I did something today that I've done more often that most people, I suspect. I actually read the "Notice of Annual Meeting of Stockholders" document that was sent to me by my brokerage. As a shareholder of several major corporations, I get these in the mail pretty frequently. I suspect that lot of people do--anyone who directly invests in stocks does.

You can learn some pretty amazing things from these documents (and regular SEC filings). For example, an Executive Vice President at this particular company was paid an annual salary of $500,000 in 2002. And he received a bonus of $562,500. He was awarded 100,000 stock options and brought in $117,112 in "other compensation" in 2002. In that same year, the Company contributed $2,750 to his 401(k) plan and paid a $450 group term life insurance premium.

Not bad! I'm a little surprised he didn't try to max out his 401(k) contribution. The limit was $10,500/year (or something like that) and his company matches a percentage of his contributions. But, hey, that's just me. I'm saving for my retirement on some tropical island.

Anyway, it gets better! In 2002, the Company also paid $113,912 in relocation expenses (that's on top of the $58,943 in relocation expenses for 2001, it says).

He must have had a lot of books to move. I'm pretty sure my relocation was well under the $10,000 limit.

But that's not all. Let's call this mysterious executive "Bob" while I quote from the another section of the document that mentions him.

In March 2001, the Company entered into an agreement with Bob pursuant to which, Bob is entitled to certain reimbursement of relocation expenses, including a mortgage subsidy. In March 2003, the Company entered into a letter agreement with Bob amending the terms of that agreement. Under the terms of the new letter agreement, Bob's base salary for 2003 was reduced to $450,000 and, in lieu of the mortgage subsidy, Bob is entitled to a payment of $23,000 on the first anniversary, $16,000 on the second anniversary and $8,000 upon the third anniversary, of his closing escrow on the purchase of a home in the Bay Area. The payments will be grossed up with respect to taxes payable by Bob and are conditioned upon the continued employment of Bob with the Company.

(Emphasis mine.)

Must be nice. Pulling down roughly half a million dollar is base salary and at least as much in an annual bonus. Why does a guy making that much cash need help paying for a house?

I have no idea. If I had that kind of cash, I'd be quite content to pay for my own place.

What I do know is that this is typical. (Like I said, I read these documents when they come in the mail.) And it's strange at the same time. You see, I don't know how much any of my co-workers are paid. We may be paid the same. Or maybe they make $30,000/year more than me. Or less. And they probably don't know how much I'm paid. It's a taboo subject at work. And I really don't understand why.

But it's trivial to find out how much Bob and the other's at the top are paid.

Update: I checked Bob's Company's 401(k) policy. It turns out that he did maximize his benefits.

Posted by jzawodn at May 14, 2003 11:12 PM

Reader Comments
# Andy Todd said:

I know its a bit of a hippy dippy idea, but I think companies should internally publish their salary lists.

Its a way of diminishing any subjective value discussions between members of a team because they all know how much each other are paid (no more "I'm better than you, no you're not, yes I am"). It also forces those deciding renumeration levels (including bonuses) to be fair and equitable, knowing that every award (or lack of it) will be scrutinised by the whole team, not just the person receiving it.

The problem is that it removes a carrot from the management arsenal and they then have to come up with other ways to divide and conquer (like having twenty different grades for a single discipline for instance). But I digress.

on May 15, 2003 02:01 AM
# Will said:

I think publishing a salary list would increase competition and enmity among the wageslaves. Publication may act like collective bargaining in removing a tool of management, if the workers then agitate for salary alignment, but those twenty different grades for a single discipline are there to reflect and enforce equitable salary ranges. "I'm sorry, we can't give you a greater raise than that because it would put you outside the salary range for your position, and we can't promote you because ...."

on May 15, 2003 02:58 AM
# Scott Johnson said:

Just as a comment I believe that Next did this in its early days and it caused a lot of issues.

on May 15, 2003 03:41 AM
# Christian said:

My former boss tried to use salaries as a bargaining tool. He tried to justify the amount of work to a coworker by saying "you get paid twice as much as bob does...". Unfortunately for the boss, the coworker knew how much bob made (we're all friends) and hit him back with "perhaps you should call payroll then because I'm not bringing home $100,000!!!"

The conversation ended on that note (not that the work level changed any...)

on May 15, 2003 05:46 AM
# Michael Kruckenberg said:

Money is a subject that really gets the blood boiling, our society places a lot of emphasis on financial status. If salary information is public (or even shared internally) it seems that the organization needs extremely clear rules for determining salary or employees will be constantly bickering over why she gets more than he etc. Very subjective. Easier to just keep salary information private.

on May 15, 2003 06:21 AM
# Andrew said:

I've always been of the opinion that senior executive salaries - particlarly CEO level salaries - take such odd, seemingly unfair, twists towards extravagance because the Company is trying to bid on top-quality talent in, let's face it, not much of a talent-pool for good CEOs. The theory going, if you want the best CEO, you have to pay them more than the next guy.

Having said that, I also think they should publish the agreements - as they do - along with the annual report, so that shareholders can see if they bid too much on this particular guy.

on May 15, 2003 06:42 AM
# Dan Isaacs said:

It's a market. Not one I will ever be a part of. I don't think it's the least bit fair, usually. But the reverse side of the bracelet they put on my ankle when I was born said something about life not being fair.

They bargain to get as much as they can, pursuant to their priorities. I know you've done the same on a few occasions. I hope all of us have occasion to be a position to do so.

Why does he have his company subsidize his mortgage? Because he can. :)

on May 15, 2003 06:52 AM
# Mikel said:

You must ask about this, at the next all hands meeting

on May 15, 2003 07:16 AM
# Barnaby James said:

And they probably don't know how much I'm paid. It's a taboo subject at work. And I really don't understand why.

Ha! Trying bringing it up in the lunch room some time. It will become clear in a remarkably short amount of time. I'll start you off -- "That guy makes how much? But he's an incompetant boob!"

I'm a little surprised he didn't try to max out his 401(k) contribution. The limit was $10,500/year (or something like that) and his company matches a percentage of his contributions. But, hey, that's just me.

I'm sure he did max out his 401k -- I think the $2750 was the employer contribution. What you pay out of your own salary pretax isn't generally considered compensation.

I'm sure the reason he gets a mortgage subsidy is because Bob probably earned that much on the east coast and the cost of living here in the bay area is higher. You don't want him to have to take a pay cut to work on the west coast do you :->

on May 15, 2003 07:25 AM
# Myke said:

Come on people. Obviously the CEO of a company this large has certain skills that are valuable to the corporation that is making hundreds of millions or billions of dollars. Stop complaining about how much the higher ups make and do something about it.

I find that most people that complain about this type of thing have never gone out and tried to even do 1/2 of what these CEO's are doing.

on May 15, 2003 08:34 AM
# George Schlossnagle said:

Bob's 401k plan sucks. Mine is better than that....

Of course if I made 2m a year I think I would find even better ways than that to shelter my cash.

on May 15, 2003 08:57 AM
# Darren said:

We used to discuss salaries amongst ourselves at work.
Then it started to get difficult when someone I told my salary to told someone else and suddenly I was having my salary being quoted back to me by people I hardly knew.

So I stopped, and then everyone else stopped.

Ignorance is bliss, I no longer get angry about crap people earning more than me. :-)

on May 15, 2003 10:47 AM
# John said:

Sounds like Bob is at Yahoo... because those details sound familiar.

on May 15, 2003 02:47 PM
# wil said:

I have to ask why you buy shares in such companies? Your 'investment' money is going directly into paying his mortgage.

on May 16, 2003 06:15 AM
# Dan Isaacs said:

How so Will? If he buys the IPO, probably a direct link. But there is no direct link between buying a stock from an unrelated third party and paying Bob's mortgage subsidy.

on May 16, 2003 07:17 AM
# Daryl Oidy said:

I find that most people that complain about this type of thing have never gone out and tried to even do 1/2 of what these CEO's are doing.

That's not the point, Myke; how many CEOs have you worked under who could do your job?

The problem isn't that the best CEOs get these spectacular packages; a lot of truly lousy ones are awfully well compensated, too.

on May 17, 2003 05:30 AM
# reverse mortgage lenders said:

Yes he did max out his 401k and i'm damn sure about this.. Here the $2750 was the employer contribution. Is it right?

on March 23, 2009 10:54 PM
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