May 27, 2008
More on Director’s Pay from the Bottom Up
One of the beauties of having so many experts participating on one blog is the dialouge it will create among them, as well as with their audience. For example, George Ince of Davis Polk & Wardwell notes: Peter Hursh’s blog on the “bottom’s up” technique of establishing director pay is a useful starting point – but I would suggest that it undervalues the director’s services since I think there should be some additional pay for directors to account for their fiduciary duties and potential liability and exposure in performing the role of a
director, which are not present for the other types of advisors he uses for the fee measurement.
More Performance Target Disclosure Stats
Back in early April, Equilar released a study regarding how many of the Fortune 100 disclosure their performance targets (compare the stats in Watson Wyatt’s survey, noted on April 10th in this blog):
– From 2006 to 2007, the prevalence of Fortune 100 companies disclosing actual performance targets for their executives under all types of compensation plans increased from 55.8% to 66.4%.
– Among Fortune 100 companies with annual bonus plans for executives, 68.3% disclosed the actual performance targets which must be achieved to generate payouts. Last year, 44.4% of Fortune 100 companies with such plans provided a comparable level of detail.
– The study also finds that 81.0% of awards which measure short-term performance, benchmark results solely against internal company goals. Conversely, 60.9% of long-term performance awards use relative measures as a component in determining payouts.
– Broc Romanek