Executive Compensation
Pay and Benefit Increases On the Rise for Private-College Presidents
A recent analysis by The Chronicle finds that half of the 50 highest-paid private-college presidents received cash perks to pay taxes on bonuses and other benefits  in 2010. The practice, known as “grossing up,” has helped 36 private-college presidents surpass the $1-million mark in earnings and increase the median compensation to $396,649, a 2.8-percent rise over 2009. While pay and benefits increase among private-college presidents, the practice has fallen out of favor in much of the corporate world. Read more…
Executive Compensation’s Ever-changing Allowability Cap
Effective January 1, 2011, the Office of Federal Procurement Policy (OFPP) allowability cap on executive compensation reached $763,029. The cap is applicable to the five most highly compensated individuals in management positions at each home office or segment of a contractor. While the cap does not limit the amount of compensation an executive may receive, it does set the maximum amount that can be passed on as an allowable cost. The cap has increased 76 percent in seven years, from $432,851 in 2004 to $693,951 in 2010. The cap is based on the median compensation level for top executives at. Read More.
CEO Expense Accounts Under New Scrutiny
Scandals over CEO Expense Accounts, like the recent University of Texas Southwest Medical center investigation, can bring large damage to an organization’s reputation over relatively small amounts of cash. As ECFA reports, keeping organizational and personal expenses separate is crucial to avoiding scandal, maintaining reputation and carrying on in accomplishing the organization’s mission. The board chair, the chief executive, and the general counsel should sit down together to figure out the best way to ensure that the CEO has the discretionary-expense guidelines he or she needs, and the board gets the accountability it deserves. The first task is to craft workable guidelines. Read More.
New 2011 Executive Compensation Cap for Government Contractors
The Office of Federal Procurement Policy (OFPP) has set the Executive Compensation Cap (the Cap) for 2011. The Federal Register establishes the new Cap at $763,029 for Fiscal Year 2011. The Cap is implemented at FAR 31.205-6(p) , and is typically adjusted annually by the OFPP. This year’s increase is a nearly 10 percent jump from the 2010 cap of $693,951. This increase represents the third largest year-over-year increase since 2004. The Cap is effective January 1, 2011, and must be used by contractors beginning retroactively with the start of a contractor’s 2011 fiscal year. Impact Effective January 1, 2011, the cap. Read More.
Executive Compensation Allowability Benchmark Update
The National Defense Authorization Act (NDAA) for Fiscal Year 2012 was signed into law on December 31, 2011 by President Obama. Section 803, Extension of Applicability of the Senior Executive Benchmark Compensation Amount for Purposes of Allowable Cost Limitations Under Defense Contracts, amends Subsection (e)(1)(P) of Section 2314 of Title 10 of the U.S. Code to include any contractor employee – not just the top five highest paid management level employees as before. The present benchmark is set at $693,951, unless updated by OFPP (which has not been updated since 2010), and applies to compensation incurred after January 1, 2012. Read More.
Salary Reimbursement Caps – An Attempt to Balance the Budget
Last month, various members of Congress picked up on the September recommendation of President Obama to restrict the amount of contractor employee wages that can be passed on to the federal government for reimbursement. Compensation of the top five management-level employees is already benchmarked at $693,951 and compensation for all other contractor employees is governed by DCAA’s assessment of reasonableness. Current proposals would limit all compensation reimbursement for all employees to a maximum of $200,000 to match the most senior federal employee’s salary. Since contractors may not be able to recover all of their employees’ salaries, the differential may come. Read More.