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Summer's Hot Issue
The Bright Light Shining on Director Compensation
How boards can guard against unwarranted attention
Can you properly define "excessive?"
Staying under the radar of the proxy advisory firms, shareholders, and activists may depend on how well your board examines—and possibly amends—its director pay philosophy and practices. Perhaps just as important is how well the plan is communicated to multiple constituencies.
In this special section, we offer a collection of recent opinion and analysis on director compensation as it emerges from relative obscurity to become one of the hot-button issues of the day and our advice on what boards can do now to be prepared.
We'll begin with new research from Pearl Meyer and Main Data Group that shows some surprising results in terms of which companies may land in ISS' trigger area of the top 5% and thus be among the first companies to feel the effects of the magnifying glass. We also note how industry classification and index groupings may affect the outcomes.
Caution: Potential Danger at the Top
Is Excessive Board Compensation An Issue or a Diversion?
Why the conclusions drawn from a recent study on “excessive” director compensation aren’t reflective of today’s corporate environment, and may inadvertantly make directors vulnerable to accusations of poor oversight based on their compensation, but not on any practices themselves.
Greater Scrutiny Surrounding Director Pay
Changes in annual director compensation rates have been and remain fairly stable. However, outliers may be calling more attention to the subject than in previous years. We offer several foundational governance points that should be considered in your program.
Tailoring Equity Grants for Newly Elected Directors
Initial grant premiums for new board members have been declining over the last twenty years. But with increasing ownership guidelines, we may see a slight resurgence in the use of initial grants.
Benchmarking Board Pay at Private Companies
Privately owned companies often struggle to find accurate data for setting director pay. Here’s how to use public company information in the effort.