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Compensation Close-up

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IN THIS REPORT

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Executive pay continues to be a touchy subject for CFOs. Critics openly question whether exorbitant salaries and bonuses are really warranted, while many corporate colleagues insist that top executives should be paid what the market will bear.

In this special report, we explore how the SEC may step in and ask for more clarity from companies about how they pay their executives. We also dig into a controversial study that shows the relationships between corporate consultants and executive compensation are plagued with conflicts of interest. And we look at how the Compensation Discussion and Analysis (CD&A) section of proxy statements is intended to make pay more transparent but might actually be boosting C-suite salaries.

But executives are not the only ones getting paid. Those looking for new talent can find some of the latest trends in employee compensation. And readers wondering why backdating scandals have been out of the news can learn why the Securities and Exchange Commission has been dropping backdating investigations.


FEATURE ARTICLES
A Call for Tougher SEC Action on Comp
Financial analysts at the CFA Institute's Centre for Financial Market Integrity, upset with corporate dodging of executive-pay reporting requirements, recommend tightening in 10 areas.
The Storm over a Corporate Pay Study
Compensation consultants attack The Corporate Library's report on their business. But despite its shortcomings, the report is a first step in looking at the relationship between those firms and the size of executive pay.


MORE STORIES ABOUT EXECUTIVE PAY
What's in Your Wallet?
The CD&A gives investors a better view of executive pay. It could also give CFOs a raise.
SEC Issues Alert on Stock-Option Expensing
With a nod to smaller businesses, the regulator extends its deadline for using the simplified method of estimating option values.
House Committee Probes Executive-Pay Consultants
Rep. Henry Waxman claims that when companies use consultants for both pay advice and other services, it leads to "soaring" executive pay packages.
Trigger Happy: The Bar Rises for Change-in-Control Benefits
More companies are appeasing shareholders on a controversial executive compensation scheme.
Material Weakness: A Pain in the Bonus
When a company's material-weakness disclosures rise, the CFO's bonus falls, according to a new study.
Torre's Pay Offer Is a Hit with CFOs
The pay-for-performance deal the New York Yankees offered to Joe Torre lines up with executive-compensation trends in Corporate America.
CEOs Don't Earn Their Pay, Execs Agree
Corporate board members say so in a landslide. Lucky for CFOs, they are next in the succession line.
SEC on Pay Disclosure: Less Conversation, More Analysis
After reviewing the executive compensation disclosures of 350 companies, the commission says it still doesn't understand how businesses figure out their pay packages.
Making Less Money, and Loving It
Do you have what it takes to become a non-profit CFO? If you're tough enough, there's good news: The non-profit job market is expanding—rapidly.
House Votes Yea to "Say on Pay"
Although Barney Frank's bill would give shareholders a nonbinding vote on executive compensation, opponents worry the votes could carry too much weight.
Critics: "Say on Pay" Spurs Brain Drain
Opponents wonder if a Barney Frank bill that would enable shareholders to opine on executive pay could push CFOs and their bosses at publicly held companies into the private-equity sphere.
The Market Rate
Executives' large pay packets cannot be blamed on poor governance.
In the Money
Executives have enjoyed an astonishing pay bonanza. Most of them deserved it.
Exec Comp: The SEC's Side of the Story
Surprised by reaction to a change in compensation disclosure rules, the SEC contends that it's requiring more disclosure about corporate stock and option outlays, not less.
Pay Daze
Linking pay to performance is harder than it looks.
Pay Up
With finance talent in high demand, companies are boosting compensation — and making some demands of their own.
A Farewell to Perks?
The SEC's new compensation-disclosure rules could mean the end of luxurious wine cellars and questionable stipends.

MORE RECOMMENDED READING ABOUT EMPLOYEE PAY
Battle Lines Drawn on Executive Pay
A House bill would require shareholder approval for corporate compensation policies.
IRS Chief: CFO Pay Should Be Fixed
At a Senate hearing, Internal Revenue Service Commissioner Mark Everson says finance chiefs shouldn't be paid in options, and a ranking senator seems itching to legislate.
Study: Director Pay Hikes Slowing Down
Further, fewer companies are making stock options a component of directors' compensation packages, with 53 percent providing them 2005— down from 59 percent in 2004 and 66 percent in 2003.
Directors Say Exec Pay Hurts Image
Two-thirds of board members also believe that the current model for executive compensation has contributed to superior corporate performance, according to a new survey; less than one-quarter of institutional investors share that view.
Executive Pay Prognosis: Marginal Change
The market for senior management pay is likely to keep compensation up—even in the face of more disclosure.
Survey Says Comp Rules No Big Deal
Even as multiple Senate hearings focus on executive compensation, a survey of human resource professionals says new SEC rules will have little impact on compensation or company performance.
When Turnover Turns Toxic
Some tips for quantifying the cost of losing key employees and stopping critical departures. A consultancy sees CFOs as central to the process.
The Onus of Bonus
Getting a handle on incentive compensation is no small task. Software can help. Also: Annual reports via video.
Just Rewards
Pressured by the tight labor market, companies are redesigning nonexecutive pay to attract — and keep — top performers.

BACKDATING BLUES
When Is Backdating a Crime?
The burden will be on DoJ prosecutors to prove Brocade executives deliberately misled investors.
Officers Who Conceal Backdating, Beware
Delaware's Chancellor Chandler rules that any complicity in stock-option abuse, including not reporting it, could make a CFO or other executives liable.
Backdating Blamed on 1993 Tax Rule
Disturbed by the manipulation of option grants, Congress is toying with eliminating the $1 million tax cap on executive compensation.
Novellus Investors Drop Backdating Suit
The manufacturer has been embroiled in the options-timing controversy for a year because of an analyst report. But it has not been implicated by restatements, resignations, or federal investigations.
Backdating Nibbles
The scandal hasn't had any obvious chilling effect on merger-and-acquisition activity.
Enforcement on Backdating Cools Off
For the third time in a week, the SEC drops an investigation into the manipulation of stock-option award dates.
Banks Dodge Backdating Bullet
A study of 12 prominent banks shows generally poor disclosure of option grants, but no firm evidence that any were involved in backdating.
Brocade's Reyes Guilty of Backdating
The U.S. government wins its first time out in a case targeting the misdating of stock options by a CEO.
First Prison Term in Backdating Scandal
Former Comverse general counsel wasn't ''the grand Wizard of Oz,'' says the sentencing judge, but still deserves a year behind bars.

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