Corporate compensation

[davelj]

[quote=flu]

Dude. Might want to check the fine print.
Steve Jobs might take home a $1 salary, but he takes home a boatload of stock/stock options…

The other thing is that, if those equity grants were structured correctly (which normally is the case for exec’s), I wonder if it’s capital gains and versus ordinary income…and conversely wonder if social secuirty/sdi/etc taxes are even paid on that too.[/quote]

Option gains are all ordinary income unless they are exercised and not sold (very rare), in which case a portion can qualify as long-term capital gains (if there is appreciation post-exercise). For restricted stock, the value at grant date is ordinary income, but the appreciation is long-term capital gain if the stock is held longer than a year. Anyhow, most – but not all – equity compensation ends up getting taxed at ordinary income rates. The clever CEOs, however, put a clause in their employment agreements that requires the company to pay any excess income taxes related to the exercise of equity compensation in the case of a change of control.

[quote=flu]
…And don’t get me started on hedge fund managers who don’t pay ordinary income taxes….[/quote]

Well, the management fee income is ordinary income. No way around that. It’s the “carried interest” that gets taxed at a long-term rate if the gain is long term (which for most hedge fund managers, it’s not – most hedge funds generate mostly short-term gains/losses). Really you’re talking about private equity fund managers where the gains are long-term. So, a thought experiment. Let’s say that a 20% carried interest results in a $100 million gain for the PE fund’s general partners which will be taxed at the long-term rate. Now, let’s use the same fund but let’s assume that the carried interest amounts to just 10%, or $50 million, while the other $50 million goes to the fund’s limited partners. Again, all long-term gains. In each scenario, the Uncle Sam gets the same amount, all you’re doing is dividing the tax (and gain) pie between the LPs and the GPs. But the government gets that same amount no matter what the carried interest percentage is. My point is that it’s a complicated issue. The vast majority of hedge and PE funds don’t even generate a carried interest, so most of the income (in the form of management fees) paid to the managers is taxed at normal income rates, but… there are some large PE funds that do have large carried interests.

[UCGal]

Motorola had a shareholder vote about executive compensation at a time they were losing money and had 2 ceo’s, one of whom was topping the highest paid CEO lists. Shareholders voted against the compensation… but it was an advisory vote… no weight/power behind it. The board learned the lesson… don’t put it to shareholder vote.

The company has since split… I see that one of the 2 ceo’s is on the list (Greg Brown)… The other, Sanjay Jha is not on the list, which surprises me… he had a HUGE payout when the company split this year.

There’s a problem with the disparity between non-exec workers and the salaries in the c-suite.

[UCGal]

Motorola had a shareholder vote about executive compensation at a time they were losing money and had 2 ceo’s, one of whom was topping the highest paid CEO lists. Shareholders voted against the compensation… but it was an advisory vote… no weight/power behind it. The board learned the lesson… don’t put it to shareholder vote.

The company has since split… I see that one of the 2 ceo’s is on the list (Greg Brown)… The other, Sanjay Jha is not on the list, which surprises me… he had a HUGE payout when the company split this year.

There’s a problem with the disparity between non-exec workers and the salaries in the c-suite.

[UCGal]

Motorola had a shareholder vote about executive compensation at a time they were losing money and had 2 ceo’s, one of whom was topping the highest paid CEO lists. Shareholders voted against the compensation… but it was an advisory vote… no weight/power behind it. The board learned the lesson… don’t put it to shareholder vote.

The company has since split… I see that one of the 2 ceo’s is on the list (Greg Brown)… The other, Sanjay Jha is not on the list, which surprises me… he had a HUGE payout when the company split this year.

There’s a problem with the disparity between non-exec workers and the salaries in the c-suite.

[UCGal]

Motorola had a shareholder vote about executive compensation at a time they were losing money and had 2 ceo’s, one of whom was topping the highest paid CEO lists. Shareholders voted against the compensation… but it was an advisory vote… no weight/power behind it. The board learned the lesson… don’t put it to shareholder vote.

The company has since split… I see that one of the 2 ceo’s is on the list (Greg Brown)… The other, Sanjay Jha is not on the list, which surprises me… he had a HUGE payout when the company split this year.

There’s a problem with the disparity between non-exec workers and the salaries in the c-suite.

[UCGal]

Motorola had a shareholder vote about executive compensation at a time they were losing money and had 2 ceo’s, one of whom was topping the highest paid CEO lists. Shareholders voted against the compensation… but it was an advisory vote… no weight/power behind it. The board learned the lesson… don’t put it to shareholder vote.

The company has since split… I see that one of the 2 ceo’s is on the list (Greg Brown)… The other, Sanjay Jha is not on the list, which surprises me… he had a HUGE payout when the company split this year.

There’s a problem with the disparity between non-exec workers and the salaries in the c-suite.

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