March 15, 2001 (PLANSPONSOR.com) - CIGNA Retirement
& Investment Services has added three new institutional
funds to its CIGNA Charter Funds family of commingled
separate accounts.
International Growth, subadvised by Putnam
Investments
Global Growth, subadvised by Marvin & Palmer
Associates
Large Cap Aggressive Growth, subadvised by
Nicholas-Applegate
The new funds bring the total number of funds in the
Charter Funds family to 25. CIGNA introduced the
Charter Funds in 1998 to provide retirement plan sponsors
and plan participants with access to leading institutional
money managers.
February 15, 2001 (PLANSPONSOR.com) - Institutional
investors have to decide whether existing disclosure
provisions on stock option packages are sufficient or run the
risk that new disclosure and shareholder approval provisions
will negatively impact a corporation's ability to compete,
according to the president of the ERISA Industry Council
(ERIC).
Mark Ugoretz, ERIC president, told PLANSPONSOR.com that
options are a “legitimate business function” which allow
corporations to compete for and retain talented
professionals, as well as for involving employees in
business decisions.
Ugoretz stressed that institutional investors have to
invest in a company based on its business objectives.
Raising the issue of options “puts a company in a
straightjacket” in terms of making it competitive since it
will have to come to shareholders on an annual basis to
obtain a shareholder plebiscite” on options packages. As a
result, a company’s competitiveness to attract employees
can suffer, he said.
Ugoretz said the current discussions about options
initiated by the New York Stock Exchange and NASDAQ
covers a lot of ground since institutional shareholders are
concerned about shareholder dilution, while the exchanges
are aimed at a broader base of their listed companies.
He pointed out that there are tax laws in place which
call for shareholder approval for any compensation package
greater than $1 million. The dilutive effect of
options raised by institutional investors is corrected by
disclosure which he said is already in place.
Options Being Scrutinized
Ugoretz’ comments come at a time when options are a hot
topic. A new survey, conducted by Pearl Meyer &
Partners, a Manhattan-based executive compensation firm,
found that options now account for over 60% of a
chief executive’s pay and those annual pay packages can now
exceed $10 million, according to a new survey.
The average compensation for CEO’s approached $10.9
million in 2000, which was a 16% increase over 1999.
The survey comes at a time when options compensation
plans are coming under increasing scrutiny from some
activist pension funds, such as CalPERS, TIAA-CREF, and the
British fund Hermes. The NASDAQ has also issued
requests for public comment letters about plans to require
more shareholder approval of such executive options
plans.
The new survey found that options now account for
60% of what executive receive in their compensation
packages, with the average options package hitting $6.5
million in options alone, up 28% from 1999. (Options
were valued at one-third of their issue value for the
survey.)
While these types of packages have raised the ire of
some investors, ERIC’s Ugoretz contended that “options are
not an executive compensation issue,” but are usually done
to achieve business objectives. As a result,
shareholders should not have the right to approve or
disapprove each and every options plan,” he said.
“Options are part of the business of running a
business,” he added.
The new Pearl Meyer CEO compensation survey found that
salaries now account for just 10% of pay packages,
while annual bonus comprise 20%, long-term bonuses 10% and
stock options 60%.