Monthly Archives: October 2016

Ensuring the Executive Pay Program is on a Strong Foundation

In the current environment with Say on Pay votes and intense media scrutiny, it can be difficult to stay centered on the foundation of the executive pay program. While it is important to be aware of external views and commentary on “best practices”, companies must ensure that their executive pay program is built on a rock-solid foundation. In terms of the building blocks of the pay program, most companies apply a “market median” compensation philosophy, but there are a wider range of practices for the peer group, performance metrics and assessing pay-for-performance alignment. Continue reading

Recent OSHA Ruling May Impact Ability to Use Safety as an Incentive Metric

Some companies in the oil and gas, energy, utility, and manufacturing industry sectors have included safety compliance and/or improvement as a performance metric in their incentive compensation plans. Safety as a performance criteria appears frequently in incentive compensation plans for both executives as well as broad-based employee groups. Now, regulators have raised a potential problem with the use of safety as a performance metric. Continue reading

Resisting Homogenization of the Executive Pay Program – Update Motivating the executive team while satisfying shareholders and achieving successful Say on Pay votes

In today’s environment, with annual Say on Pay (SOP) votes, intense external scrutiny and the need to strongly align pay with performance, it is increasingly important for companies to be confident in their executive pay program. The foundation of a sound executive pay program is built on the company’s business strategy and talent needs, which, collectively, must be achieved in order to create shareholder value. Continue reading

The SEC’s Mandated CEO Pay Ratio in the Context of Income Inequality:Perspectives for Compensation Committees

At a recent Compensation Committee meeting, a director remarked, “As we discuss our CEO’s target compensation for next year, we need to remember that there is an ongoing debate about income inequality.” Income inequality and executive compensation are two of the most controversial issues in modern American economic and political discourse. The forthcoming mandated disclosure of the CEO pay ratio will link these two issues directly in the boardroom.

How much of the increase in inequality has been caused by CEO pay, and is this a failure of corporate governance?

This Viewpoint will provide some insights for directors and others into the answers to these questions in the context of the SEC’s mandated disclosure of the ratio of CEO to median employee pay. Continue reading

Press Release

August 8, 2016 Pay Governance Research Finds Strong CEO Pay-For-Performance Alignment Analysis from executive compensation consulting firm Pay Governance (www.PayGovernance.com) finds that compensation realizable by S&P 500 CEOs is aligned with company shareholder returns over the same time period. These … Continue reading

“The Compensation Committee: What’s in a Name?”

To qualify for the performance-based compensation exception under Section 162(m), payment of the compensation must meet several requirements, including that performance goals must be set by the corporation’s “compensation committee.” The Code defines “compensation committee” as the committee of independent directors that has the authority to establish and administer the applicable performance goals, and certify that the performance goals are met. Continue reading

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