The Advisors' Blog

– Lynn Jokela

Not too long ago, Liz blogged about how director pay continues to attract more and more attention.  As director pay faces increased scrutiny from investors, this blog from Pearl Meyer suggests companies should approach proxy statement disclosure about director pay much the way they approach the CD&A – that is – striking a balance between marketing the executive compensation program, or in this instance the director pay program, and satisfying the SEC’s disclosure rules.

Not that anyone wants to make a proxy statement any longer, but it’s a suggestion that could help tell the story and potentially provide comfort to investors.  Decisions about director pay commonly include considerations about competitive pay as well as appropriateness based on the unique characteristics and value the directors bring to the board and company so it seems like a good story to tell.

Here’s an excerpt from Pearl Meyer’s blog suggesting companies follow the same approach with director pay disclosure as is used for the CD&A:

– Outline the philosophy, guiding principles, and objective that drive the program design

– Provide an overview of the pay mix structure and explain how it aligns with shareholder interests

– Summarize the compensation governance features of the director pay program – much like ‘what we do/don’t do’ as is commonly found in CD&A disclosures

– Explain how decisions are made