L-Blast | October 2017
Dear All,
It’s hard to believe the holidays are upon us, but what an exciting time it is for our great city of Houston as the Astros compete for their first World Series title! We may be champions by the time this hits your inbox, but whether we win or not, we are proud of our team and this great accomplishment. Way to go Astros!
In this edition of the L-Blast we have some great articles to share with you all this month. The first is an original NFPCC article on CEO pay in which we provide our expert opinion in regards to a piece recently published by the Harvard Business Review titled “Decoding CEO Pay.” Read on to get our take on these important issues.
The next article from the Harvard Law School Forum provides some interesting insights on the role of the stock market and its insignificance as a source of real investment capital, arguing that maximizing shareholder value undermines innovation and results in unstable employment, inequitable incomes and sagging productivity.
The third article provides an analysis on boards of directors experience and shares trends on how vacant board seats are filled, concluding that the right combination of directors is different for every company—new versus experienced directors, industry expertise versus board knowledge, and the right level of new and diverse views among many other factors.
We hope you will find these articles informative and help you view issues affecting our industry through different perspectives. In addition, we would like to announce that our 2018 Energy Pay Pulse Survey will launch December 1st. This survey will capture the latest in compensation trends for companies in the energy industry and we encourage you to participate. Lastly, our Energy Incentive Compensation Survey has been completed, contact us to learn more about our key findings.
We appreciate each and every one of you and we hope you have a wonderful Thanksgiving in the company of family and friends. As always, let us know if there is a particular subject you’d like to learn more about.
Sincerely,
The NFPCC Team
NFPCC’s Response to HBR’s “Decoding CEO Pay”
There was an article titled “Decoding CEO Pay” recently published in Harvard Business Review, and in our opinion here at NFP Compensation Consulting, Messrs. Pozen and Kothari have some valid points, and many that are not so valid. It appears they found a few unique, obscure examples and turned them into this “bad compensation practices” article, and we would like to respond by providing our valuable expertise on these important issues to our readers.
How “Shareholder Value” is Killing Innovation
Conventional wisdom holds that the primary function of the stock market is to raise cash that companies use to invest in productive capabilities. The conventional wisdom is wrong. Academic research on corporate finance shows that, compared with other sources of funds, stock markets in advanced countries have in fact been insignificant suppliers of capital to corporations.
Balancing Board Experience and Expertise
One criticism frequently leveled against boards of directors is that, when it comes to filling vacant board seats, they don’t cast the net widely enough. The numbers clearly show that boards often fill seats with candidates that have previous board experience—it’s even written right into the job description given to search firms in some cases.
2018 Pay Pulse Survey Launches December 1
At NFPCC, we’ve designed our participant-only 2018 Energy Pay Pulse Survey to concisely and powerfully asses market trends for companies in the energy industry. The survey will capture current compensation trends as they relate to:
- Salary increases
- Employee hiring/turnover
- Anticipated bonus payouts
- Long-term incentive grant awards
- Retention-related practices
The survey is scheduled to launch on December 1, and final survey results are scheduled to be available early January.
To download a copy of the L-Blast or see a PDF version click the link below:
