One of the most common questions that we receive is “have you seen any good CD&As?” Of course, Mark Borges blogs about countless CD&As all the time, providing in-depth analysis. But I have posted a list of 10 good ones that Mark has put together in our “CD&A” Practice Area so you don’t have to dig around. Bear in mind that we don’t know all the facts – so we never “endorse” disclosure, nor does this list mean that there might not be other CD&As that are superior to those on our list…
Tune in on Thursday for the webcast – “The Latest Developments: Your Upcoming Proxy Disclosures” – to hear Mark Borges of Compensia, Alan Dye of Hogan Lovells and Section16.net, Dave Lynn of CompensationStandards.com and Morrison & Foerster and Ron Mueller of Gibson Dunn discuss all the latest guidance about how to overhaul your upcoming disclosures in response to say-on-pay-including the latest SEC positions-and the other compensation components of Dodd-Frank, as well as how to handle the most difficult ongoing issues that many of us face.
In this Winter 2015 issue of our Compensation Standards Newsletter, there are 22 pieces of news & analysis from the last month culled from the three blogs on this site. You can sign up to get any blog pushed out to you via email whenever there is a new entry by simply inputting your email address on the left side of that blog.
Here’s a new study authored by Organizational Capital Partners (and commissioned by the Investor Responsibility Research Center Institute (IRRCi)) that finds:
– Average Say-on-Pay support vote across the sample was 82% for 32 low performing companies (return on invested capital – or ROIC – less than the cost of capital and negative relative total shareholder return) and 84% for 32 high performing companies (ROIC greater than the cost of capital and positive relative total shareholder return).
– Median vote was 90% for the low performing companies and 96% for high performing companies.
– There was not a meaningful difference between the recommendations of the two major proxy advisor firms, ISS and Glass Lewis. ISS recommended for 84% Say on Pay approval at value destroying companies and for 81% of value creating companies. Glass Lewis recommended for votes at 72% of the value destroying companies and 81% of the value creating companies.
Does Politico suddenly have the inside track at the SEC? That would be a shocker. This excerpt from this article surprised me:
…the SEC’s commissioners are expected to vote on Dodd-Frank rules as soon as mid-January, sources said, with the most likely candidates being regulations concerning derivatives markets and the law’s controversial “pay ratio” requirement for executive compensation.
The article also handicaps the odds of crowdfunding and other Dodd-Frank rules. Personally, I would fall off my chair if the SEC adopted pay ratio rules next week – but we’ll find out soon enough whether Politico’s “sources” are real. Note that this article from the Washington Examiner notes that a source at the SEC said that finalizing the pay ratio rule was a “top priority” and that “while there is no timetable to finish the rule…it could be done soon.”
As an aside, here’s an article critical of some members of Congress that have asked the SEC to change its budget priorities…
In this podcast, Rich Fields of Tapestry Networks provides some insight into the role of directors in CD&As, including:
– What do directors see as the purpose of the CD&A?
– How involved are they in creating and finalizing the CD&A?
– Are there any particularly challenging CD&A drafting decisions directors are thinking about?
– Any practical tips for CD&A drafting season?
Right before Christmas, ISS issued 20 FAQs on its new “Equity Plan Scorecard.” Here’s some analysis from this excerpt of Steve Quinlivan’s blog:
The FAQs go a long way in adding some transparency to a complex new policy. Absent overriding factors, a score of 53 or higher (out of a total 100 possible points) generally results in a positive recommendation for the proposal. EPSC factors are not equally weighted. Each factor is assigned a maximum number of potential points, which may vary by model. Some are binary, but others may generate partial points. For all models, the total maximum points that may be accrued is 100. The FAQs include a useful chart showing factors scored and definitions, but it does not include the number of points allocated to the factors.
Proposals that only seek approval to ensure tax deductibility of awards pursuant to Section 162(m), and that do not seek additional shares for grants, will generally receive a favorable recommendation regardless of EPSC factors, provided the Board’s Compensation Committee (or other administrating committee) is 100 percent independent according to ISS standards. In the case of proposals that include additional plan amendments, such amendments will be analyzed to determine whether they are, on balance, positive or negative with respect to shareholders’ interests, and ISS will determine the appropriate evaluative framework and recommendation accordingly.