Companies are recovering, so who should reap the rewards?
The hideous days of business class are over for some executives
You can almost hear the sound of the violins intoning sympathy for the poor, beleaguered chief executives of the world. Yes, doubtless we should all shed a tear for the blighters - their way of life, indeed their very existence, may be under threat. Some blame Kenneth Feinberg, appointed by the Obama administration as a "pay tsar". We've no idea why he's called a tsar, and no doubt he's overpaid for what he's doing, but his job is to make sure these fellows - for they are a predominantly white, middle-aged paunched club - do not make off with too much loot.
And according to a report in The New York Times, Mr Feinberg's efforts to limit some of the excesses, such as the corporate jets, country club memberships, nights out at girlie bars - all essentials of modern business life, apparently - have been successful. Even worse, some CEOs are seeing their pay packets shrink. In a report compiled by Equilar, a compensation research company based in California, the average pay package of the 200 chief executives of 199 companies analysed (Motorola has two chief executives before you ask and only they know why) had faltered by 15 per cent from the previous year, down to a measly US$7.7 million (Dh28.2m). Yes, these captains of industry, these Titans of technology, are being forced to struggle along on $148,000 a week. It is mindboggling. How can they cope? Even worse, how can their wives cope?
One can only imagine the scene. Man to wife: "Here is your weekly allowance, dear." Wife: "What? You have to be kidding. What am I supposed to do with that? Tip my tennis coach? I don't think so." Doors slam, shoes are thrown (the husband's naturally, no toxic wife throws her Manolos at anyone), the sound of spinning Porsche wheels on gravel. Of course, not every company is following the stern strictures of the tsar, and they deserve a good clap with a knout and a spell of exile at a salt mine.
But most of the company bosses have been affected by the decline of stock and options, awarded during last year. Others have seen their pay packets bulge, boosted by the revival of the stock market during the past year. This is why you have to feel sorry for these guys: damned if they do, damned if they don't. Who else was responsible for the sudden surge of value of the stock if it wasn't them? What's that you say? Nothing to do with them? Rising tide lifts all boats etc?
Some companies decided to cut back on the equity components, and increase the cash payout, even though the tsar does not like this idea. "We've seen some companies that switched over to cash because equity was too volatile," Aaron Boyd, the research manager at Equilar, told the Times. Elsewhere, the head of Kraft, Irene Rosenfeld, one of the few women in this gang, saw her meagre compensation package soar from $18.7m in 2008 to $26.3m last year, a 41 per cent increase. The company's compensation committee said her leadership of the Cadbury bid had been "exceptional" and praised her "commitment to financial discipline".
Verily, you could not make it up. The poor lady's basic pay has barely changed, her salary remained a feeble $1.5m, but a share award worth $7.8m, an annual incentive award of $3.96m (you can't fool us, that's almost four million dollars) plus another $1.9m in options (hadn't she just had those?) and finally $6.6m from a three-year non-equity incentive plan. Oh, and a $4.2m boost to her pension plan, at a time when Cadbury is closing its final salary pension scheme to new workers and making staff increase their contributions.
Incentive enough to force anyone out of bed on a cold morning and into the office. But wait, there's more. There's a further $362,994 in other benefits, including $56,348 for personal use of the company's fleet of private jets. She's allowed to use them for holidays with her family, or for any other trip that takes her fancy. It's great that private jets are back. Last year's financial malaise saw a glut of jets suddenly come on the market. Apparently there are normally about 2,000 such birds for sale at any one time. Last year, there were 3,000, enough to force down the price from anywhere from 25 per cent to 50 per cent.
But according to the UBS Investment Research's closely watched Business Jet Market Index (really, although who watches it that closely?) market conditions rose to 50 in March, on a scale of nought to 100. UBS's analysts said the rise in the index showed improving customer interest in private aviation and reinforced the prediction that this year would be better than last year. In other words, jets are now in demand, particularly among corporate Titans.
How on earth did we cope without them? We must all heave a sigh of relief that those hideous days in business class are over, complete with those ghastly vanity bags and socks and shades that the flight attendants hand out. Move aside, make mine a Gulfstream G650. Just don't tell the tsar. firstname.lastname@example.org