Search the News Archive

What Happens When Proxy Advisors Say No to Executive Compensation?

"ISS and GL, the two most influential proxy advisory firms, may significantly impact a company's [say-on-pay (SOP)] vote with their recommendations.... [W]ith Against recommendations from both ISS and GL increasing, Say on Pay approvals are decreasing.... Although SOP support typically decreases about 24 percent with an ISS Against recommendation, the range of voting outcomes can vary widely."

The Tightrope of Incentive Plan Adjustments

"In today's dynamic and often unpredictable business environment, companies sometimes face circumstances that force them to reconsider their existing incentive plans midstream. Unpredictable conditions -- global crises, economic downturns, unforeseen industry disruptions, or governmental policy changes -- pose significant challenges to maintaining standard performance metrics and reward structures. Adjusting incentive plans under such circumstances requires a careful approach that safeguards the credibility of compensation plans, ensures transparency, and upholds governance standards."

Considerations for Executive Compensation During a Crisis

"When a business disruption involves decisions on how to reward, motivate, and retain executives, those setting pay must consider the needs of the company, its shareholders, and other stakeholders. Compensating executives during a crisis must balance the retention of top talent with constraints set by stakeholders and the principles of good governance."

Study of PSUs Sees Higher Pay, Lower Performance

"New research ... finds that relative total shareholder return is lower and compensation higher among S&P 1500 firms that award performance share units (PSUs) versus time-based equity awards, i.e., restricted stock units (RSUs) and stock options."

If You Thought Starbucks Coffee Was Expensive

"[We] are likely entering a period where big companies with big problems create highly leverageable opportunities with the right leaders. The standard pay-for-performance justification for above-market pay doesn't hold in this new world.... Investors will keep pushing for constraints on executive pay based on 'good governance' guidelines while bidding up the stock prices of companies challenging those guidelines to pay for the executives they want. Boards will be caught in the middle, dealing with difficult choices about how to make their investors 'happy.' "

The Impressive Rise of Climate Goals in Executive Compensation

"The use of environmental measures in incentives has increased to 61% globally ... [In] the U.S., 52% of large-cap companies now use environmental incentive measures, up significantly from 34% in 2022 and 8% in 2021."

RIP Compensation Committees

"[B]oards are electing to alter their committee structures to keep pace with their increasing oversight demands.... While such changes may at first seem arbitrary, insignificant, or aesthetic, they are indicative of an important development in the realm of corporate governance -- specifically, that many companies have formally delegated additional responsibilities to their compensation committees."

Obstacles That Undermine Executive Pay Disclosures

"[1] Leaving out key details or answers to common questions ... [2] Failing to include essential information or rely on other disclosures ... [3] Including unnecessary or irrelevant information ... [4] Using charts or graphs that have no clear linkage to pay decisions ... [5] Failing to recognize who reads your proxy and what information they need for making proxy voting decisions[.]"

Global Efforts to Link ESG to Executive Compensation

"If certain ESG metrics have a material impact on a business' performance ... then it follows that investors, regulators and proxy advisers will likely seek assurances that executives are incentivized to meet expectations."

Companies Cut Executive Pay in Changing COVID-19 Landscape

"As of June 1, 2020, approximately 16% of S&P 500 companies -- up from 10.8% in early May -- have disclosed changes to CEO pay in response to COVID-19. Of those companies, 40% opted to forego CEO salary entirely, with the rest tending to cut CEO salary by 20-50%. Very few companies have done anything other than reduce or eliminate cash compensation."