Bloomberg BNA’s Corporate Law & Accountability Report is available on the Corporate Law Resource Center. This news service keeps corporate practitioners informed of legal developments of...
By Mary Hughes
Dec. 4 — Compensation and governance issues in the coming year are expected to center around executive pay, director qualifications, shareholder activism and company outreach, according to a recently released report.
Equilar Inc., the Redwood City, Calif.-based executive compensation data firm, released Dec. 3 the “2015 Compensation & Governance Outlook Report.” The report, Equilar said, “highlights critical topics that will affect those dealing with compensation and governance issues in the upcoming year.”
It addresses disclosure trends in executive pay and corporate governance in light of companies' efforts to engage with shareholders and to present their programs favorably and effectively. Key findings are illustrated with disclosure examples taken from recent Securities and Exchange Commission filings.
Report findings include:
• Peer group disclosure. Some companies are including in their proxy disclosure additional information through charts and tables to provide context to peer group listings. Equilar's examples include a comprehensive table featured in Johnson & Johnson's proxy statement that listed peer group companies' business characteristics and Johnson & Johnson's rankings among the companies. Another approach was taken by American Express Co., which used a pie chart to group peers according to business categories.
• Pay-for-performance alignment. Graphics and charts are increasingly appearing in proxy statements' compensation discussion and analysis to demonstrate pay-for-performance alignment. In the report's Executive Pay section, Equilar provides examples that show chief executive officer compensation in relation to the company's revenue and net income, and CEO compensation by performance-based component.
• Director skills. A few companies are including “director skills matrices” that show the skills needed by the company and the skills possessed by each board nominee. The report includes an example from the Coca-Cola Co. that uses a bar chart to summarize each director nominee's qualities in relation to the company's goals.
• Pay ratio disclosure. “A handful of companies” are beginning to include ratios in their proxy statements before they are required to by yet-to-be-finalized SEC rules, the report said. In addition to Noble Energy Inc., two companies disclosed pay ratios in their 2014 proxies: one following the requirements of the proposed pay ratio disclosure rule and the other disclosing internal pay equity, comparing just executive officers' pay.
• Shareholder engagement. More companies in the Standard & Poor's 100 index are disclosing their shareholder engagement efforts. Equilar reports that 65 companies did so in 2014, up from seven in 2008. Companies failing say-on-pay or showing poor performance will often disclose shareholder engagement, the report found.
To contact the reporter on this story: Mary Hughes in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Phil Kushin at email@example.com
Contact firstname.lastname@example.org regarding availability of “The 2015 Compensation & Governance Outlook Report.”
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)