New era dawning in exec compensation

It's long been held, among executive compensation consultants, that top executives' large holdings incent good performance. Will the credit crunch change all that? Business Week noted recently that a lot of big-name executives have been forced to pare their stock holdings, sometimes dramatically, at the worst possible time. Sumner Redstone, of Viacom and CBS; John Malone, of Liberty Cable; and Aubrey McClendon of Chesapeake Energy are all on the list. In many cases, the sales have been margin calls, and a lot of the selling has been of shares in one's own company. Some may chide them for their lack of diversification but in some cases, boards force top execs to own lots of stock. Certainly, the warrants and options are designed to get more shares in their hands. It's standard for boards to ask that they own at least five times their annual salary. But now it seems to have backfired a bit, putting execs in tricky positions of having to defend their big sales to already nervous employees. Here's the Business Week article.

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