Executive Compensation

With Pay-for-Performance, It's the Performance That Really Counts

April 10, 2012

New evidence is emerging that for all the complex calculations that go into tying executive pay to performance, investors view it pretty simply: If they don't like the company's performance, they'll vote against the pay package, details be damned. "Overwhelmingly, it's the criteria investors across the spectrum use to evaluate whether they'll vote for the pay plan," says Tim Smith of Walden Asset Management. More inside.
 

SEC Speaks on Proxy Access

March 27, 2012

The SEC's latest batch of decisions on no-action letters offers a bit more insight for companies looking to thwart shareholder proposals about access to the proxy statement. The good news: The SEC did give several companies permission to ignore such proposals. The bad news: Most of those were issued for technical reasons, not any broad attempt by the SEC to limit shareholder proxy access. More details inside.
 

ISS Compensation Peer Group Comparisons Raise Hackles

March 20, 2012

Corporate America has opened a new front on the executive pay wars, this time against proxy advisory firm ISS for its new method of benchmarking compensation packages. Disney and other corporate notables say ISS is using peer groups that differ sharply from the groups companies use themselves, and the approach "does not work well in many instances," says George Paulin, CEO of pay consulting firm Frederic W. Cook.
 

Proxy Access Moves Forward at Two Companies

February 07, 2012

Meanwhile, shareholders are having more success with proposals to gain proxy access. So far they have launched proposals to put proxy access to a vote—a process known as private ordering—at 18 companies, and two of those companies are moving toward adopting provisions to allow investors to nominate board candidates. "We're in private-ordering land now. I think we'll be there for the extended future," says Patrick McGurn, executive director at ISS.
 

Meg Whitman Gets Another Stock Option Welcoming at H-P

January 17, 2012

Hewlett Packard gave its new president and CEO Meg Whitman a second round of stock options last month on top of the hefty package it gave her when it named her to the top post in September. J.C. Penney, St. Jude Medical, and Barnes & Noble were also among companies that awarded top equity packages to executives in December. Our complete list of the largest awards is inside.
 

Demystifying ISS' Evaluation of Pay-for-Performance

January 10, 2012

Institutional Shareholder Services issued a revised methodology for how it determines its recommendation for say-on-pay votes, to put more emphasis on pay for performance. The new method involves "some fairly sophisticated analytics in order to ensure the results produce a reliable average trend line," says Carol Bowie head of compensation research development and products at ISS.
 

Conducting Investigations in Executive Compensation

December 20, 2011

In response to pressure from investors, proxy advisory firms, and the public to curb excessive executive pay practices, many companies added new pay policies and rules. Now they have the task of ensuring that everyone abides by them—and violations of executive compensation rules often lead to difficult and sensitive internal investigations. Some tips on conducting them are inside.
 

Apple Pads Senior VP Pay With Restricted Stock Awards

December 13, 2011

Six Apple senior vice presidents topped Compliance Week's monthly ranking of equity compensation awards in November, with each receiving 150,000 shares of restricted stock worth nearly $60 million. Starbucks, J.C. Penney, and ExxonMobil also gave executives sizeable equity packages. Our complete list of the largest awards is inside.
 

More Dodd-Frank Compensation Rules Coming in 2012

December 06, 2011

The SEC says it is gearing up to work on new compensation rules early in 2012, including several new disclosure requirements that are part of the Dodd-Frank Act. The new rules include disclosure of the ratio of CEO pay to employees and the relationship between executive compensation and performance, new clawback provisions, and rules on hedging against executive and director company stockholdings. Details inside.
 

Compliance 101: Wage & Hour Risk

November 29, 2011

Sure your company might someday be caught up in a sweeping regulatory enforcement case requiring a nine-figure settlement over the Foreign Corrupt Practices Act. But basic, block-and-tackle compliance threats are far more likely to leave a company fighting a rear-guard action against regulators and plaintiff lawyers. Like, say, wage-and-hour violations. How can you reduce that risk? Details inside.
 

What to Expect: Preparing for the 2012 Proxy Season

November 22, 2011

Now is the time, say governance experts, to begin preparing for the 2012 proxy season. Shareholders are expected to focus on chairman and board committee independence, majority voting, political spending disclosure, proxy access proposals, and, of course, compensation. "Investors are going to try to take a harder look at pay levels," says Amy Borrus, deputy director at the Council of Institutional Investors.
 

Say-On-Pay Shareholder Lawsuits Moving Forward

October 04, 2011

Shareholders are now launching class-action lawsuits against companies that lost say-on-pay votes, and an early test case indicates that defendants may have more trouble fending them off than they first thought. A federal judge ruled that a lawsuit against Cincinnati Bell could go forward, adding validity to such cases. The ruling could open a new front in the battle between shareholders and boards over executive compensation. More details inside.
 

D&O Insurer Offers Clawback Protection

August 23, 2011

The Federal Deposit Insurance Corp. recently adopted a rule allowing it to claw back compensation of officers and directors who contribute to the failure of a financial firm. Now insurance companies are unveiling policies that sidestep the rule by offering reimbursement of compensation recouped by the FDIC. Will such products stand up in court? More inside.
 

How to Avoid a Negative Recommendation From ISS on Say-on-Pay

August 09, 2011

Proxy advisory firms such as ISS and Glass Lewis may not have the final say on how shareholders will cast their advisory votes on executive compensation, but they sure do hold a lot of sway on how they go. Companies that want to avoid failing a say-on-pay vote may have no choice but to walk the ISS line. "They have become very powerful," says Deborah Lifshey, managing director at Pearl Meyer & Partners.
 

Companies Prepare for Executive Pay, Performance Disclosure

August 02, 2011

Per order of the Dodd-Frank Act, the SEC should soon propose rules that require companies to disclose the relationship between executive compensation and company performance. Although many companies already provide that information, some open questions remain, such as how companies should compare their performance metrics with peers. More details inside.
 

Dodd-Frank, One Year Later

July 26, 2011

The Dodd-Frank Act hit its one-year anniversary last week, which makes this as good a time as any to review what the prior year has wrought. But while the landmark legislation has elevated the importance of many compliance functions, much work still remains to be done. "Unless one has a superb crystal ball, it is way too early to assess Dodd-Frank," says Lynn Turner, former chief accountant at the SEC.
 

IRS Limits Scope of Sec. 162(m) Deductions

July 12, 2011

The IRS has proposed changes to the rules on what deductions companies can take for spending on executive compensation, which clarify the requirements for deducting performance-based pay and what types of plans qualify. "It's a potential trap for the unwary if you continue to move along and don't at least check to make sure you're in compliance," says Ben Wells, a partner with law firm Dinsmore & Shohl.
 

Oracle and GE Dole Out Largest Equity Awards in June

July 12, 2011

Oracle topped Compliance Week's monthly ranking of equity compensation awards in June, with sizable options grants to five executives, including CEO Larry Ellison. General Electric also made the list with options grants to four vice chairmen. Our complete list of the largest awards is inside.
 

Say-on-Pay Failures; Say-on-Pay Strategies

June 14, 2011

Companies that fail to win say-on-pay votes with shareholders this year—31 of them out of thousands at last count—now face another problem: shareholders suing the directors for disregarding their will. In truth, the lawsuits probably have little merit, experts say. But they do point to how companies might better deal with unhappy shareholders. More inside.
 

Viacom and McKesson Dole Out Largest Equity Awards in May

June 14, 2011

Viacom topped Compliance Week's monthly ranking of equity compensation awards in May, with sizable options grants to its CEO and its chief operating officer. Citigroup also made the list with an options award to CEO Vikram Pandit. Our complete list of the largest awards is inside.
 

Lessons From 'Say-on-Pay' Failures

June 07, 2011

Shareholders have rejected executive pay packages at dozens of companies this proxy season. Their specific motives differ with each company, but the businesses flunking say-on-pay votes share some common traits. Inside, Columnists Stephen Davis and Jon Lukomnik examine those failures and offer ideas on how to avoid losing a say-on-pay vote.
 

Davita and Google Dole Out Largest Equity Awards in April

May 17, 2011

Healthcare services provider Davita topped Compliance Week's monthly ranking of equity compensation awards in April, with sizable option grants to its CEO and chief operating officer. Google also made the list with equity awards to four top executives. Our complete list of the largest awards is inside.
 

Shareholders Are Getting Their Way on Pay

May 03, 2011

As GE's recent restructuring of CEO Jeff Immelt's stock option plan demonstrates, "say-on-pay" is having a dramatic effect on executive compensation. More companies are reviewing their plans and working to better link pay to performance. "This is going to weaken the ability of executives to determine the parameters of their own compensation," Harvard University professor Jesse Fried says. More inside.
 

Say-on-Pay Losses Catch HP, Others Off Guard

April 12, 2011

So far this year five companies, including Hewlett-Packard, have lost "say-on-pay" votes. From the look of proxy advisory firm recommendations, that is probably only the beginning of the trend. Companies will need to watch out this proxy season, and compliance officers need to be ready to help management over the hump. More analysis of the votes inside.
 

CBS's Moonves Dials in Top Equity Award for March

April 12, 2011

CBS Corp. topped Compliance Week's monthly ranking of equity compensation awards in March with a sizable options award to CEO Leslie Moonves. Other top awards went to executives at General Dynamics, Caterpillar, and Safeway. Our complete list of the largest awards is inside.
 

Debate Heats Up Over CEO Pay Ratio Disclosure

March 29, 2011

A provision of the Dodd-Frank Act requiring companies to disclose the ratio of CEO compensation to that of all other employees has spawned dread among compliance and financial reporting executives. Now Congress has introduced a bill to repeal the measure, and debate rages over a number some say is indeterminable and others intolerable.
 

SEC Adds Disclosure, Credit Risk Items to Agenda

March 25, 2011

The SEC is tackling several more Dodd-Frank Act proposals this week, including independence standards for board directors who serve on compensation committees and conflict-of-interest rules for pay consultants. It will also consider new retention requirements for issuers of asset-backed securities. More details inside.
 

Google Chairman Schmidt Tops Equity Awards for Feb.

March 15, 2011

Google topped Compliance Week's monthly ranking of equity compensation awards in February with a sizable options and restricted stock grant to Chairman Eric Schmidt. Other top awards went to executives at Coca-Cola, Motorola Solutions, and Honeywell. Our complete list of the largest awards is inside.
 

Banker Pay Proposal Includes Incentive Pay Deferral

March 01, 2011

The Federal Deposit Insurance Corp. is leading the charge to curb bank pay with a three-year deferment on incentive-based compensation for top executives, a tricky proposition to enforce. The plan also requires financial firms to identify employees who could expose companies to substantial losses and review their incentive structures. Details inside.
 

Parsing the Early Say-on-Pay Votes

February 28, 2011

The vast majority of companies so far have gotten the thumbs up from investors on their pay plans, but getting investors to approve a biennial or triennial say-on-pay vote frequency is proving a tougher sell, early voting results show.
 

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