Category Archives: Executive Compensation

Is relative TSR still the performance metric of choice?

by Cydney Posner

According to a just-released report from Equilar, an executive compensation and corporate governance data firm, “relative total shareholder return” continues to be the most common performance measure used in long-term incentive plans for CEOs among S&P 500 companies.  However, after years of increasing prevalence among companies in this group, use of rTSR flattened out in 2015 as a performance metric for CEO pay. At the same time, use of return on capital and earnings per share as performance metrics each “saw a bump,” the related press release indicated. Does this data portend a change? Continue reading

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Just as the U.S. seeks to roll back regulations, the European Parliament adopts new corporate governance rules

by Cydney Posner

Just when the U.S. is looking at how to roll back its regulations on corporations (among others) (see, e.g., this PubCo postthis PubCo post and this PubCo post), the rest of the world seems to be headed in the opposite direction.  On Tuesday, the EU Parliament approved a Shareholder Rights Directive, which introduces, among other things, the concept of binding say-on-pay votes for companies listed in EU markets (over 8,000 of them). The Directive also includes some interesting measures intended to impede short-termism.  According to the press release fact sheet issued by the European Commission, the Directive must still be adopted by the European Council (expected shortly) and, assuming adoption, will become effective two years thereafter. Continue reading

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BlackRock sets its priorities for board engagement

by Cydney Posner

Asset management firm BlackRock (reportedly the largest, with $5.1 trillion under management) has identified its “Investment Stewardship” priorities for 2017-2018, intended to help companies prepare for engaging with BlackRock. Among the hot topics are governance (including board composition and diversity), corporate strategy for long-term value creation in light of shifting assumptions, executive pay linked to long-term strategy, climate risk disclosure and human capital management.  According to BlackRock, its engagement process is designed to be constructive, and its goal is “to build mutual understanding and ask probing questions, not to tell companies what to do. Where we believe a company’s business or governance practices fall short, we explain our concerns and expectations, and then allow time for a considered response.” However, Blackrock’s approach is not limited to engagement; although, as a long-term investor, the firm will be “patient” as companies work to address concerns, in the absence of progress, BlackRock “will not hesitate to exercise our right to vote against management recommendations.” Continue reading

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Recent trends in proxy statements

by Cydney Posner

It just isn’t proxy season without some kind of account of the latest trends in proxy statements, so here’s one from CFO.com. Continue reading

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Proposed changes in the Financial CHOICE Act 2.0

by Cydney Posner

A just-released memo (subscription required) from Jeb Hensarling, Chair of the House Financial Services Committee, to the Committee’s Leadership Team outlines the proposed changes from the original Financial CHOICE Act, introduced last year (see this PubCo post), to be included in the Financial CHOICE Act 2.0. Of course, we won’t know precisely what the bill provides until it is actually made public.  While the vast majority of proposed changes identified in the memo relate to the banking provisions and the Consumer Financial Protection Bureau, some are related to compensation and corporate governance matters, such as the following: Continue reading

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Dodd-Frank pay-ratio disclosure rules to be reconsidered — pencils down for now?

by Cydney Posner

Today, Acting SEC Chair Michael Piwowar issued yet another statement directing the Corp Fin staff to revisit the pay-ratio disclosure rules.  Of the non-bank related mandates imposed by Dodd-Frank, disclosures regarding resource extraction payments, conflict minerals and pay ratio were the provisions that seemed to elicit the greatest ire from the business community.  With resource extraction payment disclosure rules now almost out of the picture — the President still must sign off — as a result of action under the Congressional Review Act (see this PubCo post), and Piwowar having already reopened for review Corp Fin’s 2014 Guidance on conflict minerals (see this PubCo post), all that remained of the low-hanging fruit was the pay-ratio provision.  Continue reading

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SEC charges company with violations of the rules related to non-GAAP financial measures

by Cydney Posner

The Corp Fin staff have been dropping hints for quite a while about potential enforcement actions in connection with abuses of non-GAAP financial measures (see, e.g., this PubCo post), and an interesting one has now materialized.  In an Order released today, the SEC announced settled charges against MDC Partners, Inc., a publicly traded marketing firm, for failure to comply with the rules related to non-GAAP financial measures.  In addition, the company was charged with failure to disclose millions in perks awarded to its former CEO. Continue reading

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