Our Insights

Shareholder Activism – NACD Roundtable June 3, 2015

The Semler Brossy consulting team presented on the topic of shareholder activism at a recent NACD Roundtable event on June 3, 2015, in Philadelphia. Download the presentation deck to learn more about: How different types of activists interact with companies How activists are targeting compensation in today's campaigns Dealing with activist shareholders Read more

TSR Can be a Flawed Incentive Measure

The most effective executive compensation programs today strike the balance across key stakeholders — boards of directors, management teams, and shareholders. For many companies, performance-based equity has become the principal component of executive pay. Roughly 65% of large U.S. companies grant performance-based equity today and half of those use relative total shareholder return (TSR) as a performance measure. At first blush, relative TSR has strong conceptual appeal — executives earn grants only when they create more shareholder value than other companies. Upon deeper review, however, relative TSR has flaws as an incentive measure. Read more

How to Set Threshold and Maximum Payouts That Are Tailor-Made For Your Company

Compensation committees sometimes feel challenged by the task of setting targets for annual goals. Not only do they have to address the upside potential and downside risk in the company’s business plan, but also other factors that include external headwinds and tailwinds associated with macroeconomic factors, competitive opportunities and threats, technological disruptions, and regulatory changes. That said, the task of setting annual targets can become quite complex. Read more

Leading Minds of Compensation 2015 Panel Discussion

Earlier this month, Semler Brossy's Barry Sullivan, managing director, was a featured speaker at the NACD Leading Minds of Compensation summit, held on March 3, 2015. NACD's Leading Minds of Compensation program is a forum for engaged compensation committee chairs, members, and directors gather to exchange insights with the nation's top thought leaders.The panel was moderated by Christopher Y. Clark, Publisher of NACD's Directorship Magazine and featured Dayna Harris of Farient Advisors, Janice L. Koors of Pearl Meyer & Partners, Steven Hall of Steven Hall & Partners, Jeff Joyce of Pay Governance LLC, Rose Marie Orens of Compensation Advisory Partners, and Barry Sullivan of Semler Brossy. Read more

CEO Reviews: Helping the Boss Get Better

The annual performance review. Many boards don’t take full advantage of them as a leadership- development mechanism for the CEO. But CEOs are no different from other employees: they need honest, direct and timely feedback. In the CEO’s case, getting unfiltered feedback from most people can be especially tricky, so a rigorous review by the board matters all the more. Read more

When It’s OK to Lower the Performance Bar

When it comes to executive compensation and company performance, directors commonly go by the following “rule:” The goals for the coming year should exceed last year’s results. Some directors believe that, if performance goals decline, executives should not receive any bonus, even if the business environment won’t allow the company to exceed its prior performance record. But the rule that requires companies to always set higher goals for top-line and bottom-line results should not be considered hard-and-fast. Even as companies aim for long-term, continuous improvement, there are legitimate cases when lowering the bar is acceptable. Read more

Five Questions Directors Should Ask About Restricted Stock

The landscape for long-term incentive plan design has radically changed, as companies have largely replaced stock options with restricted stock as the main component of long-term incentives granted to executives. Research firm Equilar has found the percentage of S&P 1500 businesses granting options decreased from 79% in 2007 to 75% in 2012, while companies issuing restricted stock jumped from 80% to 92% in the same period. Read more