{"id":876,"date":"2009-03-09T19:41:27","date_gmt":"2009-03-10T03:41:27","guid":{"rendered":"http:\/\/hodakvalue.com\/blog\/?p=876"},"modified":"2009-03-09T19:46:01","modified_gmt":"2009-03-10T03:46:01","slug":"reporting-on-executive-compensation","status":"publish","type":"post","link":"http:\/\/hodakvalue.com\/blog\/reporting-on-executive-compensation\/","title":{"rendered":"Reporting on executive compensation"},"content":{"rendered":"

An article appeared today titled “Top-exec pay train runs full steam ahead<\/a>.”\u00a0 Apparently, companies are paying fat bonuses to their CEOs even though their firms failed to achieve their targets.<\/p>\n

\u201cExecutive pay is the ultimate shell game,\u201d says Richard Ferlauto, a longtime critic of corporate compensation practices and director of pension investment policy at the American Federation of State, County and Municipal Employees. \u201cBoards come up with all sorts of new ways to pay people whose performance shows they don’t deserve it.\u201d<\/p><\/blockquote>\n

That Dick Ferlauto, he’s always good for a soundbite.\u00a0 He also says, \u201cWhat does ‘pay for performance’ mean if you ignore performance?\u201d Yeah!<\/p>\n

But wait.\u00a0 Another article today said that “CEO bonuses are falling fast: study<\/a>.”\u00a0 That story says that bonuses for CEOs fell over 19 percent last year, and that was after a 4.5 percent decline from the year before.\u00a0 What gives?\u00a0 Both headlines can’t be right, can they?<\/p>\n

It turns out that the first story was written based on exactly three examples.\u00a0 Somehow, all three of those examples illustrated the promise of the headline.\u00a0 Actually, one of the three stories doesn’t even do that–the company paying the bonus actually performed well.\u00a0 The complaint about the third company was that they awarded their CEO a golden coffin<\/a> benefit.\u00a0 The headline in the first article implies that that “Top-exec pay train” applies to a entire class of executives, a significant number of people.\u00a0 The fact that it doesn’t, that applies to just three people, kind of makes that headline suspect, to say the least.<\/p>\n

The second story was, as implied by the headline, based on a study.\u00a0 In fact, it was based on a random sample of 173 companies in an Equilar<\/a> analysis.\u00a0 In other words, this story was based on empirical research that ended up countering the anecdotally supported claims.<\/p>\n

If two points make a trend, I would say the lesson here is to ignore any story that does not include a study to back up the anectdotal claims implied by selected examples.<\/p>\n

For better or worse, though, headlines are an art, not a science.\u00a0 Their art is purely and simply to get you to literally buy the story.\u00a0 If I were half as liberal as the average reporter in the mainstream media<\/a>, I might suggest that the government mandate that stories be labeled “anectdotal” vs. “study” so I could save some of time reading time.\u00a0 But I understand regulatory behavior enough to know that as soon as I create that distinction, the market will work furiously to blur it as completely as possible, so paper can continue selling their sometimes false stories under often false pretenses.<\/p>\n","protected":false},"excerpt":{"rendered":"

An article appeared today titled “Top-exec pay train runs full steam ahead.”\u00a0 Apparently, companies are paying fat bonuses to their CEOs even though their firms failed to achieve their targets. \u201cExecutive pay is the ultimate shell game,\u201d says Richard Ferlauto, a longtime critic of corporate compensation practices and director of pension investment policy at the […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[25],"tags":[],"class_list":["post-876","post","type-post","status-publish","format-standard","hentry","category-reporting-on-pay"],"_links":{"self":[{"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/posts\/876","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/comments?post=876"}],"version-history":[{"count":5,"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/posts\/876\/revisions"}],"predecessor-version":[{"id":880,"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/posts\/876\/revisions\/880"}],"wp:attachment":[{"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/media?parent=876"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/categories?post=876"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/tags?post=876"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}