Tag: total shareholder return

Pay for performance — more style than substance?

Comp Committees appear to have gotten the message when it comes to executive pay for performance.  As discussed in this article in the WSJ, executive compensation “is increasingly linked to performance,” but investors are now asking whether the bar for performance targets is set too low to be effective. Are companies just paying lip service to the concept?

Are the days of “I’ll-scratch-your-back” cronyism history?

by Cydney Posner As discussed in a PubCo post last week, a theory that is currently gaining purchase is that, whether as a result of say on pay or otherwise, the increased influence of proxy advisory firms has led to a kind of homogenization of executive pay packages based on […]

The unintended consequences of say on pay

by Cydney Posner This post from the Columbia Law School CLS Blue Sky blog, “Should Say-on-Pay Votes Be Binding?,”  by two executives from the Institute for Governance of Private and Public Organizations  in Canada, in exploring the issue raised in the post’s title, looks at the question of the effectiveness and […]

It’s back to square one: pay CEOs with short-term incentives?

by Cydney Posner How to structure executive pay to drive performance over the long term—while avoiding pay levels that would be considered excessive—is a conundrum for compensation committees, consultants, proxy advisory firms and others involved in setting or analyzing executive compensation. And the analysis has only become more complex since […]

Is TSR really the best performance metric?

by Cydney Posner While TSR (total shareholder return) is increasingly used a performance metric for executive compensation, a study by Cornell University and Pearl Meyer, an executive compensation consultant, showed no real correlation to improvements in company performance, reports the WSJ.   In the study, over 48% of S&P 500 companies […]

With two dissents, SEC proposes pay-for-performance disclosure rules

by Cydney Posner This morning, by a three to two margin, the SEC voted to propose rules requiring companies to disclose executive pay for performance. The proposal comes five years after passage of Dodd-Frank, which imposed the obligation on the SEC.  Currently, many companies voluntarily provide information that could fit […]

Are we aligning pay to the wrong performance metrics?

by Cydney Posner As discussed in this article in Compliance Week, this report, “The Alignment Gap Between Creating Value, Performance Measurement, and Long-Term Incentive Design,” by Organizational Capital Partners and the Investor Responsibility Research Center Institute, contends that most companies are using the wrong metrics to align executive pay with performance.  Rather […]