Recommended Reading - Valeant CEO's Pay Package Draws Praise as a Model, WSJ

Joann S. Lublin wrote a story for the Wall Street Journal on the compensation package Valeant Pharmaceutical’s VRX (NYSE) CEO, J. Michael Pearson has had with his firm since 2008. Unlike so many CEOs, Pearson’s compensation was designed to be a real performance package. According to Lublin’s story,

… Directors of the midsize drug maker required him to buy at least $3 million in stock (when be began), forgo routine annual equity grants and hold many shares for years before selling.

No single element is unique, but the combination is rare — for a public company.

… Pay experts say the deal gives Mr. Pearson incentives to boost long-term value for investors. For example, the 49-year-old CEO only gets to keep certain restricted shares if Valeant’s share price increases at least 15% a year through February 2011. Mr. Pearson can’t sell most restricted shares or exercised stock options for two years after they vest.

… “Many companies would benefit from imitating this or moving in this direction,” adds Steven N. Kaplan, a University of Chicago business professor and pay researcher. “More pay for performance is a good thing.

This is the type of compensation package that needs to get a great deal more attention by shareholders, the press and even government regulators. If more and more companies look at this model and try and use it as a guide we may actually see compensation excesses fade as an issue.

Recommended Reading - Financials Post Sign of the Times: CEO Wanted, Wall Street Journal

Susanne Craig and Joann S. Lublin wrote a story that appeared in today’s Wall Street Journal that examined the dearth of financial CEOs available to come in and run many of our troubled financial companies. According to the story,

The strain of the credit crisis, curbs on executive compensation and the specter of government scrutiny are making it harder for financial firms to lure chief executives, according to directors, executives and search firms.

“There aren’t any highly attractive CEO prospects in the financial-services industry,” said Peter D. Crist, head of Crist|Kolder Associates, an executive-search firm in Hinsdale, Ill. “The best players won’t risk their careers going to a troubled enterprise.”

… One problem is that the financial industry’s crisis has shown that some firms simply might be too much for anyone to conquer. Eventually, boards will find new CEOs who are confident enough to give it a try no matter how big the risks. For now, the pickings are slim, said recruiters involved in continuing searches.

I am not quite as sanquine about the prospects for finding new CEOs to run the troubled financial firms as are those referred to in the story e.g., executive search firms, directors and executives. I agree that finding the right candidates will be challenging but that is always the case. There are good candidates out there and many are up to the challenge, even if compensation does not meet their initial expectations. Decide for yourself, check out the story.