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.
John R. Ellerman is a Partner based in the Dallas office of Pay Governance. John is an active consultant who advises the compensation committees of Fortune 500 companies. Several of these clients have been served by John for 15 years or more. John's clients are principally in the energy services sector; however, he also has clients and relevant experience in the retailing, high technology, general manufacturing, casual dining, and financial services industry.
Prior to joining Pay Governance, John was the managing partner in the executive compensation practice for Towers Watson (formerly Towers Perrin). For the last 15 years, John was the practice leader for that firm's executive compensation and rewards practice for the U.S. Western region.
John is a noted speaker on executive compensation and has presented to The Conference Board, WorldatWork, the Directors College of Corporate Governance, and other prominent groups. He was a contributing author of Marking Mergers Work: The Strategic Importance of People. John is often quoted in the business press and has been cited in The Wall Street Journal and other major newspapers.
In addition, John has held an appointment to the Division of Sponsored Research at M.I.T. After completing his academic pursuits and before entering the consulting profession, John served two years in the Department of Defense as a systems analyst.
John has both BBA and MBA degrees from Stetson University.
Many companies remain stressed that the Trump administration has yet to provide regulatory relief from the CEO pay ratio rules of the Dodd/Frank financial reform legislation which will be in effect for reporting in the 2018 proxy season. However, the business community has just been granted relief from an onerous and burdensome compensation reporting requirement that is different than the CEO pay ratio rules. This latter proposed reporting requirement has been a carry-over from the Obama administration. Continue reading →
Over the past 20 years, there has been a major shift in how large public companies have compensated their outside Directors.1 These changes have included the elimination of Board meeting fees, granting of equity compensation in the form of full-value shares, the elimination of Director retirement plans and other perquisites, adoption of stock ownership guidelines for Directors, and giving of supplemental cash retainers to Committee Chairs in recognition of their substantial time commitments to committee work. Continue reading →
The CHOICE Act is designed to rewrite many of the rules and provisions contained in the Dodd-Frank Wall Street Reform and Consumer Protect Act (“Dodd-Frank”). The proposed legislation was passed on a party-line vote of 34-26 and has advanced to the full House for a vote at some future date. The legislation is expected to pass the House due to its Republican majority. Continue reading →
In the first 3 months of 2017, our firm’s partners and consulting staff attended more than 200 corporate Boards of Directors compensation committee meetings in our role as executive compensation advisors. From attending these meetings, we have learned a great deal about certain issues emerging as dominant themes in Board discussions about executive pay and corporate governance. Continue reading →
In the aftermath of the failed Affordable Care Act (“Obamacare”) repeal and replace effort, the United States’ new administration announced its intent to shift focus to other high-priority issues. As noted in the latest press accounts, President Trump is anxious to tackle a comprehensive rewrite of the Tax Code. Continue reading →
In recent years, the SEC has developed extensive rules and regulations regarding the reporting of executive compensation in the company annual proxy. Such reporting includes the narrative discussion of CD&A executive compensation policies and practices as they pertain to the CEO and NEOs. Additionally, the SEC requires that companies provide numerous prescribed tables and schedules reporting the historical elements of executive pay for the most recently completed fiscal year as well as the past 2 fiscal years. Continue reading →
The rise in both the prevalence and prominence of long-term performance plans has been one of the most significant trends in executive compensation over the past 15 years. At the time of the dot-com market collapse (March 2000 to October 2002) and the demise of several prominent U.S. companies (e.g., the Enron scandal revealed in October 2001), long-term performance plans were only used by a relatively small portion of large U.S. public companies. Continue reading →
Perhaps the most controversial rule regarding executive compensation in the Dodd-Frank Financial Reform legislation is the CEO pay ratio disclosure. This rule requires disclosure of the CEO’s pay to that of the company’s median employee. The SEC adopted final rules regarding the pay ratio disclosure requirement in calendar year 2015, and the requirement is scheduled to take effect with proxies filed in 2018. Continue reading →
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 →
Section 409A was added to the Internal Revenue Code (IRC or “Code”) as part of the American Jobs Creation Act legislated in 2004. Essentially, Section 409A sets forth certain requirements for the effective deferral of compensation under nonqualified deferred compensation arrangements. Much of the impetus for Section 409A was the ability of certain executives to accelerate the payment of their supplemental retirement arrangements and deferred compensation at Enron immediately prior to the company’s demise. Continue reading →
Pay Governance Gives Back
Very happy and rewarding day for the Pittsburgh crew. Today the Pay Governance Pittsburgh office contributed 12 frozen Turkeys to the Washington County City Mission in support to its drive to feed local families in need. This follows the team’s volunteering of time to serve meals to the Mission’s residents, contributing extra firm computers to the Mission’s Education and Training Center, and working to enhance this non-profit’s governance structure on a pro-bono basis.
2017 Leading Minds of Compensation, East featuring Diane Lerner, Managing Partner at Pay Governance
A new Equilar report featuring commentary from Pay Governance and Donnelley Financial Solutions analyzes the compensation discussion and analysis (CD&A) section of S&P 100 proxy statements over the last five years. With the average CD&A reaching nearly 10,000 words, the report revealed key strategies in how companies design and communicate pay practices by using alternative pay graphs, checklists and other visualizations that help draw investors to the most important information.
To be redirected to Equilar and download a copy of this important report, click here.
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October 4, 2016
Pay Governance Adds New West Coast Partner
Matt Quarles has joined the firm as a Partner. In this role, Quarles is responsible for working with clients across industries on a wide range of executive compensation issues. He will be based in Los Angeles and has nearly 20 years experience in the executive compensation consulting industry.
Pay Energy®, a new proprietary assessment tool developed by Pay Governance
Pay Energy®, a new proprietary assessment tool developed by Pay Governance LLC, helps companies consider the “drive, discipline and speed” inherent in current programs and in alternative designs that may be evaluated.
“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.