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Unions Targeting Executive Pay

AFL-CIO wants to curb excessive packages; meanwhile,GE ditches its special salary deferral plans for top officers. Plus: poker as executive education?
Lisa YoonFebruary 13, 2003

No doubt in response to shareholder criticism about executive compensation, companies are examining compensation and benefit packages before their annual meetings this spring. The AFL-CIO labor federation is currently in talks with companies about curbing executive pay packages, according to the Financial Times.

The newspaper also reports that unions have demanded that directors who are members of the compensation committee should attend negotiations this year about shareholder proposals.

Two major companies that are taking another look at executive-pay schemes are General Electric Co. and Coca-Cola Co. The compensation committee at GE did away with its “special salary deferral plans” for the company’s five highest paid officers. The plans had allowed the executives to defer salary and receive an above-market interest rate. Still wanting to encourage loyalty in its executives, GE continues to offer a less generous deferral plan that covers approximately 4,000 top managers.

Coke has announced plans to phase out its Key Executive Retirement Plan, said the Times. Under the plan, the company’s top three executives received additional pension benefits on top of the regular company retirement program.

Despite recent criticism of executive pay, both GE and Coke reportedly played down the role of direct shareholder pressure in their decisions on executive benefits. Meanwhile, the AFL-CIO said that it had not decided whether to withdraw resolutions expressing concerns about the GE and Coca-Cola plans.

Poker: The New Game of Business

Forget golf.

It appears that poker is fast gaining in popularity with corporate executives, reports the New York Times, and not just because life is so much better when you hit on an inside straight.

No, the compelling reason why so many executives are playing poker is that it offers a chance to hone business skills — things like assessing risk, reading faces of rivals, leveraging strengths, masking their weaknesses, and coping with stress.

The best poker players can identify their opponents’ tells (body language that gives away their hands), according to the Times. And it’s this skill that really comes in handy in business, especially in negotiations.

One investor and poker player told the paper that poker has taught him the importance of dealing with people face to face.

On the other hand, some clients might question the judgment of someone who would casually risk thousands of dollars on a night of cards. And, another player told the paper, plenty of old-fashioned people disapprove of playing cards for money.

Though high-stakes games are probably less common than they were at the height of the dot-com mania, relationships formed at poker games are compared to the networking that that happens in golf.

“Poker is a little like a sewing circle … a very social experience the same way golf is,” one player told the newspaper. “You really don’t get those hours on end to sit around and talk to people, so it’s great to be able to sit around one night a week and talk about life.” He said he had received many magazine assignments through playing poker with editors.

And while winnings can be big, most high rollers don’t count on making poker their living: “I hope I know my M&A as well as my poker,” another player told the Times. “There’s a lot more money to be made at that.”

CFOs On the Move

Gap Inc. is paying former CFO Heidi Kunz $1.15 million severance, according to a regulatory filing. The package consists of a year’s salary and a bonus $606,300. Kunz’s base as EVP and CFO was $550,000.

The San Francisco-based clothing retailer also loaned Kunz $2 million interest-free in January 2000, to help her buy property. Under the severance agreement, Kunst has to repay the loan in full by February 2005 if she sells the property or breaches any part of her severance terms with Gap.

Kunz resigned in mid-January, when new CEO Millard Drexler tapped former Disney colleague Byron Pollitt to run the Gap’s finance department.