About two years ago, I wrote a post about director compensation, quoting the old saw that pigs get fat but hogs get slaughtered. Given what I’ve been reading of late, I think it’s time for a refresher, but this time I’m discussing executive, rather than director, compensation.
With the onset of the COVID-19 pandemic, a number of companies or their executives took action to reduce pay. In some cases, salaries were reduced to $1 a year or eliminated entirely. So far, so good. However, there were also cases in which the executives were given so-called mega-grants of equity to make up for their sacrifices. That may have raised a few eyebrows, but the eyebrow-raising may have been mitigated or overlooked because the grants were made when the stock markets had dropped precipitously and many companies’ shares were trading at 52-week lows.
Of course, what goes down must come up, so when the stock markets rallied (and, in general, have continued to rise to levels that seem absurd in the face of what’s going on these days), the noble executives who sacrificed pay made out like bandits. Or hogs. No sane person would argue that the stock markets have any rational connection to corporate performance generally, much less to that of a particular company. However, the rising tide has floated a number of boats, including the holders of those mega-grants.
Continue Reading Of shields and swords, pigs and hogs