC News Radio

Monday
May212012

Shareholders Cut CEO Pay in Backlash

Adam Gault/Thinkstock(NEW YORK) -- Amidst a climate of populist outrage and corporate missteps, shareholders are voting en mass to cut executive pay thanks to a new government rule called "say on pay." The board of directors, who determine CEO pay, don't have to listen to the shareholder vote but most of them are listening.

Sprint CEO Dan Hesse received a $3.25 million pay cut after shareholders expressed concern with a deal Hesse cut with Apple to carry the iPhone on the Sprint Network. The deal will cost Sprint $15.5 billion and the Sprint will reportedly not profit from the move until 2015.

But are "say on pay" shareholder votes, while non-binding, a helpful feedback tool or do they encourage Monday morning quarterbacking?

"I think that there is the risk of a knee-jerk reaction," said Wayne Guay, an accounting professor at the Wharton School of Business. Critics of "say on pay" argue that shareholders don't read proxy statements and are less likely to make an informed decision.

Supporters of the policy say that if a CEO can expect an unscrutinized "golden parachute," he or she may have more of an incentive to engage in risky short-term behavior.

But some experts point out that underperforming CEO's are already punished because many of them own a large amount company stock.

Still, compensation packages are often generous enough to offset the loss in stock value. The most famous example was in 2008 when executives from Lehman Brothers collected $483 million in compensation before the company went under in a bankruptcy that is credited with starting the recent financial meltdown. Without worthless stock options, Lehman's CEO Richard Fuld still made close to $350 million.

"It's risk-free for the individual [the CEO] but it's risky for the company," said Rep. Barney Frank, D-Mass., back in 2009 while the law was being debated. "And when you accumulate risks for companies, it's risky for the economy," said Frank.

When big companies fall, like they did in 2008, there is often a domino effect that takes down other companies that rely on their business.

Will "say on pay" have a long-term positive effect?

The rule has been in effect for only one year here in the U.S. but the law was adopted in the U.K. in 2002.

One study on the U.K. system done by a professor from the Columbia Business School and one by a professor at the University of Southern California found that their system encouraged an enhanced dialogue between the board and shareholders. Those shareholders were most likely to punish a CEO by objecting to a generous severance package. When the boards ignored the "say on pay" vote, the next vote was almost always lopsided against the board.

The boards in the U.K study almost always capitulated after the third vote.

Here in the U.S., say on pay is likely too new to be able to assess the effects.

JPMorgan Chase CEO Jamie Dimon last week apologized immediately and profusely for the company's trading fiasco that reportedly cost the company $3 billion. "We made a terrible egregious mistake. There's almost no excuse for it," said Dimon on NBC's "Meet the Press."

Two days after the apology, 91.5 percent of the company's shareholders voted to approve of Dimon's $23 million pay package. However, many of those votes were likely submitted before the trading fiasco was disclosed.

Copyright 2012 ABC News Radio

Tuesday
Jan312012

Fact Check -- Obama and ‘Equal Pay’ for Women

The White House(WASHINGTON) -- Three years after he signed it into law, President Obama has made the little-known Lilly Ledbetter Fair Pay Act the centerpiece of his re-election pitch to women.

It’s a “big step toward making sure every worker in this country, man or woman, receives equal pay for equal work,” Obama says in a video to supporters on his campaign blog.

The legislation repeatedly tops Obama’s list of accomplishments in stump speeches on the campaign trail and is cited as a fulfilled promise from 2008.

“Change is the first bill I signed into law that enshrines a very simple proposition,” Obama told a crowd of donors at the Apollo Theater Jan. 19. “You get an equal day’s pay for an equal’s day work.”

The idea that Obama has narrowed the gender pay gap is also the subject of an aggressive digital media push to promote his record and enlist new members to the group “Women for Obama.”

“Ensuring equal pay for women was @BarackObama’s first act as President, but not his last,” reads a message posted to the Obama for America twitter account for New Mexico, @OFA_NM.

Actress Kerry Washington, an Obama surrogate in Florida, was even more direct in a promotional video on the campaign’s blog: “There’s equal pay for women,” she declares outright.

The only problem? Women don’t enjoy equal pay, it’s improved little during Obama’s term and the Lilly Ledbetter Fair Pay Act has hardly been a “big step” toward the goal.

In 2010, the most recent data available, women on average earned 77.4 cents for every dollar earned by men holding the same full-time, year-round job, according to Census data analyzed by the National Committee on Pay Equity.

The gap was virtually unchanged from 2009, when it was 77 percent and 2008 when it stood at 77.1 percent, before the law was enacted.

Pay inequity remains most pronounced among women of color. African-American women made 67.7 percent of what was earned by men in 2010, according to the Census, while Hispanic women earned 58.7 percent, both figures largely unchanged from the year before.

Still, while the Lilly Ledbetter Act hasn’t directly resolved the issue of systemic pay inequality, it has helped some victims of discrimination pursue their compensation claims in the courts, women’s rights advocates say.

After the Supreme Court threw out Lilly Ledbetter’s pay discrimination suit against her employer Goodyear Tire & Rubber Co., saying it exceeded the statute of limitations, Democrats in Congress with support from Obama enacted the law to extend the period for alleged victims to sue.

Copyright 2012 ABC News Radio

Friday
Jan062012

Federal Workers to See Pay Increase?

Nick M Do/Getty Images(WASHINGTON) -- The White House will propose a 0.5 percent pay increase for federal workers as part of its 2013 budget, according to an Office of Management and Budget official.

The modest increase will mark the first uptick in federal compensation since President Obama announced a two-year pay freeze in November 2010, citing the need for federal employees to share in the sacrifice needed to get the deficit under control.

The 0.5 percent increase for civilian federal workers still falls well below the 3.6 percent cost-of-living adjustment for Social Security and other benefits that went into effect at the start of this year to keep pace with inflation.

The proposal would require congressional approval and puts the president at odds with Republicans who have called for extending the pay freeze.

The White House is expected to put forth its 2013 budget proposal next month.

Copyright 2012 ABC News Radio

Tuesday
Dec062011

Washington's Wealthy, Wealthier and…Not So Wealthy

Hemera/Thinkstock(WASHINGTON) -- President Obama’s net worth in 2010 was $7.3 million, but in the same year Secretary of State Hillary Clinton had a net worth of $31 million, according to the Center for Responsive Politics.

Their report says even Obama’s chiefs of staff are wealthier than he is -- at least according to publicly available records. Bill Daley, the current chief of staff, had a 2010 net worth of $28.7 million -- almost four times Obama’s own earnings -- while the one who held the position before Daley, Rahm Emanuel, had a 2010 net worth of $11.4 million.

Seth Cline, writing in the center’s OpenSecrets blog said Obama’s preferred bank is JPMorgan Chase, where he has a checking account of less than $15,000 and an asset management account worth between $200,000 and $500,000 in 2010.  Cline says the president has at least $200,000 invested in the Vanguard 500 index, “a mutual fund based on the performance of the Standard & Poor’s 500 index.”  He also has between $2.1 million and $10.2 million in Treasury bills and notes.

The Center’s report says Daley held 26 separate accounts at JP Morgan and “combined Clinton, Daley, Emanuel and Obama had JP Morgan accounts with an estimated average of $51.1 million in holdings.” Interesting, considering Obama's villifying of Wall Street "fat cats" and his sympathizing with the Occupy movement, which rails against banks.

Vice President Joe Biden, however, is not considered rich by those standards.

“Biden’s low estimated net worth is a result of relatively small income from assets and six liabilities which totaled an average of $337,000,” the center said.

Copyright 2011 ABC News Radio

Tuesday
Aug162011

Nice Guys Finish Last in the Workplace

Brand X Pictures/Thinkstock(NOTRE DAME, Ind.) -- "Nice guys finish last" the old adage goes, and a new study suggests there just might be some truth to this dictum — at least when it comes to workplace earnings.

The study, published in the Journal of Personality and Social Behavior, found that men who described themselves as nice -- agreeable, cooperative and kind -- earned 18 percent less than men who characterized themselves as disagreeable and aggressive. Women earned the least amount of money, but women who called themselves disagreeable made about 5 percent more than their more friendly female counterparts.

Timothy A. Judge, a professor of management at the University of Notre Dame and lead author of the study, said the most significant finding showed that what works for men -- disagreeableness -- didn't work as well for women.

Two factors probably contribute to this, he said.

"First, I think people interpret disagreeable behavior by men and women differently," Judge wrote in an email to ABC News. "Disagreeable men are [seen as] tough-minded and good negotiators. Disagreeable women are seen as "bit**es" or labeled in a similarly derogatory way. Think of Martha Stewart and Hillary Clinton. Appropriate behavior is somewhat gendered."

"It's age old — women who are assertive get perceived as being aggressive," said Joshua Klapow, clinical psychologist and associate professor at the University of Alabama at Birmingham School of Public Health. "It is a culturally bound factor that is not fair but highly prevalent."

Data from nearly 3,500 workers, ranging from recent college grads to those near retirement, was used in the investigation. The researchers collected the data from three American surveys -- the National Longitudinal Surveys of Youth, the National Survey of Midlife Development and the Wisconsin Longitudinal Survey -- which consisted of self-reported facts regarding work experience, salary and other personal information.

Copyright 2011 ABC News Radio

Monday
Jul042011

Salaries of Top American Executives Increased in 2010

Adam Gault/Thinkstock(NEW YORK) -- While the recovery remains stubbornly slow, with 14 million people still looking for work, things are definitely looking up for those few at the very top of the economic ladder.

CEO pay went up an average of 23 percent in 2010, while wages for rest of us rose a meager one-half-percent, according to a new report prepared for the New York Times.

The report, which was prepared for the New York Times by Equilar, an executive compensation data firm, found that the median CEO salary was $10.8 million.

The chief executive of DirecTV was reportedly paid $33 million last year, while the head of Occidental Petroleum was paid $76 million, and Viacom's chief topped all CEOs at $84.5 million, after signing a new long-term contract that included one-time stock awards.

In comparison, the average American worker made $752 a week in late 2010, according to the New York Times, up only 0.5 percent from a year earlier.

"CEO pay tends to be more linked to performance than the average worker's pay, and this has been a good year for American public companies, after all," said Professor Robert Jackson Jr. of Columbia Law School. "What's really troubling for me is that as well as American public companies did this year, their CEOs did better. That is, their CEO pay seems to have outstripped significantly shareholder performance.
"Back in 2008 when performance fell considerably, CEO pay did not decline to the extent that shareholder value did, making us all feel a little like tails I win, heads you lose," Jackson added.

CEOs are able to have some control over their earnings because they have influence over the people who decide on salaries.

"The fundamental problem with CEO pay is that the executives themselves participate in their own compensation -- they have influence over the directors, who decide what they're paid," Jackson said.

In some ways, executives are being rewarded for not hiring -- for getting more work out of fewer workers. Why aren't workers rewarded too?

"The worker gets paid what the market will bear and because of that you see wages that tend to reflect market values -- by contrast CEO pay is not set in a fully competitive market," Jackson said.

So although workers may have to wait awhile for their wages to increase, "The boss still gets his as long as investors get theirs," Jackson said.

Copyright 2011 ABC News Radio

Tuesday
May242011

Degrees Do Pay Off, But Choice of College Major Can Determine Earnings

Jupiterimages/Thinkstock(WASHINGTON) -- That English major might seem more fun than math or engineering, but it won't pay off nearly as well in the long run, according to a Georgetown University study released Tuesday. Researchers compared the average earnings for various fields over a 40-year career and found a 300-percent difference between the average salary of the highest-earning petroleum engineers and the lowest-earning high school guidance counselors.

"Going to college and getting a bachelor's degree is important, but the major that you take is more important than that," Anthony Carnevale, director of the Georgetown University Center on Education and the Workforce, told ABC News. "If what they are interested in is money, they should go directly to engineering, computer science, the hard sciences or business."

The study found that earning a technical degree by age 35 meant one was more likely to become a manager, and that's when earnings jump.

"You want your child to pursue their dreams, but at some point they've got to wake up and make a living. It's good to know when you're dreaming and when it's real," said Carnevale. "[Parents] ought to sit down with their child and talk about careers. There's a tendency to look on college as getting a degree, and not much attention paid to the value. In the end, there is the real hard issue about the differences in the earnings between these different careers."

For parents who might be questioning whether they or their children should take on huge debt to pay for college, the Georgetown researchers said the debt is worth it, even if the cost of college increases significantly.

"None of the average 40-year careers don't pay back the college expense, plus a few hundred thousand dollars," said Carnevale. "A couple of majors come close to being not worth it, and we were surprised at this, but they are all worth [the cost]. … We know that for a bachelor's degree and better, except for Ph.D.s who want to work in universities, career-wage returns are still higher than the cost of education."

A college degree is particularly important during a recession, when the jobless rate for high school graduates can double that of college graduates.

"This is judgement day for the B.A., and in the end, they are judged useful," Carnevale told ABC News.

So how do the majors stack up? Here is the list in descending order of earnings -- from highest to lowest.

Engineering

Computers and Mathematics

Business

Health

Physical Sciences

Social Science

Agriculture and Natural Resources

Communications and Journalism

Industrial Arts and Consumer Services

Law and Public Policy

Biology and Life Science

Humanities and Liberal Arts

Arts

Education

Psychology and Social Work

Copyright 2011 ABC News Radio

Tuesday
May242011

Report Shows College Grads Earn More, Face Less Unemployment

Ryan McVay/Digital Vision/Thinkstock(WASHINGTON) -- College graduates earn far more money than most people without a degree and the gap is continuing to grow, according to a new report released Tuesday by Georgetown University.

"On average if you get a bachelor's degree you'll earn 84 percent more than somebody who has high school degree," says Anthony Carnevale of the Georgetown University Center on Education and the Workforce.

Graduates also face a lower rate of unemployment.

"They're out of work at about one-third the rate of people with only high school degrees," says Carnevale.

And while some college majors carry far more earnings potential than others, "the higher degree level in general will make you more salable once the economy comes around," he adds.

Copyright 2011 ABC News Radio







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