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.

Subscribe to Dialogue
Week of
September 22, 2014

Quick Picks

Important Proxy Advisor Developments | Wachtell, Lipton, Rosen & Katz | September 29, 2014

Proxy advisors' growing influence over the past several years has led commentators to call for reform. Two 2004 no-action letters that required investment managers to vote on all matters and the 2010 implementation of Say on Pay have boosted proxy advisors' influence. Advisors' ability to sway votes on shareholder proposals has been well documented—James Copland of the Manhattan Institute observed that an ISS recommendation boosts support of a proposal by an average of 15%, while a negative recommendation on executive compensation proposal reduces shareholder support by 17% (Semler Brossy analysis of the Russell 3000 shows shareholder support for executive compensation was 28% lower at companies with an ISS 'Against' than an ISS 'For'). Advisor reform is a two-way street; commentators want advisors to be more transparent while investment managers (in accordance with the SEC's Staff Legal Bulletin 20 ("SLB 20")) must be diligent in their oversight of proxy advisor policies. The 2015 proxy season will be key for the SEC to reflect on SLB 20 and to track the ongoing role proxy advisors play. Read more

Americans Have No Idea How Bad Inequality Really Is | Slate | September 26, 2014

A new study from Harvard Business School Professor Michael Norton and Chulalongkorn University in Bangkok's Sorapop Kiatpongsan reveals that Americans dramatically underestimate the CEO-to-median worker ratio. The authors—who surveyed 55,000 people, including 1,581 Americans—asked participants to i) estimate the ratio and ii) reveal what they thought it should be. The median American respondent guessed a ratio of 29.6-to-1 and an ideal ratio of 6.7-to-1. Respondents largely agreed in their estimates across income, education, and age. The actual ratio is estimated to be between 272 and 354-to-1. Read more

Compensation Trends + Developments

Regulation, Legislation + Governance

From Critics + Commentators