AmEx CEO Ken Chenault has created one of the best models for executive compensation to date after the credit markets killed off a lot of his compan's profits. AmEx's board granted the executive 1,375,000 stock options in November and should receive the same number again on January 31st. This is a huge number of shares was justified by the unusually distant time horizon over the next six years requiring that EPS grow at lesat 15% a year on average, revenues must grow at least 10% a year, ROE must average at least 36% per year, and total return to shareholders must beat the S&P500 by at least 2.5% per year. Now that's a plan that shareholders can back!

Jefferies Inc. projected steep fourth quarter losses as a result of surging compensation costs and two principal trading efforts. Top executives, however, agreed not to receive their bonuses as the bank preparesto take losses estimated at $24 million. The chief executive and chairman of the board also agreed to forego stock grants for last year valued at $13 million and $6.5 million, respectively.

The CEO noted: “We have chosen to do this because we believe it is important to compensate competitively our most important assets, our people, and that, if we are asking our shareholders to make this investment for the long-term success of Jefferies, we should put our money where our mouth is and pay our fair share.”

Marvell chief executive, Sehat Sutardja, is set to receive a pay increase and bonuses just one month after the company announced that it was laying off employees. The executive is on track to make $657,000 this year - up $100,000 from last year along with a stock-based bonus and new option grants good for 415,800 shares. As if this wasn't enough, the troubled company also showed four quarters of net losses, a stock price down 27% last year, and an investigation into stock option backdating. Was this new pay deserved? Maybe shareholders will demand a say next time!

The CFA Institute sent a letter to the SEC last month suggesting changes to the way proxy votes on executive compensation are handled. The letter expressed disappointment in the regulations and suggested several specific changes:

• Ending “the use of endless and complex legal boiler-plate, and the avoidance of full disclosure by inappropriate claims that compensation metrics are proprietary” to improve the quality and clarity of compensation reports.
• Ending a practice that allows companies to avoid the “full disclosure of their [executive’s] use of company assets such as aircraft and homes, or the awarding of other personal services or products to these senior executives through a perquisites “allowance.’ These executives are then permitted to purchase whatever services they wish.”
• “Strictly limit the ability of companies to use ‘competitive considerations’ as a reason to avoid disclosure of compensation strategy”
• Requiring companies to”disclose the names of specific competitors used by the company to create a benchmark for determining executive compensation” and be required to provide “graphic comparisons” of its performance against its peers.

It will be interesting to see if the SEC takes any of these suggestions to heart, but given the organizations 92,000 members it should at least have some impact...

A new analysis of escalating CEO compensation compiled by the Canadian Centre for Policy Alternatives found that the average of the 100 highest-paid Canadian chief executives working for a publicly traded company earned $8,528,000 compared to the average salary of just $38,998 for people who are not CEOs. In fact, Canada's top CEOs now make 218 times as much as the average full-time worker, compared to only 104 times as much 1998. It appears that America isn't the only country with the problem!

"It appears to have had something to do with the fact that the market for chief executive officers became significantly an international market in the 1990s and the salary levels in the U.S. tended to slip over (into Canada)," said one of the report's authors. "All it takes is one or two Canadian companies doing really well after hiring a high-profile American chief executive officer and others start to do it, and that tends to drive up the general level of CEO salaries."

A new study released today by The Conference Board found that CEOs of the nation’s largest companies receive a relatively high proportion of the compensation in the form of stock and options. Many see this as good news since it ties their pay to performance, but others are quick to argue that the stock is often granted to them while the options are often issued deep in-the-money and do not necessarily incentive them as heavily as many would have you believe.

"There is a lot of debate about how making chief executives feel at risk for the stock price will align their interests more closely with those of the shareholders,” the report’s authors wrote. “Under this logic, big multiples are good – it should make the CEO think more like shareholders. This measure would suggest that a significant degree of alignment [of CEO and shareholder goals] should have been achieved already, especially for the largest companies."

Timothy Guertin, president and chief executive of Varian Medical Systems, received compensation valued at $6.2 million in fiscal 2007, according to a proxy statement filed with the SEC. The compensation consisted of $773,098 in base salary combined with cash incentive awards totaling $561,076 for the year. Other compensation included $25,396 in car use and expenses, $14,937 in tax gross-ups, and $1,099 in company paid premiums for life insurance, financial consulting, and medical examinations. The majority of the executive’s salary, however, was realized in stock and option awards with an estimated value of $4.7 million on the days they were granted.

Varian Medical Systems posted net profits of $239.5 million, or $1.83 per share, compared with profits of $245.1 million, of $1.81 per share, in fiscal 2006. The earnings were lowered by the acquisition of ACCEL Instruments and Bio-Imaging Research during the year. During this time, the stock dropped from a 52-week high of $56 in November to a low of $37.30 in September.

Richard Bond, president and chief executive of Tyson Foods, unveiled his compensation for fiscal 2007 today. The executive reported receiving compensation of around $24.6 million, consisting of $1.2 million in base salary, $1.7 million in non-equity incentive plans and the rest in exercised stock, bonuses and stock options. He also reported $740,227 in tax reimbursements and $378,856 in perks, which included use of the company aircraft, a car allowance, country club membership dues, use of company-owned entertainment assets, a personal cell phone, home phone and Internet line and event tickets.