Boards Concerned with Dodd-Frank Regulations

Opposition from business groups is partially to blame for delays in finalizing Dodd-Frank regulations, according to Agenda. Nearly half of the bill’s requirements remain unwritten, including rules regarding pay-for-performance disclosure and whether companies will be required to report “realizable” or ”realized” pay. Despite the delays, 25% of directors and officers surveyed by Agenda identify Dodd-Frank as their biggest regulatory concern.

Dodd-Frank Rules Barely Half-Finished (Agenda - subscription required)

Directors' and Officers' Outlook: Q2 2014 (Agenda - subscription required)

Pay for Performance? It Depends on the Measuring Stick

The New York Times (subscription required)

According to an Arthur J. Gallagher & Company survey, pegging executive compensation to total shareholder return (TSR) is not effective for increasing shareholder value. Though half of surveyed companies employ TSR, those using it to benchmark CEO pay had lower shareholder return than companies using other benchmarks, especially earnings-per-share (EPS). The Gallagher survey authors found correlation, but would not confirm causation, for any of the performance outcomes. Companies that frequently change their pay programs also significantly underperform those with more stable structures. The study concluded that compensation programs should be individually tailored to use company strengths to create value for shareholders.

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Compensation Trends + Developments

The Morning Risk Report: When CEO Pay Seems to Fall, Look Closer |  The Wall Street Journal (subscription required) April 10, 2014

ISS/IRRC Study: Shareholder Engagement at All-Time High |  Pensions & Investments (subscription required) April 10, 2014

CEOs’ Pay Increasingly Being Trumped by Other C-Level Executives |  Financial Post April 11, 2014