ISS and Glass Lewis Continue to Clinch the Purse Strings

December 11, 2014

There is one looming question for public company management teams and board of directors which always creeps into discussions related to compensation planning: How much will ISS and Glass Lewis move the target for their pay-for-performance and governance models in the coming year?  Both companies recently released their changes for the 2015 guidelines with minor revisions to their pay – for – performance models.  This is the first year in which neither company made major revisions to their models but rather focused more on over-arching governance issues.  L&A has outlined the major governance and compensation-related changes below but recommends clients review all the new guidelines directly from ISS and Glass Lewis.   To read more on this article, click here. share

share

Share to Google Plus

Read ISS and Glass Lewis Continue to Clinch the Purse Strings »

SEC Guidance May Lessen Investment Adviser Demand for Proxy Advisory Services

November 11, 2014

  Pulled from Harvard Law School's Forum on Corporate Governance and Financial Regulation, this article discusses recent SEC guidance related to investment adviser demand for proxy advisory services.  We have noticed an increased concern amongst our public company clients about the growing influence and perceived power of proxy advisors, as well as the methodology behind their ever-changing policies and procedures. The article addresses the corporate community's actions as it works to highlight this growing influence, as well as the SEC's corresponding response through recently published guidance relating to both proxy firms and their investor clients.     To read more on this, click here.      As always, please let us know if there are any topics you'd like to…

share

Share to Google Plus

Read SEC Guidance May Lessen Investment Adviser Demand for Proxy Advisory Services »

A Lesson in Dealing with Shareholder Advisory Firms

November 4, 2014

Now headed into the fourth year of Dodd Frank and Say-On-Pay, many companies have had the unfortunate experience of crossing paths with ISS and their seemingly unexplainable influence on otherwise logical shareholders.  We have helped many clients successfully navigate through negative ISS recommendations and develop plans to reduce the risk of future run ins.  Our experience, and the experiences of other we have talk with have been invaluable, and where there is no perfect formula, understanding the keys to others successes can only be beneficial. To read more on this article, click here. share

share

Share to Google Plus

Read A Lesson in Dealing with Shareholder Advisory Firms »

Question: Oil company directors & officers own 3% of US oil & gas company shares. Is that too low?

October 23, 2014

We were asked on Twitter the following question: "Oil Company directors and officers own 3% of U.S oil, gas company shares.  Is that too low?" http://fuelfix.com/blog/2014/10/21/report-retirees-401ks-hold-most-shares-in-oil-gas-industry/ Our Resonse: The amount executives and directors own as a percent of a company is tied to the size of the company.  The larger the company, the smaller the percentage. 3% ownership for executives and directors only is in the ballpark for large market cap companies. Small to mid cap companies have larger ownership levels.    share

share

Share to Google Plus

Read Question: Oil company directors & officers own 3% of US oil & gas company shares. Is that too low? »

Executive Pay: The Sin Tax of the Future

October 22, 2014

Executive pay is about to become the new sin tax. Executive Pay continues to be one of the most heated discussions in America.  In addition, the US Government is in serious debt ($16.5 trillion) and running a deficit each year ($500 billion); the gap between the average worker and CEO has jumped from 46x in 1983 to 331x currently (AFL-CIO analysis of S&P 500 companies); a law was recently passed in Obamacare to tax executive pay for insurance companies over $500,000; the media is constantly running stories on the pay gap problem; all of which will create the perfect storm to redistribute corporate and shareholder dollars to the US Government. There is currently legislation on both sides of Congress led by…

share

Share to Google Plus

Read Executive Pay: The Sin Tax of the Future »

Sustainability Bonuses: A New Trend That May Become the Norm

August 14, 2014

A New Trend that May Become the Norm We have seen a recent uptick in companies, especially Fortune 500, integrating metrics that are more about the company sustainability and/or social responsibility.  While these metrics are not the majority of the weight for determining payouts, they may be a gatekeeper that prohibits payouts. Companies are using metrics like reduced carbon footprint, energy consumption, use of renewable resources, commute time, environmental impact, etc.  Hugh Welsh of The Guardian recently wrote about having sustainability goals and not achieving them.  The article can be read here. We believe this recent trend among Fortune 500 may become more the norm over the coming year. Why? The increased use in these corporate sustainability metrics has various shades…

share

Share to Google Plus

Read Sustainability Bonuses: A New Trend That May Become the Norm »

Chipotle Fails Say on Pay with High TSR

May 27, 2014

Last week we saw the news come out of Chipotle failing the Say on Pay vote, and it was NOT because of performance.  In fact, the company saw 1, 3 and 5-year TSRs in the 83rd, 77th and 95th percentiles as compared to peers, yet they received a "no" vote recommendation from ISS.  It is fascinating how influential ISS has become this year.  The reasoning behind the "no" vote recommendation was due to a high pay compared to the peer group at approximately a 3x multiple of peer group CEO median. In other words, ISS has made o matter how good your TSR is, if you are more than 3x the ISS peer median, you will get a fail from…

share

Share to Google Plus

Read Chipotle Fails Say on Pay with High TSR »

Not-for-Profit Board Best Practices from NACD Program

March 18, 2014

Our group attended the NACD Tri-Cities event last week in Houston, where the topic was not-for-profit board best practices.  The panel discussion touched on some really great points on what the modern not-for-profit boards should look like and be focused on.  The speakers stressed that not-for-profits MUST start thinking more like for-profit businesses in order to achieve their goals.   A key point that was made that stuck with the crowd was the concept of "Impactful Philanthropy," and how increasing your revenue through other streams rather than just relying on grants and donations has a direct correlation to how great that impact will be. Other points that were big take aways for board members of not-for-profits to think about: -…

share

Share to Google Plus

Read Not-for-Profit Board Best Practices from NACD Program »

The GM CEO Issue & the Misunderstanding of Executive Compensation

February 18, 2014

The past three weeks has been a roller coaster for General Motors in the news.  The reason: the media doesn't understand executive compensation structures…again.  The issue of the gap between genders is a big one, and we do not mean to discredit it as being that on average women are making approximately 75% of what men make is a real issue for our future workforce.  This issue aside, the media hyped this story up without a full understanding of what the CEO's potential "realized" compensation would be at the end of 2014 including annual and long-term incentives.  Now we know according to this article  in the NYTimes that Ms. Barra will actually have the potential to earn over 60% of what…

share

Share to Google Plus

Read The GM CEO Issue & the Misunderstanding of Executive Compensation »

Why Caps on Executive Pay Won’t Work

February 6, 2014

We have all heard the argument for caps on executive compensation.  Although we here at L&A believe that compensation should be targeted at appropriate levels, tied to performance, and sustainable, the idea to cap executive compensation has a lot of holes in it. The argument was most recently made by Mr. Douglas Smith in the NY Times here with the concept of capping federal wages, therefore setting the example of what needs to be done in corporate America.  There are several points made in this opinion piece that are made every time this issue arises that we would like to put to sleep. First, the premise that the US President’s ratio to minimum wage is way off. $400,000 in salary is…

share

Share to Google Plus

Read Why Caps on Executive Pay Won’t Work »