Dialogue

The latest reporting, opinion and research on executive compensation. We don’t necessarily agree with it all, but we provide it here for consideration.

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Week of
July 20, 2015

Quick Picks

CFOs Prep for Pay-Ratio Rules | WSJ: CFO Journal (subscription required) | July 20, 2015

In order to comply with the Dodd-Frank CEO-to-median-worker pay ratio disclosure rules, CFOs are asking the SEC for clarification on how to define a median worker and his or her compensation. Discussion has centered on what should be included in the calculations, particularly in terms of employees outside of the US and benefits such as pensions or perquisites. The SEC estimates that the 3,800 US public companies could spend an aggregate of $73.8 million to comply with the ruling, or $19,000 each, although many companies argue that the costs could be higher if they are forced to consider compensation for overseas employees. The SEC Commissioners will vote on whether to adopt final rules on August 5. Read more

Survey Reveals How US Companies Address the Impact of Currency Fluctuations on Incentive Plans | Towers Watson | July 22, 2015

A recent Towers Watson survey showed about two-thirds of polled companies had no policy for adjusting incentive plans to mitigate the impact of currency fluctuations. The question of whether to adjust for currency fluctuations is especially relevant after the strengthening dollar played a key role in holding back first-quarter profits. As companies set incentive goals for 2015 and the years ahead, the role of exchange rates and how they affect performance metrics needs to be addressed, according to Towers Watson. Currency fluctuations also force compensation committees to address the underlying philosophical question in how executive compensation should account for variables outside of an executive's control. Read more

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