The Wall Street Journal just posted a story on how funds vote on executive compensation. Here's the link: http://www.wsj.com/...?
I worked on the report this story is based on, spent countless hours digging deep in data and the single fact that surprised me most was that TIAA CREF -- the leading retirement provider for teachers and college professors – is more likely to approve high executive pay packages than almost any other institution. We identified 100 S&P 500 CEOs we believe to be most overpaid, and looked into how mutual funds and public pension funds voted. Some pension funds apparently did a reasonable job of analysis, voting against many of the outrageous CEO pay packages. New York City Pension funds supported only 43% of them. TIAA-CREF supported 94%. More than JP Morgan, more than Goldman Sachs, more than just about anyone.
Not sure why this struck me so much. Maybe because I come from a teaching family. Every time we went to a restaurant in my childhood, someone came up to the table that had been taught by my Grandmother. She taught in a one room schoolhouse for 30 years, and I think she taught well.
Maybe it is because I have so much respect for the people who teach my children every day. I know how hard they work, how harshly they are judged, and how little they are paid.
The teachers I know are smart people, and I don't think they would want their retirement money supporting outrageous executive compensation.
Here's an example I ran across while working on this report. There was a company that gave huge stock options at the bottom of the market, during the financial crisis. Now stock options are supposed to reward executives for improving company stock price. There's a lot of data out there that says execs can't really do that much to improve stock price. As the Wall Street saying goes, though, "It is better to be lucky than smart."
So this exec, he's lucky. His options have turned out to be worth way more than they were estimated to be. He's cashed in $100 million. And the company says, it “believes that reducing or limiting current stock option grants . . . because of prior gains realized by an executive officer . . . would . . . reduce the motivation for continued high achievement.”
Just think about that for a moment, the $100 million he’s already made isn’t enough. His motivation could be reduced if they didn’t keep piling on the options. I find that frankly insulting to all of us who work day in and out who are motivated by so many things, including presumably the desire to do our jobs well. I find this insulting to teachers. And I find it offensive that TIAA-CREF rubber stamps these sort of pay packages.
If you are a TIAA-CREF member, I hope you'll consider reaching out to them and letting them know, by contacting them directly or posting a comment on their Facebook page.
Also, if you want to learn more about the report, webinar is free and open to all: THE 100 MOST OVERPAID CEOS
EXECUTIVE COMPENSATION AT S&P 500 COMPANIES
WEBINAR: THURSDAY, FEBRUARY 12, 2PM ET/11AM PT
REGISTER:www.asyousow.org/webinar/ceopay