As discussed in this PubCo post, in November of last year, the U.K. Government published a “Green Paper” on Corporate Governance Reform, which, in the face of rising economic inequality, sought “to consider what changes might be appropriate in the corporate governance regime to help ensure that we improve business performance and have an economy that works for everyone.” The Paper requested input on several proposals, including pay-ratio disclosure, giving employees more influence on company boards and making say-on-pay votes binding, leading to “a broad-ranging debate on ways to strengthen the UK’s corporate governance framework.” The results are now in. Corporate Governance Reform, The Government response to the green paper consultation identifies nine proposals for reform that the U.K. Government intends to advance. The reforms, many of which would not require legislation, are expected to become effective by June 2018 to apply in the following fiscal years. Whether any of these reforms will have a significant impact—either at home in the U.K. or as an influence abroad in the U.S.—remains to be seen.
Are shareholders really the “owners” of corporations? Even though shareholders have no responsibilities to the corporations they “own”? Should corporations be managed for the sole purpose of maximizing shareholder value? Are shareholders even unanimous in that objective? Is shareholder centricity really the right model for good governance of corporations? What changes in corporate governance have been fueled by the shareholder primacy model? Do those changes make sense? What has been the adverse fallout from the current fastidious devotion to shareholder preeminence? These are just some of the issues addressed in this terrific piece by two Harvard Business School professors, Joseph L. Bower and Lynn S. Paine, in the Harvard Business Review. In their view, the “health of the economic system depends on getting the role of shareholders right.” Highly recommend.
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 […]
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 […]
More than half of poll respondents plan to disclose “more than the minimum” under pay-versus-performance rules
by Cydney Posner A poll conducted by compensation consultant Towers Watson in the course of its webcast on the SEC’s proposed pay-versus-performance disclosure rules revealed that, if the rules are adopted, more than half of the respondents expect to disclose “more than the minimum” required under the SEC proposal and […]
by Cydney Posner See our CooleyAlert on the SEC’s proposed new pay-versus-performance rules. It’s called “SEC Proposes New Rules on Pay Versus Performance: When “Compensation Actually Paid” is Not Compensation Actually Paid and “Company Financial Performance” May be Unrelated to Company Financial Performance.” It’s mighty fine reading!
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 […]