– Broc Romanek, CompensationStandards.com

Last month, social activist As You Sow announced its new “Executive Compensation Initiative,” which provides tools to help others get active as well as getting more active itself. As You Sow just filed its 1st shareholder proposal on pay issues. Here is their set of FAQs about CEO Pay…

– Broc Romanek, CompensationStandards.com

Cap’n Cashbags – a CEO – doesn’t try to avoid the ALS Ice Bucket Challenge in this trailer for the full feature film (here’s his 1st attempt):

– Broc Romanek, CompensationStandards.com

With just two weeks to go, folks are rushing to join their 2000 other colleagues to be part of our “Annual Proxy Disclosure Conference” on September 29th-30th. Registrations for our popular pair of conferences (combined for one price)—in Las Vegas and via video webcast — are strong and for good reason. Act now!

The full agendas for the Conferences are posted — but the panels include:

– Keith Higgins Speaks: The Latest from the SEC
– Top Compensation Consultants: Survivor Edition
– Preparing for Pay Ratio Disclosures: How to Gather the Data
– Pay Ratio: What the Compensation Committee Needs to Do Now
– Case Studies: How to Draft Pay Ratio Disclosures
– Pay Ratio: Pointers from In-House
– Navigating ISS & Glass Lewis
– How to Improve Pay-for-Performance Disclosure
– Peer Group Disclosures: The In-House Perspective
– Creating Effective Clawbacks (and Disclosures)
– Pledging & Hedging Disclosures
– The Executive Summary
– Dealing with the Complexities of Perks
– The Art of Communication
– The Big Kahuna: Your Burning Questions Answered
– The SEC All-Stars
– Hot Topics: 50 Practical Nuggets in 75 Minutes

– Subodh Mishra, ISS Governance Exchange

More than three-quarters of FTSE 100 companies have modified remuneration practices in the past 12 months to meet shareholder expectations and respond to new rules on disclosure and voting, according to a report from Deloitte. The Sept. 4 report of FTSE 100 directors’ remuneration shows that “companies are seeking to better align the interests of directors and shareholders by focusing more on the longer term, increasing the shareholding requirements for directors and introducing simpler remuneration structures.”

According to Deloitte, 35 companies studied this year implemented new long-term incentive plans, “more than at any time in the last ten years.” Last year, almost half of FTSE 100 companies operated more than one long-term plan, the report notes, while bonus share matching plan were removed by 13 companies, “demonstrating a move towards simpler arrangements.” “A particularly striking finding from this year’s analysis is that in over a quarter of the performance share plans the participants will not receive any shares for five years,” said Stephen Cahill, a partner in Deloitte’s remuneration team. “Overall, almost half the long-term plans in place are now based on time periods longer than three years.”

Meanwhile, shareholder expectation for directors to hold a minimum number of shares are being met, the report finds, with most companies (96 percent) now having such guidelines in place. In a statement announcing key findings, Cahill said the past year has seen over a quarter of companies increase the minimum requirements, resulting in a median requirement to hold shares with a value of 200 percent of salary, compared with 150 percent last year. In the largest companies, he noted, this rises to 300 percent of salary.

Separately, there has been no change in the median potential bonus that may be paid in FTSE 100 companies generally, the report finds, but the median has decreased in the top 30 companies and actual bonus payout amounts continue to decrease. The median bonus payout across all FTSE 100 companies in 2013 was 70 percent of the maximum opportunity, compared with 87 percent four years ago. (There is a maximum bonus opportunity based on company performance. Depending on the extent to which the performance targets are met a proportion of the bonus will be paid, up to the maximum for outstanding/exceptional performance.)

In the top 30 companies, payouts were lower with a median of 58 percent of the maximum opportunity. In 11 companies, compared with only three last year, the level of the bonus payout was reduced by the remuneration committee to better reflect the overall company performance.

There has been no change in the potential size of the median long-term award. The vesting of awards relating to performance periods ending in 2013 has also been lower than the previous year with a median of 40 percent of the maximum that could have been earned, according to Deloitte. “The variability of these plans is demonstrated by the fact that over a quarter of recipients received no payout award and only one in five received the full award,” said Cahill.

– Broc Romanek, CompensationStandards.com

This overview from Audit Analytics – “The Stock-Option Backdating Scandal and its Minor Implication of Audit Firms” – provides a brief reminder of that exciting time…

– Broc Romanek, CompensationStandards.com

Here’s news from this Reuters article:

Abercrombie & Fitch Co’s board agreed to make governance changes to resolve a lawsuit objecting to its awarding longtime Chief Executive Officer Michael Jeffries more than $140 million of compensation since 2007. The negotiated settlement, which requires court approval and includes no monetary payment to shareholders, was disclosed on Friday, less than an hour after the underlying lawsuit was filed in the U.S. District Court in Columbus, Ohio.

Abercrombie agreed to appoint a chief ethics and compliance officer, tie executive pay more closely to performance, bolster anti-corruption compliance training, and limit access to nonpublic data to Jeffries’ partner and other third parties, among other provisions, court papers show. The accord would bind other shareholders with similar claims. It differs from most shareholder derivative litigation, in that settlements often occur months or years after lawsuits are filed. A Florida pension plan, the City of Plantation Police Officers’ Employees’ Retirement System, is the plaintiff.

“Many lawyers try to shoot first and ask questions later,” Mark Lebovitch, a partner at Bernstein, Litowitz, Berger & Grossmann representing the plaintiff, said in an interview. “The board deserves credit for recognizing the benefits that our settlement proposal would create for the company.” Abercrombie directors denied wrongdoing in agreeing to settle. A spokesman for the New Albany, Ohio-based company had no immediate comment on Tuesday.

The changes came after Abercrombie had this year added seven new independent directors, including four to resolve a proxy battle with hedge fund Engaged Capital, and reduced Jeffries’ power by splitting the roles of chairman and chief executive. Abercrombie has had 10 straight declines in quarterly same-store sales. It said on Aug. 28 it would reduce its logo-focused apparel business in North America to “practically nothing” while expanding other lines. Jeffries’ pay was less than $140 million from 2008 to 2013, according to court papers, because some awards did not vest or were not granted.

In the court papers, Lebovitch said the plaintiff chose an “atypical strategy” of negotiating changes quietly, rather than risk a long court battle with Abercrombie’s “famously aggressive counsel” at Skadden, Arps, Slate, Meagher & Flom. He also said the settlement was not collusive, and that courts in the federal circuit that includes Columbus have encouraged settlements in comparable cases. “I don’t see the incentive to settle as being any different before or after a lawsuit is actually filed,” said Robert Daines, a professor at Stanford Law School and co-director of its Rock Center for Corporate Governance.

The plaintiff’s lawyers could receive up to $2.78 million in fees and expenses if the settlement were approved. “We think the benefits are more significant than in virtually any derivative settlement you will find, and could justify a much larger award,” Lebovitch said.

The case is City of Plantation Police Officers’ Employees’ Retirement System v. Jefferies et al, U.S. District Court, Southern District of Ohio, No. 14-01380.

– Broc Romanek, CompensationStandards.com

Here’s this article from ThinkProgress.org:

David Dillon, the former CEO of the supermarket chain Kroger, told the audience of an Aspen Ideas festival that his pay in his last year on the job, which clocked in at nearly $13 million, “even seems ludicrous to me.”

He clarified that the package wasn’t ludicrous when it was first put together, but rose so high because the company’s stock has skyrocketed, and much of his compensation was tied to the stock price. “I don’t really defend that amount, that even seems ludicrous to me,” he said. And while he said that even before the large package, compared to his peers, “I generally hit the 25th percentile on the bottom side” for compensation, even that “was pretty damn high.” In a follow up interview with Quartz, he added that the use of the word ludicrous was in comparison “to what I thought was a more logical level of pay for the year.”

On the panel, he also defended the idea of designing executive compensation so that CEOs “have enough shareholder interest that they are mentally aligned with thinking about what should a long-term shareholder want out of an organization.” But he admitted things have gone pretty far. “I also think it’s gotten a little extreme, or maybe a lot extreme,” he said.

In speaking with Quartz, he added, “I personally believe that, generally speaking, executive pay has gotten too high, and it needs to be addressed in appropriate ways.” He added, “Anybody who looks at CEO pay, even if it was reasonably based, they would say that person is paid way too much.” “I don’t dispute that they ought to be paid really well,” he said. “It’s just that I think it’s gotten a little bit out of hand.”

The numbers back him up. Median CEO pay hit a record earlier this year, breaching the $10 million mark. It rose more than 50 percent over the last four years, while the average American saw her pay increase just 1.3 percent over the last year. Chief executive pay has risen 127 times faster than worker pay over the last three decades. The ratio of CEO pay to worker pay was 259.9-to-1 last year. That compares to a ratio of 20-to-1 in 1965 and even just 87.3-to-1 in the early 90s. Executive pay is even growing faster than pay for the top 1 percent.

And there is little evidence to suggest that these huge increases in CEO compensation are benefitting their companies. There is no evidence to suggest that paying CEOs top dollar means better performance in terms of profitability, revenue, or stock return. In fact, a study found that the companies that pay their chief executives the most see the worst results for shareholders. Despite the attempt to tie pay to company performance, companies routinely game those systems to ensure that the top executive gets his bonuses and payouts, even if they fail to meet targets. Worse, nearly four in ten of the highest-paid CEOs over the last two decades were fired, caught committing fraud, or oversaw a company bailout.