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Golden parachutes are falling out of favor amid investor and regulatory scrutiny of rising executive pay, especially perks that aren't tied to a company's performance. Since 2011, shareholders have had a say in how much executives are paid, including golden-parachute payments. "Say on pay" votes are now required by the Securities and Exchange Commission, and while they aren't binding, boards are under pressure from regulators and shareholder-advisory firms to consider investor views when crafting executive-pay packages.
As a result, "we're certainly seeing a more conservative approach by companies" to change-of-control payments, said Dan Wetzel, a managing director at consulting firm Pearl Meyer & Partners.
Cash severance payments, which once commonly exceeded three times an executive's annual salary and bonus, have been trimmed. Other perks have all but disappeared. One such example are gross-ups, which obligate a company to pay the high taxes levied on corporate perks, in effect letting the executive take home the full amount. Just seven of the 50 largest U.S. companies allowed tax gross-ups in 2012, down from 21 companies in 2006, according to Pearl Meyer & Partners. Mr. Wetzel said the number is likely lower now.