Richard Fairbank, their CEO, has given up base, bonus, and traditional stock option awards in favor of performance based stock options. Another CEO who took stock options over all other forms of compensation is Richard Manoogian of Masco. In most cases, it starts with a consultant working with corporate staff, makes its way to the CEO, and once he or she get comfortable with it, it gets to the board. Having said that, I work with one company where the idea usually originates with the CEO, who talks next with the chair of the compensation Committee, and then the idea gets turned over to the Staff and their consultants to work through the details and gather data in support. The CEOs of these highly successful companies have a great deal of leverage in shaping the package and the level of compensation.
Success breeds success, as with most things.
Co-authors include Jim Reda of Arthur Andersen LLP, and Jim McMahon and Dr. Eric Lane of Analytical Consulting Companies. Upon taking early retirement, he founded The Analytical Consulting Companies in Phoenix. Through its subsidiary, Analytical Compensation Services, the firm assists organizations on salary administration issues, does market-pricing, designs variable pay plans, and consults on equity compensation in both private and public companies. A third unit, McMahon Ramsden, Ltd., is based near London and conducts surveys in Europe and consults on a wide range of human resource matters. Dr. Lane works very closely with Jim McMahon, as well as with Hewitt Data Services.