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The thinking is, if you’re doing something that’s not fraudulent but is inappropriate and perhaps impacts the share price, why wouldn’t it warrant a clawback?” said Aalap Shah, managing director at Pearl Meyer.
“Companies still like that TSR component, but it will continue to have less weight and boards will opt to use TSR as a modifier at the end,” said Jan Koors.
In the report, Jan Koors notes, “The best-in-class compensation committe committee will ask: ‘Have we created a leadership team, an environment, and an executive pay structure that gives our board and this organization the flexibility—as well as the creativity and the confidence—to do what’s right, not necessarily just what’s documented on paper?’”