Executive Compensation and Company Performance

The Globe and Mail newspaper published a report on executive compensation yesterday. The largest compensation package was for the Thomas Glocer who is the CEO of Thomson Reuters Corp. (TRI.TO, TRI). His total compensation package is greater than $39 million dollars. This is a combination of base salary, bonus, stock awards, option grants, pension and any other cash rewards and benefits. This is followed by the compensation package for Ted Rogers of Rogers Communications (RCI/B.TO) who was eligible for over $21.4 million. The list went on, displaying the compensation for an additional 102 top Canadian companies, many of them inter-listed on the New York Exchange. One of the issues raised in the article was the fact that shareholders would like to see a simpler compensation plans with a clear tie to company performance. The argument was that to better tie compensation to performance, executive compensation programs will become even more complicated. My question is what is so complicated? If the company meets business targets in terms of making money and maintaining shareholder value in comparison to its peers, then a bonus may be considered. As an employee, I cannot remember how many times being promised a bonus, only to not receive it because the targets overall were not met, although the group I was in and the projects I was working on delivered more than expected or budgeted for. Somehow this does not seem to translate upwards. I think it would be very interesting to see if there is a way to quantify any link between executive compensation and company performance. I would also welcome any thoughts or comments you may have regarding this issue.

Today the markets may react to some news reports such as the durable goods report, the FOMC in the afternoon and crude inventories this morning.

Futures this morning are positive along with the DAX, indicating a positive open. The market condition scans are showing a negative bias and the market bias indicators remain neutral.

Index	Change	%Change	Level	Phase
TSX	+62.54	+0.64%	9896.72	Warning
DJIA	-16.10	-0.19%	8322.91	Bearish
Nasdaq	-1.27	-0.07%	1764.92	Bullish
SP 500	+2.06	+0.23%	895.10	Bearish
Russell 2000	-3.04	-0.62%	489.77	Warning
NYSE	+34.42	+0.60	5759.49	Warning

Source: Telechart

Short Term market outlook:

Bias: Scans showing a neutral bias

Energy: weak

Primary Trend: sideways

Sector	Phase
Consumer Staples	Recovery
Healthcare	Recovery
Technology	Bullish
Utilities	Recovery
Energy	Distribution
Financials	Bearish
Industrials	Bearish
Materials	Distribution
Consumer Discretionary	Bearish

Source: Telechart