– Broc Romanek, CompensationStandards.com

Normally, I don’t blog about rulemaking petitions because they don’t go anywhere (the SEC is not required to act on them; see my blog about how a lawsuit was recently dismissed that sought to force the SEC to act on a political contribution disclosure petition). But I thought I would note this new petition from PAX Ellevate Management that seeks to require companies to disclose gender pay ratios on an annual basis, or in the alternative, to provide guidance to companies regarding voluntary reporting on gender pay equity to investors…

– Broc Romanek, CompensationStandards.com

Here’s a blog by Stinson Leonard Street’s Steve Quinlivan: The Delaware Court of Chancery has issued an opinion on a Section 220 demand made against Yahoo! No complaint has yet been filed, and although Vice Chancellor Laster speculates on some inferences that can be drawn, no one has proven anyone has done anything wrong.

The allegations in the case have eerie parallels to the Disney compensation litigation. The Vice Chancellor notes:

Mark Twain is often credited (perhaps erroneously) with observing that history may not repeat itself, but it often rhymes. The credible basis for concern about wrongdoing at Yahoo evokes the Disney case, with the details updated for a twenty-first century, New Economy company. Like the current scenario, Disney involved a CEO hiring a number-two executive for munificent compensation, poor performance by the number-two executive, and a no-fault termination after approximately a year on the job that conferred dynastic wealth on the executive under circumstances where a for-cause termination could have been justified. Certainly there are factual distinctions, but the assonance is there.

While noting the decision does not hold the Yahoo directors breached their fiduciary duties, the Vice Chancellor observed:

Based on the current record, the Yahoo directors were more involved in the hiring than the Disney directors were, but the facts still bear a close resemblance to the allegations in Disney III. The directors‘ involvement appears to have been tangential and episodic, and they seem to have accepted Mayer‘s statements uncritically. A board cannot mindlessly swallow information, particularly in the area of executive compensation: ―While there may be instances in which a board may act with deference to corporate officers‘ judgments, executive compensation is not one of those instances. The board must exercise its own business judgment in approving an executive compensation transaction.‖ Haywood v. Ambase Corp., 2005 WL 2130614, at *6 (Del. Ch. Aug. 22, 2005). Directors who choose not to ask questions take the risk that they may have to provide explanations later, or at least produce explanatory books and records as part of a Section 220 investigation.

– Broc Romanek, CompensationStandards.com

We have posted the transcript for the recent webcast: “The Latest Developments: Your Upcoming Proxy Disclosures.”

– Broc Romanek, CompensationStandards.com

Here’s an excerpt from this Manifest blog about this UK study:

The authors believe that CEO reward practice has reached a ‘crisis point’ and the data they present shows that CEO pay is more influenced by FTSE rankings and size than financial performance. The report recommends a new approach to CEO pay suggesting that its analysis ‘shows that current executive reward practice is based on misplaced assumptions about the motivating force of money. CEO reward practice also, therefore, fails to address some of the root causes of why current rewards might not have the desired effects. Organisations need to become more diverse, more embracing of shared and accountable leadership, more transparent in their reporting and more concerned with stakeholder rather than simply shareholder value’.

– Broc Romanek, CompensationStandards.com

Here’s a teaser from this article by Semler Brossy’s John Borneman:

We recently attended a Nasdaq compensation committee forum attended by board members, top HR executives and representatives from a number of institutional investors where the major topic of discussion was about the growing prevalence of TSR and relative TSR (rTSR) metrics in executive compensation. There was broad and general agreement that linking compensation to TSR does not make a very good “incentive” plan. Executives cannot control TSR directly, and it generally makes more sense to link pay to the strategic priorities of the business that executives can control, like revenue growth, innovation, margin management and returns on investments. This idea of strategic alignment has been the core principle for designing effective incentive plans for more than 30 years, and it continues to be relevant today.

– Broc Romanek, CompensationStandards.com

Here is Equilar’s new 10-page report, which examines the popularity and value of plane, car and professional services perks for both CEOs and NEOs in the S&P 500. The report includes commentary from Kristine Bhalla of ClearBridge Compensation Group LLC and Jim Kroll of Willis Towers Watson, also takes a deeper dive on eligibility for a wider variety of perks in the Fortune 100 for the current year including tax gross-ups, security and club dues.