Remembering George Rathmann

AMGen 1983 Logo

AMGen’s Logo in 1983 (Photo Source: wikipedia.com)

Thankfully, it’s not often that PWInsight publishes obituaries. But this week, George Rathmann, 84, the founder of Amgen, one of our early biotech client companies, died, and I cannot let his passing go without acknowledgment.
 
He led the push for groundbreaking drugs. He was a cheerleader for everyone who surrounded him.  He changed lives. And he never let his well-deserved medical celebrity go to his head.
 
“I’m George, not Dr. Rathmann,” he told me upon our first meeting in the late 1980s.   I vividly recall showing him a six-minute video we produced for investors about Amgen’s first-approved drug, Epogen, which treated severe anemia for kidney patients.  He wept.  And when we showed the film weeks later at an investor conference, he wept again.
 
George had soul. He is survived by his wife of 61 years, five children and 13 grandchildren.  Ironically, he developed kidney disease in his late 70s and took Epogen to help him survive.

 

Roger Pondel, pondel@pondel.com
 
 

What They’re Still Sayin’ about Payin’

Say on Pay

Photo credit: Flickr, Tind

With proxy season nearly upon us, a couple of thoughts may be in order about Say on Pay, one year after
we first blogged about these new guidelines going into effect.
 
On the positive side, last year nearly all companies had their executive pay plans approved by at least a majority of their shareholders, according to a recent research report from IR Insight in a survey of 181 companies.  Moreover, the vast majority of the companies received a “yes” vote from 70 percent or more of their shareholders on their executive pay plans.
 
With only two companies surveyed receiving a majority of “no” votes, Say on Pay is nevertheless not lessening in importance.
 
“Egregious pay packages are by and large a thing of the past,” according to Robin Ferracone, a consultant with Farient Advisors, an independent executive compensation firm.  Ferracone believes that investors were “forgiving” last year.  She said institutional investors are set to grade companies’ pay plans “a lot harder” in 2012, although if companies’ performances and the markets improve, investors may not question executive pay much at all.
 
Narrowly approved pay plans may not be out of the woods.  Modest changes to the investor base could put these companies in jeopardy of receiving enough “no” votes to reject the pay plan.  Executive compensation experts advise corporate secretaries and investor relations officers to contact top holders at these companies to learn about investor concerns, and either explain the purpose of the questionable provisions, or modify the plan.
 
Going forward, the expectation is investors will more closely scrutinize how executive pay is
determined.  They want to see companies disclose how they have appropriately aligned performance with pay.  Ferracone believes this means more use of objective criteria, benchmarking and third-party diagnostic tools.
 
Finally, the SEC has delayed until the second half of 2012 the final rules on a number of pay disclosures under the Dodd-Frank Act.  Ira Kay, managing director at Pay Governance, a firm that provides independent executive compensation advice to boards, says the “pay versus performance” disclosure rules are difficult to craft, and the SEC may get ideas from companies tackling the issue on their own.  We’ll soon see.

 

PondelWilkinson, investor@pondel.com
 
 

Wage Disparity Rages On

Women's salaries are still lower on average than men's

Women’s salaries are still lower on average than men in the same career

A recent study by GMI Ratings showed a $215,000 disparity between the salaries of male and female CFOs.
 
CFO Magazine noted that the study looked at several factors that impact CFO pay, including company size, market cap, age and tenure in the position.  Total average compensation for the men, including salary, bonus, and stock awards, was $1.54 million versus $1.32 million for women.
 
Why do women earn less?  Is gender discrimination at play?  One of the study’s authors surmised that, “It is possible that women are more likely than men to advance through promotion from within a single company.  Many firms tend to pay more when making outside hires, which could lower women’s compensation levels.”  The report also cited possible shorter work histories for women, even when they are the same age as men, because they are more likely to interrupt their careers to raise children.
 
SteveTobak, a consultant and contributor to CBS, has some ideas of his own.  He believes that, among other things, women and men may not negotiate in the same way and that compensation is a complex discussion at the CFO level. He also noted that women and men may not be similarly motivated by the same factors, with women weighing non-compensation factors such as work flexibility, security and benefits more heavily than men.
 
Based on 2010 census data, Bloomberg recently reported that the six jobs with the largest gender gap in pay are in the financial sector, with women earning 55 to 62 cents for every $1 made by men.  However, it appears the gender gap is starting to close with the median-pay disparity for all occupations at 77 cents for every $1 earned by men, an improvement from 61 cents during the last 50 years.
 
Whatever the reason for the inequality, the debate about why it exists rages on.  While on the surface it certainly seems that men and women should be paid the same for the same job function, there are clearly many factors at play.
 
If you’re a woman who wants to earn more than your male counterpart on Wall Street, Bloomberg recommends (tongue in cheek, of course) that you set up a shoe-shine stand in Lower Manhattan. Female personal care and service workers earn $1.02 for every $1 made by their male colleagues. Go figure.

 

Laurie Berman, lberman@pondel.com
 
 

This Time, It’s Real

On this, the first business day of the second quarter of 2012, everyone seems to be writing and talking about the spring in this year’s early spring.  No, not the weather, but the economy and how, this time, the rebound finally seems real and sustainable.
 
In early 2010, we, and most others, thought things were turning around.  We even asked our landlord about the two vacant offices adjacent to our suite in Century City.  Glad we didn’t sign on.
 
Then again in early 2011, the economy once again appeared to be heading in the right direction. But, alas, hopes were dashed, and it stalled again.
 
Today, it not only feels different, but the facts seem to be saying so, too.
 
Jobs are being created and unemployment is falling.  According to our client, Greg Palmer, CEO of staffing industry advisory firm Greg Palmer and Associates and his Palmer Forecast™, the use of temp help among businesses throughout the nation is on the rise, one indicator that good things are in store.
 
Last week, nine companies went public, the most IPOs in one week in more than 15 months.  More than 200 companies have filed with the SEC and are waiting in the wings.
 
Even James Surowiecki, who writes the Financial Page column in my favorite magazine, The New Yorker, recently wrote, “…there are at least a couple of reasons to think that, this time, we aren’t looking at a false spring.”
 
The two reasons, according to Surowiecki, are autos and housing.
 
Pent-up demand for autos is morphing into active demand.  Our client, the nation’s largest wheel manufacturer Superior Industries, is operating at near capacity.  And client Autobytel just recorded its first full year of net income since 2004 fueled by many positive changes within the company but also buoyed by the industry’s recovery.  New car sales fell from a pre-recession annual peak of 17 million to just over 10 million in 2009. The seasonally adjusted annualized (SAAR) forecast of new car sales for March is estimated at 14.3 million, down from last month, but up from 13.0 a year ago and the highest since August 2007.
 
As to real estate, things look better there, too. PondelWilkinson client Market Leader, which provides more than 100,000 real estate professionals throughout the United States and Canada with online technology and marketing solutions, delivered 39% revenue growth last year in what can conservatively be labeled a challenging, aka, stinky, environment.  The latest National Association of Realtors forecast predicts that existing home sales and prices, along with new home sales and housing starts all will be up for 2012 and will rise even more in 2013, with continued low (but climbing a little next year) mortgage rates.
 
The 2012 first quarter was outstanding in the stock market as well, to the tune of 900 points on the Dow.  In fact, it was the best Q1 for the Dow in 14 years and the best for NASDAQ in 21 years.
 
So welcome to Q2. Let’s all do our best to keep the momentum going and not let the media pundits in yesterday’s newspapers, television shows and blogs dampen our enthusiasm with their commentary about the prospect of a slip and the anxiety that is creeping back into the markets, as New York Times’ Nathaniel Popper and others  believe.  After all, yesterday was April’s Fool day.

 

– Roger Pondel, rpondel@pondel.com