Tag Archives: SOP

Considering Performance Stock Options

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

Did Say-on-Pay Reduce and/or “Compress” CEO Pay?

In the Dodd-Frank Act legislation after the 2008 Financial Crisis, the inclusion of shareholder SOP voting was driven by bipartisan Congressional support to “control executive compensation…” at corporations. In 2009, a former SEC chief accountant said, “Executive compensation at this point in time has gotten woefully out of hand… The time to adopt ‘say on pay’ type legislation is certainly past due.” Politicians, regulators, and some institutional shareholders clearly thought that, “The impetus for passage of Dodd-Frank’s say-on-pay requirement in 2011 focused on remedying ‘excessive’ CEO pay.”
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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

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

Does a Say on Pay Failure Affect Future Share Price Performance?

As companies approach the upcoming proxy season, Say on Pay (SOP) once again becomes top of mind for Compensation Committees and corporate management. Over the past 4 years since SOP proposals became mandatory under Dodd-Frank, shareholders have continued to show overwhelming support for executive pay packages despite continued criticism by media and other outlets. Continue reading

Direct Shareholder Engagement on Say on Pay: Circumventing the Perceived Hegemony of Proxy Advisors

In the three years that U.S. public companies have held non-binding Say on Pay (SOP) votes under the Dodd Frank Act, compensation committees, compensation advisors, and financial regulators have seen the clout of Institutional Shareholder Services (ISS) increase dramatically in the executive compensation arena. Continue reading

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