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Overtime Primer: Highlights from the New Regulations
The federal DOL overtime regulations go into effect this year. Are you ready?
This report includes a summary of key changes, including the salary level test and salary basis test.
As a bonus, we've included a handy flowchart to help you determine exemption status under the FLSA.
June 04, 2002
Turbulent Times for Pay Panels
Beset by often conflicting forces, these committee chiefs now occupy one of the hottest board seats. On one side, top-notch executives demand top-notch pay deals to steer their enterprises through hard times. But on the other, stockholders howl when compensation soars and share prices sink.
What's more, according to the Journal, outcry over the largess bestowed upon several high officials involved in Enron Corp.'s collapse seems sure to further turn up the heat on individuals running compensation committees.
In 2001, shareholders voted on 60 executive-pay resolutions, eight more than in 2000, according to the nonprofit Investor Responsibility Research Center in Washington, D.C. On average, such measures garnered 19.7% of the votes cast last year, up from 13.6% in 2000.
At more than a half-dozen companies during 2000, the California Public Employees' Retirement System challenged excessive executive compensation by withholding votes to re-elect at least one pay-panel member.
CalPERS, the nation's biggest pension fund, says the number of businesses that it targeted over pay rose last year and should remain high again in 2002. So far this year, it has taken aim at two directors at Lucent Technologies Inc., Murray Hill, N.J., and plans a similar drive at telecom company WorldCom Inc., Clinton, Miss.
The giant fund is dissatisfied with pay-panel chairmen's "minimal" response to these protest votes, says Ted White, director of corporate governance for CalPERS. "It's time to put more pressure on," he told the Journal.
Even without greater investor activism elsewhere, the Enron scandal alone may produce more vigilant chairmen of compensation committees, according to Carolyn Kay Brancato, a corporate-governance specialist at the Conference Board, a New York business-research organization.
A working group at the Conference Board recently studied pay panels' shortcomings and concluded, "If you don't have a forceful chairman of the committee, you just don't have a committee with backbone," Brancato said.
A new breed of pay-panel leaders has already brought stiffer backbones into a handful of boardrooms, according to the Journal. They refuse to rubber stamp management's lavish requests. And they bolster their independence by being sure to have a grasp on complex pay issues and insisting that the board hire outside compensation consultants. Some of these chairmen are chief financial officers, human-resources specialists, or retired CEOs.
Wall Street Journal reports that a complex task confronts those heading board pay panels these days.