Our Insights

Advancing the Dialogue: Getting the Most Out of Your Company’s Compensation Risk Assessment

As the 2013 proxy season gets under way, issuers must again assess the level of risk in their compensation programs – namely, issuers must evaluate whether or not their compensation policies and practices are reasonably likely to have an adverse effect on the company. Our experience suggests that for most companies, compensation risk assessment is a routine, “check-the-box” exercise that often fails to reveal the company’s compensation-related enterprise risks. In this article we outline a multi-faceted approach to compensation risk assessment that executives can employ to ensure the process is both thorough and “value-added.” Further, we detail four critical questions that an engaged Director should raise to ensure their company’s risk assessment is compliant, thoughtful, and comprehensive. Read the entire article (PDF) written by Blair Jones and Mark Emanuel. Read more

Exec Stocks: Selling the Right Way

No director wants to see his or her company cited in the newspaper for executivepay transgressions. Especially not on the front page of The Wall Street Journal. And especially when the reporter suggests stock sales from an executive-pay plan hurt shareholders. But that’s what happened on Nov. 27, in what might be called the Thanksgiving Surprise: CEOs of companies ranging from Big Lots to VeriFone Systems saw their photographs published for questionable trades of incentive stock. Read more

Linking Executive Pay and Performance

Say on pay has shed light on companies’ ability to relate pay and performance. Blair Jones, CCP, CECP, Managing Director at Semler Brossy, discusses companies’ shift to other definitions of pay, including realizable pay. Read more

Top 5 Lessons from Say on Pay and Shareholder Engagement

Say on Pay has ushered in a new era of shareholder engagement on executive compensation. In the past, centralized proxy voting and governance policy-making groups at institutional shareholders have not had a channel to directly influence executive pay practices, despite growing market concerns. With Say on Pay, they now have an explicit voice. In response, HR professionals accountable for executive pay issues must develop a new set of tools and capabilities. Specifically, direct outreach and engagement with shareholders has become a key component of governance. In this article, we outline Top 5 lessons learned from our experience engaging with shareholders over the last year. Read more

Advancing the Dialogue: Breaking The Link Between Budgets And Pay

Companies typically use the annual budgeting process to set performance goals for annual and long-term incentives. This article suggests eliminating budgets as the starting point for the goal-setting process and offers four alternative approaches for consideration. Read the entire article (PDF) written by Seymour Burchman. Read more

Advancing the Dialogue: When Do Performance Options Make Sense?

The evidence to date does not suggest a significant shift to performance-contingent stock options, despite the pressure for companies to enhance the appearance of having “performance-based” pay. Yet there are circumstances where this vehicle may make good sense, and in this article we outline the benefits and risks of performance options, and when they might be considered as part of an overall pay strategy. Read the entire article (PDF) written by Seymour Burchman and Blair Jones. Read more

Advancing the Dialogue: Can Corporate Officers Sell Stock?

Conventional wisdom suggests that executives should always hold on to company stock earned through incentive plans. However, recent research conducted by Semler Brossy indicates that stock sales are relatively common practice for long-serving executives, and in this article we offer a principled approach which encourages appropriate diversification over time. Read the entire article (PDF) written by Roger Brossy and Ross Brondfield. Read more