NEW YORK - As far as the executive suite is concerned, it's almost as if the fund scandal and corporate governance issues did not happen.
Earnings in 2003 were so strong, that most executive compensation committees are voting their CEOs and directors a bonus or a raise. Directors at Fortune 200 companies are looking at raises of between 5% and 15%, while CEOs are looking at average bonuses of 10% to 15%, according to a recent press briefing here by executive compensation consultants Pearl Meyer & Partners of New York.
Scandal, Be Damned
That's the experts' opinions on what boards of directors are likely to decide, as they mete out 2003 incentives in the spring. While the media may be calling attention to the bonuses of top executives implicated in the scandal (take the recent news stories on the $2 million bonus for the CEO of Franklin, for example), those doling out the dough for corporate leaders are more concerned about rising profits, said Jan Koors, a managing director with Pearl Meyer.
"Bonuses are going to jump up, a healthy jump of 11% to 15%," Koors said. "Chief executive officers [are going to see their pay scales increase] comfortably in the double-digits - maybe not 20%, but a healthy increase."
Another trend that Pearl Meyer, which consults with executive pay committees and lists a number of mutual fund companies among its clients, expects in 2004 is a move away from stock and cash, or cash-equivalent options, to long-term incentives. Restricted stock plans and long-term performance share are two new types of incentives the firm is recommending.
In fact, at one of Pearl Meyer's clients, where the CEO has resigned because of Fundgate, the board is likely to make such a change, to a performance-based plan, said Claude Johnston, managing director. A cash SAR [stock appreciation right] plan, which operates like a stock option but gives an executive the benefit of a better defined value, is likely to be one of the new types of incentive plans that this mutual fund company adopts, Johnston said.
The bottom line in the C-suite, Koors and Johnston said, is that no matter what the legal, regulatory or governance issues swirling around the investment management industry, executives are going to come out alright, financially speaking.
As Koors summed it up, "It's good to be king."
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