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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June 15, 2015

Quick Picks

Shareholder Activism and Executive Compensation | Jeremy L. Goldstein & Associates, LLC | June 18, 2015

Attorney Jeremy Goldstein of Jeremy L. Goldstein & Associates, LLC suggests that in order to avoid becoming the target of shareholder activism, boards should review their pay programs for aspects that can either be exploited by activist investors or are likely to malfunction if an activist investor wages a takeover effort. Mr. Goldstein explains that companies should be especially cognizant of disclosing the reasoning behind plans that deviate from industry norms, ensuring programs reward executives for achieving the company’s stated, long-term goals, and taking care that employees are properly protected under change in control provisions in the event of an activist takeover. The author emphasizes that companies should carry out these reviews and make any changes before any activists speak out to avoid difficult proxy contests. Read more

Director Backing Wanes After Pay Support Dips | Agenda (subscription required) | June 22, 2015

A recent study conducted by Semler Brossy Consulting Group shows that individual director election results are 1 to 2 percent lower on average after a company receives only 50% to 70% shareholder support on Say on Pay. This drop in support jumps to 6% when isolating results for Compensation Committee members and chairs. According to Semler Brossy principal Greg Arnold, “the issue is mainly reputational, and [involves] some embarrassment.” This sentiment is supported a joint study from Georgetown University and the University of Maryland, which found that a company is less inclined to re-nominate any director who “attracts hostility from shareholders at another firm.” Read more

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