Compensation Governance

Today’s economic environment has resulted in substantial loss of value to many shareholders and executives of publicly traded companies (i.e., the latter losing substantial value in their stock holdings, and too, losing prospective realizable pay as a result of unattainable performance goals within their outstanding performance-based awards).  In most situations, the shareholders and the executives are aligned in such loss.  But a problem is that substantial loss at the executive level could increase undesired poaching and turnover of key executives at a time when executives should be focused on navigating the company through a reopening of the United States economy.  To overcome this problem, compensation committees of publicly traded companies (“Compensation Committees“) will likely need to consider adjustments to the company’s compensation framework in order to continue to incent and retain executives.  To that end, this Part 1 (of a 7-part series) provides thoughts that the Compensation Committee should consider with respect to upcoming equity grants.
Continue Reading Current Compensation Issues (Part 1 of 7): Considerations with Respect to Upcoming Equity Grants

Join us on April 9, 2020 from 10:00 am to 11:00 am Central for our FREE monthly webinar on “Executive Compensation Considerations in Light of Market Volatility, Stock Prices and the Unknown,” where we will discuss compensatory issues to consider as a result of failed (or failing) performance-based compensation metrics and lost value to the

Many publicly-traded issuers in today’s environment have outstanding equity awards with performance goals that are unlikely to be achieved.  In response, Compensation Committees of such issuers will need to strike a balance between incentivizing/retaining executives and dealing with the stark reality that shareholders have lost substantial value.  To that end, Compensation Committees are likely to

Compensation governance is a front-and-center topic with a continued focus on stock ownership and clawback policies (in part due to the voting guidelines of institutional investors, proxy advisory firms and the Dodd-Frank Act).  At 10:00 am Central on Thursday, October 10, 2019, in a webinar entitled “Stock Ownership Policies & Clawback Policies: Design Pointers,” our

The purpose of this post is to highlight compensatory action items that publicly-traded issuers should consider this proxy season.  Such considerations include:

  • Chase the Say-on-Pay Vote.  The most common reason for a negative recommendation from ISS is a perceived pay-for-performance disconnect within the compensation structure.  Robust disclosure on this point can help, especially disclosure that clarifies why certain performance criteria were used and explains the degree of difficulty associated with achieving target performance.
  • Consider an Annual Equity Grant Policy.  Some issuers grant equity awards to executive officers based upon an initial dollar amount that is then converted into shares.  If such an issuer has a depressed stock price due to market volatility, then the conversion formula will result in the award having more shares (compared to the situation where the issuer’s stock price had not fallen).  Is the issuer ripe for an allegation that the executives are timing the market because equity was granted at a low stock price for the sole purpose of receiving a larger number of shares?  To help defend against such a question, issuers should consider having a documented annual equity grant policy.  The policy could be formal or informal (with the latter being clearly presented in the CD&A of the issuer’s proxy statement).
    Continue Reading Compensatory Action Items to Consider this Proxy Season

Employment agreements between publicly-traded issuers and their executive officers often contain severance pay provisions that are heavily negotiated at the time of entering into the agreements.  The purpose of this post is to consider whether the amount of contractually-provided severance pay could, over the employment term, be reduced proportionate to the increase in the executive’s wealth accumulation over the same time period (i.e., an inversely proportional relationship between the amount of severance pay and the amount of wealth accumulation by the executive over the employment term).
Continue Reading Should Contractually-Provided Severance Pay Decrease as Wealth Accumulation Increases?

As we head into a new proxy season, we would like to invite you to attend our annual FREE webinar entitled “Upcoming Proxy Season: Compensatory Thoughts from ISS,” which will be held on Thursday, January 17, 2019 from 10:00 am to 11:00 am Central.  As always, continuation education credits are available.

For your convenience, our remaining 2019 monthly webinar program is as follows:
Continue Reading Upcoming Proxy Season: Compensatory Thoughts from ISS

The recent settlement by James Dolan, CEO of Madison Square Garden Co. (MSG) serves as a reminder that the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (“HSR Act”) can apply to compensatory equity awards.  To avoid violations, a publicly-traded issuer should monitor (at least annually) equity grants and outstanding equity awards for ongoing HSR