Current Pay Governance Viewpoints

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    Does the SEC's New "Compensation Actually Paid" ("CAP") Help Shareholders Accurately Assess Pay-For-Performance?

    By Ira T. Kay and Blaine Martin

    On April 29, 2015, the SEC released proposed rules on public company pay-for-performance disclosure mandated under the Dodd-Frank Act. Pay Governance has analyzed the proposed rules and the implications for our clients’ proxy disclosures and pay-for-performance explanations to investors. We are concerned about the validity of describing a company’s pay-for-performance alignment using the disclosure mandated under the SEC’s proposed rules, and its implications for Say on Pay votes. Read More

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    Shareholders Defeat Mandatory Deferral Proposal

    By John R. Ellerman, Lane T. Ringlee and Maggie Choi

    Many large U.S. based multinational banking and financial services corporations have implemented executive compensation clawback policies that require the cancellation and forfeiture of unvested deferred cash awards or performance share unit awards. These policies typically condition the cancellation of deferred compensation if it is determined that an executive engaged in misconduct, including failure to supervise or monitor individuals engaging in inappropriate behaviors that caused harm to the organization’s operations. Read More

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    SEC Releases Proposed Pay for Performance Disclosure Rules

    By Lane T. Ringlee, John R. Ellerman, Blaine Martin and Maggie Choi

    In this edition of Viewpoint, Pay Governance will discuss the proposed rules and the next steps companies should consider regarding pay for performance disclosure rules. The SEC intends that the pay for performance comparison will supplement the CEO pay ratio in providing shareholders with information to better assess executive pay for purposes of the shareholder advisory Say on Pay vote. Read More

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    Activism of a Different Nature: Social Investors Advocate for Change in the Proxy

    By Jon Weinstein, Blaine Martin and Soren Meischeid

    Sustainable investing - defined as an investment approach that considers environmental, social, and governance (ESG) factors in the selection and management of investments - has seen significant growth in assets under management in the past several years. In the United States, an estimated 11% of total assets under management are now invested based on sustainable investment strategies. Similarly, shareholder proposals relating to environmental or social issues represented one-third of all shareholder proposals in 2014, representing an increase of nearly 40% since 2009. Some proposals are receiving shareholder support at or above 30%, generally driven by "for" vote recommendations from ISS. We find that ISS favors proposals that seek additional environmental or social reporting versus proposals that seek operational changes or restrictions. This finding contrasts with ISS's say-on-pay vote recommendation policies, which often seek changes to executive compensation designs. Read More