BOSTON, May 21 /PRNewswire/ -- DolmatConnell and Partners released our 2008 studies of executive compensation in the Tech100 and LifeScience100 (the studies are available for download at (http://www.dolmatconnell.com) today and issued the below press release that we wanted to ensure that you saw. There are some very interesting findings, summarized in the press release, that we believe you will find highly relevant and newsworthy. If you would like to discuss any of the findings in more detail, or arrange an interview with Jack Dolmat-Connell, the CEO and founder of the firm and one of the leading executive compensation consultants in the country, please contact Sabreena Kropp at 781-647-2744 or SabreenaK@dolmatconnell.com.
DolmatConnell & Partners, Inc., a leading independent executive compensation consulting firm, released today their 2008 Tech100 and LifeScience100 Studies. These studies, now in their fourth and second year respectively, provide some exceptional insight into the evolving world of executive compensation in the 100 largest publicly traded High Technology and Life Science companies in the U.S.
Changes in CEO pay level varied significantly between the two studies and were linked to overall industry performance levels. In the Tech100, CEO base salaries increased 3.8% and actual total cash compensation increased 2.9%, while total direct compensation (base + actual bonus + annual long-term incentive grant values) fell 0.6%. This was in line with a median annual total shareholder return for the industry which was 1.6%. The picture in the LifeScience100 was vastly different, with a median total shareholder return of 14.4% last year. CEO base salaries increased 5.6%, actual total cash compensation increased 10.3%, and total direct compensation rose 11.8%.
Pay-for-performance is dramatically improving, as Boards and Compensation Committees are responding to shareholder concerns with respect to executive pay. DolmatConnell & Partners looked at the Top 20 and Bottom 20 performing companies in each industry and found several encouraging results.
In the Tech100, median target bonuses for the Top 20 performing companies were 120% of base salary and actual bonus payouts were 139% of target ($1.4M), whereas in the Bottom 20 companies, median target bonuses were 150% of base salary, and actual bonus payouts were only 19% of target ($225K). Bonus payouts in the LifeScience100 followed similar trends. Says Jack Dolmat- Connell, CEO of DolmatConnell & Partners, "It is great to see that Boards are finally getting tough relative to the pay of underperforming CEOs. This is what has infuriated investors for years -- high pay for mediocre or poor results."
Most studies of executive compensation look at the aggregate value of base salary, actual bonus and the annual long-term incentive grant values in a given year, also known as "pay opportunity" for a given year. In addition to this, the DolmatConnell & Partners' studies looked at the value of compensation "realized" in a given year -- what executives actually took home. The results of this new look are stunning -- CEOs at Top 20 companies in the Tech100 realized $9.0M in 2007, whereas CEOs at Bottom 20 companies realized only $3.4M, a very significant difference in compensation based on performance. Unrealized compensation (the value of equity still outstanding) differences were even more dramatic -- CEOs of Top 20 companies held equity worth $45.0M, while the equity outstanding of the CEOs of the Bottom 20 was worth only $8.1M. Says Dolmat-Connell, "This is incredibly positive news based on a completely new and better way of looking at executive pay. It is also fascinating to note that the vast majority of the value of the equity held by CEOs in the Top 20 was in the form of stock options, an investor- friendly long-term incentive vehicle, whereas the majority of the value of the equity held by the Bottom 20 CEOs was in the form of time-based restricted shares, a very investor-unfriendly vehicle."
Copies of both studies can be found at http://www.dolmatconnell.com.
About DolmatConnell & Partners, Inc.
Based in Waltham, MA and Palo Alto, CA, DolmatConnell & Partners (http://www.dolmatconnell.com) is a privately held compensation consulting firm dedicated to providing independent, insightful, and innovative advice in all areas of executive compensation and Board of Directors remuneration.
|SOURCE DolmatConnell & Partners, Inc.|
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