Alleghany Corp: When Executive Compensation Isn't Zero

Jason Zweig has some very nice things to say about the executive-compensation scheme at Alleghany Corp (NYSE: Y) in his column this week. He talked to the CEO, who didn’t do very well at all last year:

Alleghany
pays its long-term incentive awards as “performance shares” that go up
or down with the market. Last year, when the stock fell 28%, “the value
of my total compensation was negative,” Mr. Hicks says, “as it should
have been, since the shareholders didn’t make anything.”

Wow, negative
compensation? That’s some clawback! Instead of the company paying Mr
Hicks, it seems, Mr Hicks had to end up writing a check to the company.
How much did he have to pay? I thought I’d check out Alleghany’s proxy statement to find out.

What
did I find? A salary of $1 million in 2008, a bonus of $1.275 million,
a stock award of $4.158 million, and various other bits and pieces
which add up to total 2008 compensation of $8,223,698. Yes, that’s positive compensation: money paid by the company to its CEO.

So no, Mr Hicks, the value of your total compensation last year was not negative, it was positive. Compensation is how much the company pays you, and if you’re going to talk

For more information on Communicating "Negative" Compensation.

Posted by Dan Walter

Performensation: Equity Compensation for High Performance Companies.