On the front lines of executive pay: revisiting the top comp stories of 2007 suggests some next-stage steps for crafting pay programs that meet board, shareholder, and regulator requirements.

• Author: Dolmat-Connell, Jack
• Position: EXECUTIVE COMPENSATION

LAST YEAR BROUGHT some remarkable stories to the executive compensation forefront--from huge CEO severance payouts to equally huge paybacks and to shareholder activism through "say on pay." Here are our selected highlights of the top comp stories of 2007:

* Home Depot's Bob Nardelli: Early in January 2007, Home Depot's CEO Robert Nardelli resigned under a mutual agreement with the company over a conflict regarding his hefty annual compensation package. Nardelli had purportedly refused to take major cuts in his pay or to link his pay with shareholder gains, yet still successfully negotiated a whopping $210 million retirement package despite his overall less than stellar performance during his six-year tenure at Home Depot. While Nardelli's case is an outlier in the field of severance pay, this story created a huge media blitz and added to widespread perception of out-of-control CEO pay.

* The Subprime Mortgage Scandal and CEO Fallout: The far-reaching consequences of the subprime mortgage losses have extended to executive pay. The CEO departures caused by the subprime failures have been substantial. CEO Charles Prince III left Citigroup in November 2007 after Citigroup realized between $8-11 billion in losses connected with subprime mortgage investments as of his departure. Prince received no severance pay but left the group with benefits valued around $29.5 million. E. Stanley O'Neal of Merrill Lynch left in October 2007 with, again, no severance pay but benefits valued at $161.5 million. Merrill Lynch was hit with an $8.4 billion third quarter loss related to subprime investments. The market went into a tailspin in connection with the subprime fallout, but certain executives still walked away with money lining their pockets.

* UnitedHealth CEO Payback: Minnesota-based UnitedHealth Group Inc. was one of the largest companies embroiled in the stock option backdating scandal. Under former CEO William McGuire's watch, UnitedHealth executives were granted stock options where the grant dates were changed to give an optimally low stock price to allow executives to reap more rewards upon award exercise. In a surprising turn, McGuire agreed to surrender around $198 million upon his resignation in light of the backdating scandal, and then further agreed to surrender $420 million in stock option claims and retirement compensation. McGuire's forfeiture is one of the largest paybacks in corporate history. But no need to feel sorry for him--he will...