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March 19 — Public company boards and management say that reader friendliness is as important as technical accuracy in disclosing executive pay, according to a survey that rates quality and clarity of Compensation Discussion and Analysis content.
A survey of 93 public companies by New York-based Pearl Meyer & Partners LLC found that only 11.4 percent of respondents rated the effectiveness of their CD&As as excellent. The CD&A is a principles-based overview of a company's executive compensation policies and programs, mandated by Securities and Exchange Commission rules.
A report on the survey results, “The New Normal of Annual Compensation Disclosure,” released March 18, said that the top request of boards and management with respect to CD&A content is that “it be made easier to understand.”
Say-on-pay has benefited companies in improving the effectiveness of their communication. According to the survey report, companies reporting excellent or very good communication effectiveness received higher levels of shareholder support on say-on-pay ballots.
Companies with effective communications have some things in common: They start planning earlier, bring in communications professionals to help tell their story, and use executive summaries, charts and graphs, Pearl Meyer said in a news release.
The survey report said that companies can improve the effectiveness of executive compensation disclosure in four ways:
• leverage specialized resources, such as internal and external communications professionals;
• allow for significant planning and generous time lines;
• use plain, concise language; and
• incorporate graphic depictions of key information.
The complete survey results are available for purchase at www.pearlmeyer.com/thenewnormalreport.
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