Pay Governance LLC is an independent firm that serves as a trusted advisor on executive compensation matters.
Our work helps to ensure that our clients' executive rewards programs are strongly aligned with performance and
supportive of appropriate corporate governance practices.
Performance-based long-term incentive (LTI) awards—typically performance shares or stock units (PSUs)—are a large component of annual LTI awards for executives at most companies . Compensation committees continue to wrestle with the various design considerations associated with PSUs. Read More
The Securities and Exchange Commission (“SEC”) staff has had a busy summer. Following the release of proposed rules and regulations regarding the CEO Pay for Performance and Clawback provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”), the SEC on August 5, 2015 proposed final rules and regulations regarding the CEO pay ratio disclosure. The CEO pay ratio disclosure fulfills a further mandate of the Dodd-Frank legislation. Read More
On August 4, 2015, Institutional Shareholder Services (ISS) released its annual policy survey for the 2016 proxy voting season. The survey encompasses its global proxy voting policies across all potential topic areas. Read More
Although all aspects of diversity are meaningful topics, this article is solely focused on gender diversity. Currently, females represent approximately 15% of outside board member seats in the S&P 1500 and about 18% of the S&P 500 seats. This equates to a median of 1-2 female board members in a group of 9-11 board members. Read More
Read our latest publication on Culture and Compensation Risks featuring Diane Lerner, Patrick Haggerty and Lane Ringlee. To read the full publication, click here.
2015 Peer Group Benchmarking: An Analysis of S&P 1500 Companies
Featuring Commentary from Pay Governance
The 2014 fiscal year showed marginal changes in terms of peer group methodology. Peer groups consisting of 16 to 20 companies remain the most popular, and 37.6% of S&P 1500 companies had peer groups in this range, with peer group sizes of 11 to 15 the next-largest contingency at 35.3%.
This report also includes an analysis comparing company-disclosed peer groups to Equilar Market Peers. Starting with disclosed peer groups and based on Equilar’s proprietary algorithm, an Equilar Market Peer group represents the 15 most strongly linked companies within a company’s larger peer network. The average overlap of Equilar Market Peers and peers disclosed by the S&P 1500 is 73.7%. Of the companies analyzed, 53.3% had revenues that fell below the 50th percentile of their Equilar Market Peers, and the median ranking of a company’s revenue versus its Equilar Market Peers was at the 46.2nd percentile.
On August 4, 2015, Institutional Shareholder Services (ISS) released its annual policy survey for the 2016 proxy voting season. The survey encompasses its global proxy voting policies across all potential topic areas. The responses elicited from the survey are used to assist ISS in developing changes to its proxy voting policy guidelines, and will be open for one month (until September 4, 2015). Upon closing of the survey, there will be an open comment period prior to the finalization of the updated ISS proxy voting policies which are targeted for release in November 2015.
Agenda published their 2nd Quarter publication and included quotes from Aubrey Bout and Steve Pakela of Pay Governance.
“One of the best parts of say on pay is shareholder engagement,” says Aubrey Bout, a partner with Pay Governance. “That is a positive thing any which way you look at it.”
“The proxy advisors aren’t going to tell you which metrics to use; they just want to know why you use the metric. It’s critical to explain in the CD&A why a metric was selected and how it fits in the overall vision and strategy of the company, and how it supports that strategy,” says Stephen Pakela, a partner at Pay Governance.
“The fundamental philosophy of executive compensation is to ‘attract, retain and motivate’ a talented management team. So it’s concerning when you hear incentive awards are just put in desk drawers until plans mature,” said Pay Governance managing partner John England.