DolmatConnell Study Finds CEO Pay Trends Better Linked to Financial Results in the Largest Technology Firms; Overall Pay Levels Still Off the Mark in Relation to Firm Performance.WALTHAM Waltham (wôl`thăm, –thəm), city (1990 pop. 57,878), Middlesex co., E Mass., a suburb of Boston, on the Charles River; settled c.1634, set off from Watertown 1738, inc. as a city 1884. , Mass. -- DolmatConnell & Partners, Inc. (DC&P), the recognized leader in Results-Driven Executive Compensation(SM) advisory services advisory services advisory services provided to the public, in their capacity as owners and managers of animals, are an important part of veterinary science. They may be provided by government bureaux, by commercial companies who deal in pharmaceuticals or animals or animal , today announced the results of its 2006 Tech100 Compensation Study. The study shows that CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. total direct compensation increased once again in 2005 (8.9%). Furthermore, when looked at relative to company performance, CEO pay shows a promising trend - CEO pay in the highest performing 1/3 of the companies increased 15.7%, pay in the middle third increased by 13.1%, and pay in the lowest 1/3 of performers fell by 12.0%. While this directional In one direction. Contrast with omnidirectional. trend is good news, the results of the study still show a disturbing inverse relationship A inverse or negative relationship is a mathematical relationship in which one variable decreases as another increases. For example, there is an inverse relationship between education and unemployment — that is, as education increases, the rate of unemployment between the absolute dollars of CEO total direct compensation received and firm performance. "Overall, the major finding of the study illustrates that year-over-year changes for long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. incentive and total direct compensation seem well connected to performance," said Jack Dolmat-Connell, President of compensation consultancy DolmatConnell & Partners. "This is very good news because it means that Board's are moving CEO pay in the right direction. However, many companies are still off the mark in relation to paying for performance because the starting point Noun 1. starting point - earliest limiting point terminus a quo commencement, get-go, offset, outset, showtime, starting time, beginning, start, kickoff, first - the time at which something is supposed to begin; "they got an early start"; "she knew from the of CEO pay is wrong. Lower performing firms are still paying CEOs far too much." DC&P's study found that CEO total compensation (cash and equity/LTI) pay change (year-over-year) was up 8.9% to $8.415M, but varied significantly by firm performance. In addition, the study found that long-term incentive compensation changes were better linked to firm performance, up 21.0% for high performers and down 29.8% for low performers. However, bonuses barely declined at low performing firms (-2.3%) and increased at high performers (+9.4%). These results indicate that bonus plans do not have significant downside Downside The dollar amount by which the market or a stock has the potential to fall. Notes: You might hear someone say that the downside on stock XYZ is $10. What that means is that the stock could fall by this amount if things got bad. to overall performance. For the second year in a row, the DC&P study found a dramatic increase in the use of restricted stock - now being used by 47% (up from 32% in 2005) of Tech100 firms, an industry once dominated by its use of only stock options. Contrary to many reports, DolmatConnell & Partners found that nearly all technology firms continue to use stock options despite mandated stock option expensing. What has changed is that a majority of technology firms now provide a portfolio of at least two long-term incentive awards (stock options, restricted stock, and performance-based plans) as firms realize the benefits of having part of LTI LTI Linear Time Invariant LTI Long Term Incentive (NZ) LTI Lingua Tertii Imperii (language of the NAZI empire, Latin) LTI Lost Time Injury LTI Leadership Training Institute LTI Lost Time Incident compensation de-leveraged from stock price (as options are tied directly to stock price). "The majority of technology firms today are providing part of CEO long-term incentive compensation in restricted shares or a performance-based LTI plan, in addition to still providing stock options. Restricted shares offer significant retention value for CEOs, while performance-based plans provide a strong link to company operational goals," said Dolmat-Connell. "Stock options are still king when it comes to technology firm compensation, but revised accounting rules have leveled the playing field, giving firms options beyond (stock) options." Data was accumulated ac·cu·mu·late v. ac·cu·mu·lat·ed, ac·cu·mu·lat·ing, ac·cu·mu·lates v.tr. To gather or pile up; amass. See Synonyms at gather. v.intr. To mount up; increase. from SEC documents filed as of May 6, 2006, collected by DolmatConnell & Partners and Equilar, Inc. To obtain a copy of the study, contact DolmatConnell & Partners via telephone at 781-647-2739 or on the web at www.DolmatConnell.com. About DolmatConnell & Partners DolmatConnell & Partners (DC&P), the leader in Results-Driven Executive Compensation(SM), provides independent compensation advisory services to Boards of Directors and management at leading public and private companies, ranging from venture-backed startups to Fortune 500 companies. DC&P publishes many industry-leading studies on executive compensation and firm financial results. DC&P is a privately-held company based in Waltham, Massachusetts One of the early centers of the Industrial Revolution in northern America, Waltham is a city in Middlesex County, Massachusetts, United States. The population was 59,226 at the 2000 census. . For more information, visit DC&P on the web at www.DolmatConnell.com. |
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