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The Employee Ownership Update

Loren Rodgers

October 15, 2013

(Loren Rodgers)

New NCEO Data on Executive Compensation Practices in ESOP Companies

The NCEO gathered executive compensation data for the 2012 fiscal year between July and September in 2013, receiving a total of 402 valid surveys from a diverse sample of ESOP companies. The survey collected data on base pay, cash incentive pay, stock incentive pay, deferred compensation, and additional benefits. The survey also addressed a number of compensation practices and mechanics at ESOP companies.

CEOs or presidents had a median total income of $306,894. The differences in median total earnings for other positions were less drastic: COO ($217,917), top divisional vice president ($195,750), and CFO or other top financial executive ($186,000). Companies with more than 1,000 employees paid their CEOs a median total income of $1,026,502, which is only slightly higher than the median total income at such companies in 2011 of $1,018,134. That is more than four times the amount of total income paid to CEOs at companies with 50 or fewer employees, who received a median of $217,940, which is actually lower than the $234,267 median at similar companies in 2011.

Incentive compensation is a substantially more important component of compensation at larger companies. At companies with 50 or fewer employees, median incentive pay is 22% of the total pay, versus 42% of the total median pay at companies with 500 to 1000 employees, and 58% of total pay for companies with more than 1,000 employees.

Survey participants received a summary of the results. You can order the complete results either as a custom report based on criteria you specify or as a database of all responses; see our ESOP Executive Compensation Survey page.

Survey on Challenging Practices for Equity Compensation Plan Administration

Companies with stock plans other than ESOPs can fill out an online questionnaire designed to improve the administration of stock plans in general. The survey, created by The American Coalition of Stock Plan Administrators (ACSPA), is intended to focus on what ACSPA calls "challenging practices," which are challenges in administering a stock plan, which a governing body (IRS, SEC, etc.) would have to change or clarify to improve the process.

ACSPA is an industry trade association focused specifically on the US equity compensation plan administration industry. Its members collectively administer thousands of plans covering millions of participants. The online questionnaire will be open until October 15.

FASB Task Force Says Performance Target Plans Will Be Accounted for As If Not Vested Until Target Is Met

On September 13, the Financial Accounting Standards Board Emerging Issues Task Force 13-D recommended that equity awards that have a performance target that can be met after a service-based vesting requirement will be accounted for as a performance condition that affects also vesting. For instance, a company might provide that an employee must work for three years and the stock price must hit a certain target. The guidance does not specify that an employee must be still working when the performance condition is met to qualify for treatment as a performance condition. The cost of these awards, as a result, is accrued and recognized over the expected period in which they are to be achieved.

NCEO Looking for Retired ESOP Company Executives for New Directory

The NCEO is creating a new directory of retired ESOP company executives who are willing to willing to share their experience and expertise, which may include working on a pro bono basis with ESOP companies considering or using an ESOP; participating in outreach programs to the press, trade associations, policy makers, and the public; and serving on ESOP company boards.

Retired executives who want to participate should submit information about themselves and their interests on our online signup form. After an NCEO staffer approves the entry, it will appear in a directory on our Web site that will be launched in the near future. So, for instance, someone might want to look for a retired ESOP executive to talk to about pros and cons of ESOPs or making an ESOP work better, or perhaps they are looking for board members. They can select that category in the directory, and see each matching person plotted on a map of the U.S.

One goal of the project is to identify people who can credibly present ESOPs to the public. The NCEO continues to encourage trade associations, as well as state and local governments, to make people more aware of ESOPs as a business transition tool, via seminars, articles, Webinars, and other means of spreading the word. Several people in several states are actively working on these projects (and making good progress), and we have developed a variety of online and print support materials.

The goal is to have a resource of people experienced with ESOPs to help people and institutions interested in employee ownership. Please pass this information on to people who might want to be involved, or, if this fits your situation now, please consider signing up. Contact Corey Rosen for more information at CRosen@nceo.org or 510-208-1314).

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