Hold-Through-Retirement Provisions

  1. What are "Hold-Through-Retirement" Provisions?
  2. Comprehensive Analysis - and Implementation Guidance - for Hold-Through-Retirement Provisions
  3. Sample Reports to Shareholders Describing HTR Requirements
  4. Sample Proxy Disclosure of HTR Requirements
  5. Sample HTR Requirement Policies
  6. Sample Letters to Executives Announcing HTR Requirements
  7. Sample Agreements Incorporating HTR Requirements
  8. Other Samples from ExxonMobil
  9. List of Companies with Hold-Through-Retirement Provisions
  10. Shareholder Proposals Seeking HTR
  11. Investor Policies
  12. Stock Ownership Guidelines Monitoring Chart
  13. Other Guidance
  1. What are "Hold-Through-Retirement" Provisions?

    One way to address the situation at many companies where CEOs and top executives have received options over the years which now have such high values is to require them to hold the equity underlying all exercised options (as well as other equity grants) until retirement. An increasing number of companies have followed the lead of savvy banks and brokerages which have used this practice for some time.

    Fortunately, there should be ample opportunity for compensation committees to change and renegotiate a past practice. These opportunities exist each time any aspect or component of a CEO's compensation is considered. For example, to be awarded a new option or restricted stock grant, the CEO could agree to fixes to past and outstanding awards. This could be accomplished by new retention provisions that require the executive to hold the stock until retirement.
     

  2. Comprehensive Analysis - and Implementation Guidance - for Hold-Through-Retirement Provisions

    In the September-October 2008 issue of The Corporate Executive, we provide comprehensive analysis of why - and how to - implement Hold-Through-Retirement provisions. And in the November-December 2008 issue, we provided additional guidance on how to implement HTR provisions.
     

  3. Sample Reports to Shareholders Describing HTR Requirements (includes Citigroup, Goldman Sachs; here is Citigroup's governance guidelines)
     
  4. Sample Proxy Disclosure of HTR Requirements (includes Citigroup, JP Morgan, Merrill Lynch; here is a Sample Template for Disclosure from Marc Trevino and Joseph Hearn of Sullivan & Cromwell)
     
  5. Sample HTR Requirement Policies (includes Citigroup, FPL Group, Morgan Stanley, Synovus and Wachovia)
     
  6. Sample Letters to Executives Announcing HTR Requirements (includes JP Morgan)
     
  7. Sample Agreements Incorporating HTR Requirements (includes ExxonMobil, Goldman Sachs excerpt and Total System Services)
     
  8. Other Samples from ExxonMobil  
  9. List of Companies with Hold-Through-Retirement Provisions

    Here is a list of companies that have "Hold-Through-Retirement" provisions.
     

  10. Shareholder Proposals Seeking HTR
  11. Investor Policies - Here is what the Council of Institutional Investors included in its recently updated policy on executive compensation regarding stock ownership:

    Structure

    • Stock ownership: Executives and directors should own, after a reasonable period of time, a meaningful position in the company's common stock.  Executives should be required to own stock—excluding unexercised options and unvested stock awards—equal to a multiple of salary, scaled based on position, such as two times salary for lower-level executives and up to six times salary for the CEO.

    Limitations

    • Stock sales: Executives should be required to sell stock through pre-announced program sales or by providing a minimum 30-day advance notice of any stock sales.
       
    • Post-retirement holdings: Executives should be required to continue to satisfy the minimum stock holding requirements for at least six months after leaving the company. 

    Proxy Statement Disclosure

    • Transparency: Companies should disclose stock ownership requirements and whether any members of the executive oversight group are not in compliance." 
       
  12. Stock Ownership Guidelines Monitoring Chart
     
  13. Other Guidance
 

For more information, contact info@compensationstandards.com or call 925.685.5111.
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