http://www.legalbeer.com/liquor-laws-by-state
As with any job, sometimes we all need a drink. Airline work is certainly no exception in my opinion. However, laws on where and when you can buy alcohol is all state controlled, and therefore varies just about every place you go. So, here is a fantastic resource for those needing a drink, in an unfamiliar part of the country.
Tuesday, October 25, 2011
Monday, October 24, 2011
What a douche
Anyone that has read my blog in the past would know that I go over and above trying to take care of my passengers and crew. I fight tooth and nail with ATC, ground crews, weather, and even with my own company. I have done my very best to keep my composure even in the face of udder redonkulousness. Today, I about lost it.
We only had one quick leg to do this morning due to a huge cluster of scheduling changes do to broken airplanes yesterday. It was pretty early coming out of the NYC area, so things moved quickly. It was nice. I don't think we ever came to stop along the taxi route. Even had a nice smooth flight at cruising altitude. We ended up getting into SYR about 30 mins early. I even managed to pull off a pretty smooth landing. All as well. Or, so I thought.
I was still up front with the FO, getting things shut down and packed up when everyone was getting off. I could hear most people getting off the plane saying, "Thanks," and "Have a good day." Then I heard one douche face complaining. I tuned my ear in a bit more... He was complaining about being so early. Honestly??? Really??? I just picked my head up and looked at the FO, who heard this guy as well, and I said, "You have GOT to be kidding me..." To be honest, I'm really pretty glad that he didn't complain to me about it. I have a feeling I would have jumped down his throat.
Here we go... Really, sir? You were boarded up quickly, kept comfortable, kept safe, got to your destination early, and you're STILL bitching???? What in the hell must it be like going through life as such a miserable human fucking being that even when something is good, you still need to piss and fucking moan about it. Holy fucking shit balls. I really really wish, you sir, would get hit by a fucking truck.
*deep breaths*
We only had one quick leg to do this morning due to a huge cluster of scheduling changes do to broken airplanes yesterday. It was pretty early coming out of the NYC area, so things moved quickly. It was nice. I don't think we ever came to stop along the taxi route. Even had a nice smooth flight at cruising altitude. We ended up getting into SYR about 30 mins early. I even managed to pull off a pretty smooth landing. All as well. Or, so I thought.
I was still up front with the FO, getting things shut down and packed up when everyone was getting off. I could hear most people getting off the plane saying, "Thanks," and "Have a good day." Then I heard one douche face complaining. I tuned my ear in a bit more... He was complaining about being so early. Honestly??? Really??? I just picked my head up and looked at the FO, who heard this guy as well, and I said, "You have GOT to be kidding me..." To be honest, I'm really pretty glad that he didn't complain to me about it. I have a feeling I would have jumped down his throat.
Here we go... Really, sir? You were boarded up quickly, kept comfortable, kept safe, got to your destination early, and you're STILL bitching???? What in the hell must it be like going through life as such a miserable human fucking being that even when something is good, you still need to piss and fucking moan about it. Holy fucking shit balls. I really really wish, you sir, would get hit by a fucking truck.
*deep breaths*
Saturday, October 15, 2011
Professionalism
What is Professionalism? Well, it certainly is one of those facets of a pilot that everyone talks about, everyone says is very important, yet it hard to quantify. I don't think there is one simple answer. There are lots of different things that go into being a professional. Just as when we see someone behaving in any way we don't like, we call them, "Unprofessional."
I once heard that, "Character is doing the right thing, even when no one is looking." I think this a big part of professionalism. The NTSB's Deb Hersmann once said, "You never know on which flight, your career will be judged." I feel Mrs. Hersmann is definitely hitting the nail on the head.
But, there are many others who have some other ideas on what professionalism is. If you ask the public, you might get answers like, "Sharp looking, clean shaven, hat wearing, grey hair, deep voice, and smooth landing." If you ask the company, you'd get something like, "Doesn't complain, gets the flight out on time." If you ask others they might describe someone very good at their job, perhaps to the point of being cold and emotionless.
For me, there are many facets of a professional pilot. However, more than the list of traits itself, is an order of importance. Further more, this order of importance changes with each unique situation. While "outward appearance" is something that is important, I think people put far too much value in. After all, consider a shady businessman. Just because he looks good and fit, is charming, and wears a nice suit, doesn't mean he knows anything besides how to screw you over and take all of your money. I believe the same holds true for pilots. I have met and flown with pilots that really looked sharp, fit, dashing, and experienced, were still complete douches on more than a few occasions. Just because you look the part, doesn't mean you actually can play the part.
So, which is more important? Do you really want someone that only looks professional? Or would you rather have someone that doesn't look as sharp, but will do a far superior job in handling strange and challenging situations, working well with a variety of other personalities, keeping passengers informed and calm, and perhaps even be a better pilot. I know the best answer is both. However, that would only leave me and about 50 other pilots in the whole world! ;-)
There are more than a few pilots out there who don't wear the gay hat, don't have a head full of grey hair, but who are very good at the job of being an airline pilot. Do they look like they've been doing this job for 50 years? No. Do they question authority? Maybe. Do they act like they are God? No. Do they jump down the throat of a fellow crew member who questions anything? Not in the least. Do, they know their shit? Definitely. Are they team players? Absolutely. Do they scream and cry like little girls when a time critical situation presents itself? Not in the least. Honestly, the actual "flying" portion of this job is far and away, the easiest part. Sure you want someone that can fly the plane. But there is so much more to it in order to be a true and safe professional.
A professional crew is one that does their job and maintains control amidst all the crap that comes with this job. There are people who can filter out the garbage and deal with the situation amidst chaos around them. Not everyone is up for this job. Even those that are, usually require a lot of training to become seasoned in this behavior. It's not easy, but this is the kind of person you want in the front of your plane when the shit hits the fan. You don't want a pansy up there who goes to water when anything is out of the norm. You also don't want a cowboy who just starts flipping switches and guessing his/her way out of problem. You want people who are adaptable, knowledgeable, and calm under pressure. You want team players and you want crew that legitimately want to take care of their crew and passengers.
Yes, lets not forget about those folks behind you: the passengers, AND the flight attendants. Pilots are taught to "Aviate, Navigate, and Communicate" in that order. Yes, you have to fly the damn plane before anything else. Mostly because no matter what you do for navigating and communicating is pointless if you crash. But this really is an extreme. FAR more often are pilots faces with much more mundane challenges. Whether it be something broken on the plane, storms, rough air, delays, etc, its very important to keep others informed. You are part of a crew after all, and you can make your own life considerably easier if you just take a few mins to inform your FAs and the passengers. I really wish there was more on this in terms of selecting pilots to be hired. I really really do.
Egos really have no place in the modern flight deck. There is far too much to be keeping an eye on. There are two pilots up there for a reason. When you have a person who has the attitude of, "I'm the captain and I'm never wrong" well, I'll be the first to say that this person is a dick. And, more often than not, this person with the overblown ego is usually not that good of a pilot themselves. So they lash out at others trying to make them feel inadequate. That's the only way they can bolster their own ego. Its really a sad thing to see.
As time marches on, that old school "I'm the captain" attitude is slowly exiting the flight deck. Its still there, no doubt. For the most part, it resides with those old crusty bastards that should have retired when they were 60 (or earlier) yet congress now lets them stay 5 years longer. And yes, this has indeed prevented many top notch young pilots from getting airline jobs, since those jobs haven't been available with these crusties not leaving.
In time though, they will. Just as their predecessors did decades before. The best thing us younger pilots can do is keep a list of all the "I'll never be like that," traits we saw in those crusties. And make sure we review that list from time to time as we move our profession forward.
I once heard that, "Character is doing the right thing, even when no one is looking." I think this a big part of professionalism. The NTSB's Deb Hersmann once said, "You never know on which flight, your career will be judged." I feel Mrs. Hersmann is definitely hitting the nail on the head.
But, there are many others who have some other ideas on what professionalism is. If you ask the public, you might get answers like, "Sharp looking, clean shaven, hat wearing, grey hair, deep voice, and smooth landing." If you ask the company, you'd get something like, "Doesn't complain, gets the flight out on time." If you ask others they might describe someone very good at their job, perhaps to the point of being cold and emotionless.
For me, there are many facets of a professional pilot. However, more than the list of traits itself, is an order of importance. Further more, this order of importance changes with each unique situation. While "outward appearance" is something that is important, I think people put far too much value in. After all, consider a shady businessman. Just because he looks good and fit, is charming, and wears a nice suit, doesn't mean he knows anything besides how to screw you over and take all of your money. I believe the same holds true for pilots. I have met and flown with pilots that really looked sharp, fit, dashing, and experienced, were still complete douches on more than a few occasions. Just because you look the part, doesn't mean you actually can play the part.
So, which is more important? Do you really want someone that only looks professional? Or would you rather have someone that doesn't look as sharp, but will do a far superior job in handling strange and challenging situations, working well with a variety of other personalities, keeping passengers informed and calm, and perhaps even be a better pilot. I know the best answer is both. However, that would only leave me and about 50 other pilots in the whole world! ;-)
There are more than a few pilots out there who don't wear the gay hat, don't have a head full of grey hair, but who are very good at the job of being an airline pilot. Do they look like they've been doing this job for 50 years? No. Do they question authority? Maybe. Do they act like they are God? No. Do they jump down the throat of a fellow crew member who questions anything? Not in the least. Do, they know their shit? Definitely. Are they team players? Absolutely. Do they scream and cry like little girls when a time critical situation presents itself? Not in the least. Honestly, the actual "flying" portion of this job is far and away, the easiest part. Sure you want someone that can fly the plane. But there is so much more to it in order to be a true and safe professional.
A professional crew is one that does their job and maintains control amidst all the crap that comes with this job. There are people who can filter out the garbage and deal with the situation amidst chaos around them. Not everyone is up for this job. Even those that are, usually require a lot of training to become seasoned in this behavior. It's not easy, but this is the kind of person you want in the front of your plane when the shit hits the fan. You don't want a pansy up there who goes to water when anything is out of the norm. You also don't want a cowboy who just starts flipping switches and guessing his/her way out of problem. You want people who are adaptable, knowledgeable, and calm under pressure. You want team players and you want crew that legitimately want to take care of their crew and passengers.
Yes, lets not forget about those folks behind you: the passengers, AND the flight attendants. Pilots are taught to "Aviate, Navigate, and Communicate" in that order. Yes, you have to fly the damn plane before anything else. Mostly because no matter what you do for navigating and communicating is pointless if you crash. But this really is an extreme. FAR more often are pilots faces with much more mundane challenges. Whether it be something broken on the plane, storms, rough air, delays, etc, its very important to keep others informed. You are part of a crew after all, and you can make your own life considerably easier if you just take a few mins to inform your FAs and the passengers. I really wish there was more on this in terms of selecting pilots to be hired. I really really do.
Egos really have no place in the modern flight deck. There is far too much to be keeping an eye on. There are two pilots up there for a reason. When you have a person who has the attitude of, "I'm the captain and I'm never wrong" well, I'll be the first to say that this person is a dick. And, more often than not, this person with the overblown ego is usually not that good of a pilot themselves. So they lash out at others trying to make them feel inadequate. That's the only way they can bolster their own ego. Its really a sad thing to see.
As time marches on, that old school "I'm the captain" attitude is slowly exiting the flight deck. Its still there, no doubt. For the most part, it resides with those old crusty bastards that should have retired when they were 60 (or earlier) yet congress now lets them stay 5 years longer. And yes, this has indeed prevented many top notch young pilots from getting airline jobs, since those jobs haven't been available with these crusties not leaving.
In time though, they will. Just as their predecessors did decades before. The best thing us younger pilots can do is keep a list of all the "I'll never be like that," traits we saw in those crusties. And make sure we review that list from time to time as we move our profession forward.
Tuesday, October 11, 2011
Flying on 9-11
I was flying on 9-11 this year. The 10th anniversary of said day. It was a bit of an odd feeling, if I'm honest. Back in 2001, I wasn't even a pilot. Most people can tell you exactly where they were when world changing events occurred. For me, I was at college. Grad school actually. I was talking with a recruiter from Lockheed Martin when I heard a plane had hit the WTC. At that point, it wasn't clear that it was an, "attack." Shortly after, of course, we knew this was going to be one of those historic days. And not in a good way.
On my first flight in the morning, I noticed I had 3 non-uniform USAir pilots on board. I assumed they were heading to NYC for the anniversary ceremonies. I could see in their eyes that this day meant different things to them. Sure it was still a huge tragedy to me, but this was an attack on their careers. I wasn't even a pilot yet when it all happened. So, while I think about the loss of all those people and the towers themselves every single time I fly by lower Manhattan, I think it hits those guys/gals who were working that day 10 years ago, just a little harder.
I even thought about if I would go to any of those ceremonies if I hadn't been working. I was working, so it wasn't an option. But I don't think I'd have gone even if I had the day off. I can't really relate to those who were there, who lost loved ones, who lost fellow airline pilots and/or flight attendants, etc, etc. I was just a grad student trying to land a job. I think those airline gatherings in DC and NYC were more for those who were in this line of work when that all unfolded. I just would feel a bit out of place being there I guess.
I did my share and got my 3 USAir pilots to LGA on time so that they could participate, pay respects, and share some stories about that day with others. I think its important for them to do that. I think its best for me to have worked that day, and let them have the day off to attend those functions. I'm glad I was able to help them get there.
My only regret was we were completely in the clouds at 4000ft while we flew by ground zero on our approach to LGA. The one day that everyone really wanted to look at lower Manhattan and ground zero, and no one could see a thing. *sigh* I guess that's the way it goes sometimes.
On my first flight in the morning, I noticed I had 3 non-uniform USAir pilots on board. I assumed they were heading to NYC for the anniversary ceremonies. I could see in their eyes that this day meant different things to them. Sure it was still a huge tragedy to me, but this was an attack on their careers. I wasn't even a pilot yet when it all happened. So, while I think about the loss of all those people and the towers themselves every single time I fly by lower Manhattan, I think it hits those guys/gals who were working that day 10 years ago, just a little harder.
I even thought about if I would go to any of those ceremonies if I hadn't been working. I was working, so it wasn't an option. But I don't think I'd have gone even if I had the day off. I can't really relate to those who were there, who lost loved ones, who lost fellow airline pilots and/or flight attendants, etc, etc. I was just a grad student trying to land a job. I think those airline gatherings in DC and NYC were more for those who were in this line of work when that all unfolded. I just would feel a bit out of place being there I guess.
I did my share and got my 3 USAir pilots to LGA on time so that they could participate, pay respects, and share some stories about that day with others. I think its important for them to do that. I think its best for me to have worked that day, and let them have the day off to attend those functions. I'm glad I was able to help them get there.
My only regret was we were completely in the clouds at 4000ft while we flew by ground zero on our approach to LGA. The one day that everyone really wanted to look at lower Manhattan and ground zero, and no one could see a thing. *sigh* I guess that's the way it goes sometimes.
Wednesday, October 5, 2011
Decisions
http://highschool.rivals.com/content.asp?CID=1230222
As many of you had likely seen, some time ago, there was a high school track race that was stopped by the race official for weather/lightning with one lap remaining. The leader was on pace to break the NJ state record. Needless to say, this was a very contentious call. However, regardless of what was going on during the race, if there was a safety issue, the race should be stopped. Plain and simple.
First off, a huge pat on the back to that official. I found this chain of events to be very similar to what its like being an airline pilot. Many times, you are the last and final safety net. And, making a decision like that is not always an easy thing. It's often greatly unpopular, even with the very people you're trying to keep safe!
Not all decisions are cut and dry and they don't always come down to safety. One of the first flights I ever felt like I had to be a dick on, was a flight to New York. After several rounds of departure delays due to weather and traffic congestion in NY, we finally got a "wheels-up time" from ATC. As ATC loves to do sometimes, after 2 hours of waiting, they called and said, "your wheels up time is in 12 mins!" Thanks for that.
So, we got everyone aboard quickly, ran our checklists, and just when I was about to start engines, the flight attendant informed me that someone wanted to get off the plane. I feared it was something major like a medical emergency or they left the stove on at home, family member was just in a car accident, etc, etc. The FA then said, "They can't find their phone and they think they left it in the gate area and they want to go get it."
No matter what decision was made, it had to be made fast. If we let this person off search for their phone, we were not going to make our wheels up time. This would delay the rest of the passengers at LEAST another 45 mins, likely more.
The choice basically boiled down to having one person upset or 31 people upset. There was no way to please everyone in this instance. If I was a dick to 1 person, then 31 other people could get where they were going and have a chance at making connections.
I like math. 31 is quite a bit larger than 1. It was a pretty easy choice, but still not one that I took lightly. I knew this person was going to be hosed over without their phone. However, they should also have been more careful with not leaving it around in an airport! (and, I also didn't rule out the chance that they in fact DID have their phone buried in they're bag somewhere and just couldn't find it at that moment.)
I elected to not let the passenger off to look for their phone. If we let them off, they wouldn't be getting back on. That was the decision. I did have the FO call station operations on the radio when we got airborne and relay to the station that a passenger lost a cell phone in the gate area of our flight and then we provided the station phone number to the passenger so that arrangements could be made if the phone was recovered.
People make mistakes, I know. I make plenty. However, I would rather this one person have to deal with repercussions for their mistake, rather than screw over 31 others for their mistake. And, there was no guarantee that the phone was in the terminal. All we knew was they couldn't find it at the moment and figured they MIGHT have left it inside. You can't please everyone all the time. And, if you try, you will almost certainly piss off everyone.
So, to the person that lost their phone, I hope you got it back. Better yet, hope you found it in your bag or coat pocket after the flight. I didn't enjoy being a dick in not letting you go back in the terminal and look for your phone, but I did have some other things to consider.
As many of you had likely seen, some time ago, there was a high school track race that was stopped by the race official for weather/lightning with one lap remaining. The leader was on pace to break the NJ state record. Needless to say, this was a very contentious call. However, regardless of what was going on during the race, if there was a safety issue, the race should be stopped. Plain and simple.
First off, a huge pat on the back to that official. I found this chain of events to be very similar to what its like being an airline pilot. Many times, you are the last and final safety net. And, making a decision like that is not always an easy thing. It's often greatly unpopular, even with the very people you're trying to keep safe!
Not all decisions are cut and dry and they don't always come down to safety. One of the first flights I ever felt like I had to be a dick on, was a flight to New York. After several rounds of departure delays due to weather and traffic congestion in NY, we finally got a "wheels-up time" from ATC. As ATC loves to do sometimes, after 2 hours of waiting, they called and said, "your wheels up time is in 12 mins!" Thanks for that.
So, we got everyone aboard quickly, ran our checklists, and just when I was about to start engines, the flight attendant informed me that someone wanted to get off the plane. I feared it was something major like a medical emergency or they left the stove on at home, family member was just in a car accident, etc, etc. The FA then said, "They can't find their phone and they think they left it in the gate area and they want to go get it."
No matter what decision was made, it had to be made fast. If we let this person off search for their phone, we were not going to make our wheels up time. This would delay the rest of the passengers at LEAST another 45 mins, likely more.
The choice basically boiled down to having one person upset or 31 people upset. There was no way to please everyone in this instance. If I was a dick to 1 person, then 31 other people could get where they were going and have a chance at making connections.
I like math. 31 is quite a bit larger than 1. It was a pretty easy choice, but still not one that I took lightly. I knew this person was going to be hosed over without their phone. However, they should also have been more careful with not leaving it around in an airport! (and, I also didn't rule out the chance that they in fact DID have their phone buried in they're bag somewhere and just couldn't find it at that moment.)
I elected to not let the passenger off to look for their phone. If we let them off, they wouldn't be getting back on. That was the decision. I did have the FO call station operations on the radio when we got airborne and relay to the station that a passenger lost a cell phone in the gate area of our flight and then we provided the station phone number to the passenger so that arrangements could be made if the phone was recovered.
People make mistakes, I know. I make plenty. However, I would rather this one person have to deal with repercussions for their mistake, rather than screw over 31 others for their mistake. And, there was no guarantee that the phone was in the terminal. All we knew was they couldn't find it at the moment and figured they MIGHT have left it inside. You can't please everyone all the time. And, if you try, you will almost certainly piss off everyone.
So, to the person that lost their phone, I hope you got it back. Better yet, hope you found it in your bag or coat pocket after the flight. I didn't enjoy being a dick in not letting you go back in the terminal and look for your phone, but I did have some other things to consider.
Sunday, July 17, 2011
The Oatmeal might be on to something
http://theoatmeal.com/comics/airplane_layout
This is a good comparison on how commercial aircraft are currently arranged, verses how they perhaps should be arranged.
Matthew Inman has lots of good stuff over at theoatmeal.com.
This is a good comparison on how commercial aircraft are currently arranged, verses how they perhaps should be arranged.
Matthew Inman has lots of good stuff over at theoatmeal.com.
Thursday, July 14, 2011
CEO Secrets Released
from CNN Money
How to get paid like a U.S. CEO
July 5, 2011: 10:57 AM ET
While millions are still out of work, U.S. CEOs received a 28% pay raise this past year. A lot of factors are driving the increases. Job performance isn't one of them. By Eleanor Bloxham, contributor
FORTUNE -- Did you get a decent raise last year? How about 28% without having to change jobs, vie for a promotion or outperform your peers?
If you were a CEO of an S&P 500 company last year and your pay only went up 28%, then sorry, but half your peers did better than you.
So with millions out of work, how do U.S. CEOs keep their pay rising in good times and bad? The short answer is an army of support and a few small distinctions.
Here's how it's done.
Step One. Ignore global benchmarks in setting pay.
While outsourcing may be negatively affecting your pay as a non-CEO or your ability to find work, U.S. CEO salaries are soaring in part because of the failure of boards to compare the pay of U.S. CEOs against their global counterparts.
Exxon's (XOM) board, for example, doesn't use other global energy firms when setting their CEO's pay. And Wal-Mart's (WMT) board compares its CEO's pay mainly to CEO pay at other U.S. firms and fails to include no. 2 world retailer Carrefour, no. 3 Metro AG, , or no. 4 Tesco among their benchmark companies.
Why does that have an impact? Recent research by professors Nuno Fernandes, Miguel Ferreira, Pedro Matos, and Kevin Murphy finds that, on average, U.S. CEOs earned double their non-U.S. counterparts between 2003 and 2008. And, adjusting for firm size and industry, U.S. CEOs still earn around 80% more than their non U.S. based peers.
Step Two. Convince your bosses that pay need not be based on your performance.
In fact, they can just ignore performance in setting pay. While we'd all like to have a nickel every time someone said CEO pay is based on the principles of "pay for performance", research by Fernandes and his colleagues shows that U.S. CEOs aren't being paid double their global counterparts because they are doing a fantastic job. (Additional research supports the argument that U.S. CEO pay has little relationship to a CEO's job performance.) So, if it's not to do with performance, what is driving CEO pay upward?
Step Three: Get equity.
The research shows that U.S. CEO pay is higher primarily because U.S. CEOs are awarded high levels of equity compensation, which includes pay in the form of company stock and stock options. But you can't stop there.
Step Four: To make sure the gravy train doesn't stop, get institutional shareholders to believe your equity pay benefits them.
When companies have U.S. institutional owners, boards are more likely to offer high levels of equity compensation (and, in turn, total compensation), the research shows. U.S. institutional owners have pushed for greater equity-based pay based on the assumption that offering pay incentives like stock and stock options boost performance and align pay with performance. That has not been the case, however.
When insiders, rather than institutions, hold more of a company's stock -- for example, in family-owned firms -- "they keep pay down," says Fernandes. There's "better discipline." Insiders do a better job of controlling the CEO than outside institutional owners have, he says.
Step Five: Get an independent committee to determine your pay.
According to the research from Fernandes and Co., regardless of a company's size, higher CEO pay is associated with a board comprised of more independent directors. But isn't it counterintuitive that having more independent directors would lead to higher pay? Perhaps on the surface, yes, but independent directors are likely more attuned to institutional owners' interests.
If U.S. institutional owners want more equity-based pay, which leads to outsized U.S. (versus non U.S.) pay, independent directors are more likely to deliver what they think institutional owners want. The directors are "shielding themselves from [liability] problems" by handing out "higher equity based pay," Fernandes says.
Step Six: Make sure your company is listed in the U.S.
Fernandes says that the U.S. is exporting its pay practices abroad. When non-U.S. firms are traded on U.S. exchanges, the firm's CEO pay gets a boost.
Step Seven: Take advantage of regulation to boost your pay and make the case that your additional pay is in shareholders' best interests. (You are really doing it for them.)
How do you pull this one off? Use regulation and accounting conventions to justify pay increases. For example, in 1993, Congress passed legislation that limited the amount of base executive pay that companies could deduct in their taxes to $1 million. This legislation is often cited as one of the drivers for the rise of CEO incentive pay.
Another driver has been past U.S. accounting conventions related to stock options. In the past, the expense of paying executives with stock options did not have to be included on the company's income statement. This accounting, which made companies' income statements look better because the stock option compensation did not show up as an expense, is often cited as a key contributor to the rise in CEO incentive pay.
Going forward, James Reda, founder and managing director of compensation firm James F. Reda and Associates, predicts that a new Dodd-Frank requirement to include a chart that compares executive pay with performance will be used as yet another "excuse to increase pay" for CEOs at U.S. companies.
"Companies will use this as a rallying cry to increase pay," he says, and they'll be "slicing and dicing the information any way they like." If one performance metric doesn't work, they'll just change the comparison, Reda says. Reda predicts in five years we'll see a doubling of U.S. CEO pay from the current levels.
So those are your seven steps to be paid like a U.S. CEO -- although they may not be so easy to duplicate for the non-CEOs among us. Of course, corporate boards could study other approaches to motivating and rewarding good CEO performance, which does seem to be an issue of concern. A survey released in May by the National Association of Corporate Directors (NACD) with compensation consultants Pearl Meyer & Partners showed that "a total of 33% of respondents … ranked 'the selection of performance goals that align with shareholder value creation' as their top Board issue."
Perhaps institutional owners could also rethink what they want. Has higher equity based pay been worth the money they've spent? What signals do they really want to send?
Higher CEO pay is likely not going to benefit you. It means fewer dollars in the coffers for your raises, no better performance for your company, and more unemployed workers, rather than new hires who could help you with your growing workload.
Maybe it's time for more than a collective sigh. Let's hope the U.S. contagion won't spread too far too fast.
Eleanor Bloxham is CEO of The Value Alliance and Corporate Governance Alliance (http://thevaluealliance.com), a board advisory firm.
How to get paid like a U.S. CEO
July 5, 2011: 10:57 AM ET
While millions are still out of work, U.S. CEOs received a 28% pay raise this past year. A lot of factors are driving the increases. Job performance isn't one of them. By Eleanor Bloxham, contributor
FORTUNE -- Did you get a decent raise last year? How about 28% without having to change jobs, vie for a promotion or outperform your peers?
If you were a CEO of an S&P 500 company last year and your pay only went up 28%, then sorry, but half your peers did better than you.
So with millions out of work, how do U.S. CEOs keep their pay rising in good times and bad? The short answer is an army of support and a few small distinctions.
Here's how it's done.
Step One. Ignore global benchmarks in setting pay.
While outsourcing may be negatively affecting your pay as a non-CEO or your ability to find work, U.S. CEO salaries are soaring in part because of the failure of boards to compare the pay of U.S. CEOs against their global counterparts.
Exxon's (XOM) board, for example, doesn't use other global energy firms when setting their CEO's pay. And Wal-Mart's (WMT) board compares its CEO's pay mainly to CEO pay at other U.S. firms and fails to include no. 2 world retailer Carrefour, no. 3 Metro AG, , or no. 4 Tesco among their benchmark companies.
Why does that have an impact? Recent research by professors Nuno Fernandes, Miguel Ferreira, Pedro Matos, and Kevin Murphy finds that, on average, U.S. CEOs earned double their non-U.S. counterparts between 2003 and 2008. And, adjusting for firm size and industry, U.S. CEOs still earn around 80% more than their non U.S. based peers.
Step Two. Convince your bosses that pay need not be based on your performance.
In fact, they can just ignore performance in setting pay. While we'd all like to have a nickel every time someone said CEO pay is based on the principles of "pay for performance", research by Fernandes and his colleagues shows that U.S. CEOs aren't being paid double their global counterparts because they are doing a fantastic job. (Additional research supports the argument that U.S. CEO pay has little relationship to a CEO's job performance.) So, if it's not to do with performance, what is driving CEO pay upward?
Step Three: Get equity.
The research shows that U.S. CEO pay is higher primarily because U.S. CEOs are awarded high levels of equity compensation, which includes pay in the form of company stock and stock options. But you can't stop there.
Step Four: To make sure the gravy train doesn't stop, get institutional shareholders to believe your equity pay benefits them.
When companies have U.S. institutional owners, boards are more likely to offer high levels of equity compensation (and, in turn, total compensation), the research shows. U.S. institutional owners have pushed for greater equity-based pay based on the assumption that offering pay incentives like stock and stock options boost performance and align pay with performance. That has not been the case, however.
When insiders, rather than institutions, hold more of a company's stock -- for example, in family-owned firms -- "they keep pay down," says Fernandes. There's "better discipline." Insiders do a better job of controlling the CEO than outside institutional owners have, he says.
Step Five: Get an independent committee to determine your pay.
According to the research from Fernandes and Co., regardless of a company's size, higher CEO pay is associated with a board comprised of more independent directors. But isn't it counterintuitive that having more independent directors would lead to higher pay? Perhaps on the surface, yes, but independent directors are likely more attuned to institutional owners' interests.
If U.S. institutional owners want more equity-based pay, which leads to outsized U.S. (versus non U.S.) pay, independent directors are more likely to deliver what they think institutional owners want. The directors are "shielding themselves from [liability] problems" by handing out "higher equity based pay," Fernandes says.
Step Six: Make sure your company is listed in the U.S.
Fernandes says that the U.S. is exporting its pay practices abroad. When non-U.S. firms are traded on U.S. exchanges, the firm's CEO pay gets a boost.
Step Seven: Take advantage of regulation to boost your pay and make the case that your additional pay is in shareholders' best interests. (You are really doing it for them.)
How do you pull this one off? Use regulation and accounting conventions to justify pay increases. For example, in 1993, Congress passed legislation that limited the amount of base executive pay that companies could deduct in their taxes to $1 million. This legislation is often cited as one of the drivers for the rise of CEO incentive pay.
Another driver has been past U.S. accounting conventions related to stock options. In the past, the expense of paying executives with stock options did not have to be included on the company's income statement. This accounting, which made companies' income statements look better because the stock option compensation did not show up as an expense, is often cited as a key contributor to the rise in CEO incentive pay.
Going forward, James Reda, founder and managing director of compensation firm James F. Reda and Associates, predicts that a new Dodd-Frank requirement to include a chart that compares executive pay with performance will be used as yet another "excuse to increase pay" for CEOs at U.S. companies.
"Companies will use this as a rallying cry to increase pay," he says, and they'll be "slicing and dicing the information any way they like." If one performance metric doesn't work, they'll just change the comparison, Reda says. Reda predicts in five years we'll see a doubling of U.S. CEO pay from the current levels.
So those are your seven steps to be paid like a U.S. CEO -- although they may not be so easy to duplicate for the non-CEOs among us. Of course, corporate boards could study other approaches to motivating and rewarding good CEO performance, which does seem to be an issue of concern. A survey released in May by the National Association of Corporate Directors (NACD) with compensation consultants Pearl Meyer & Partners showed that "a total of 33% of respondents … ranked 'the selection of performance goals that align with shareholder value creation' as their top Board issue."
Perhaps institutional owners could also rethink what they want. Has higher equity based pay been worth the money they've spent? What signals do they really want to send?
Higher CEO pay is likely not going to benefit you. It means fewer dollars in the coffers for your raises, no better performance for your company, and more unemployed workers, rather than new hires who could help you with your growing workload.
Maybe it's time for more than a collective sigh. Let's hope the U.S. contagion won't spread too far too fast.
Eleanor Bloxham is CEO of The Value Alliance and Corporate Governance Alliance (http://thevaluealliance.com), a board advisory firm.
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