Today is the “Pay Ratio & Proxy Disclosure Conference”; tomorrow is the “Say-on-Pay Workshop: 14th Annual Executive Compensation Conference.” Note you can still register to watch online by using your credit card and getting an ID/pw kicked out automatically to you without having to interface with our staff. Both Conferences are paired together; two Conferences for the price of one.
– How to Attend by Video Webcast: If you are registered to attend online, just go to the home page of TheCorporateCounsel.net or CompensationStandards.com to watch it live or by archive (note that it will take about a day to post the video archives after it’s shown live). A prominent link called “Enter Pay Ratio Conference Here” – on the home pages of those sites – will take you directly to today’s Conference (and on the top of that Conference page, you will select a link matching the video player on your computer: HTML5, Windows Media or Flash Player). Here are the “Course Materials,” filled with 182 pages of annotated model pay ratio disclosures, 156 pay ratio nuggets, talking points, etc.
Remember to use the ID and password that you received for the Conferences (which may not be your normal ID/password for TheCorporateCounsel.net or CompensationStandards.com). If you are experiencing technical problems, follow these webcast troubleshooting tips. Here is today’s conference agenda; times are Eastern.
– How to Earn CLE Online: Please read these “FAQs about Earning CLE” carefully to see if that is possible for you to earn CLE for watching online – and if so, how to accomplish that. Remember you will first need to input your bar number(s) and that you will need to click on the periodic “prompts” all throughout each Conference to earn credit. Both Conferences will be available for CLE credit in all states except for a few – but hours for each state vary; see this “List: CLE Credit By State.”
Banking and financial firms that have estimated theirs responded with the lowest ratios in the survey, at mostly 200:1 or less. The highest estimated ratios in the survey, at mostly 400:1 or more, came from retailers and wholesalers of consumer goods, who tend to employ more part-time workers with low wages.
Here’s another interesting excerpt:
About three-fourths of companies surveyed by Mercer haven’t started thinking about communications yet. Of those that have, employees and other internal audiences are their top priorities, more so than investors, the media, or labor unions.
Here’s the intro from this interesting blog by Davis Polk’s Ning Chiu:
Although the failure rate for 2017 say-on pay results achieved an all-time low of just 1.3%, the number belies the fact that more than 2,000 say-on pay proposals have either received negative recommendations from ISS or less than 70% support, or both, since say-on-pay resolutions started in 2011.
Approximately 12% to 14% of companies run into problems every year. As companies have become more proactive with shareholder engagement, the number of companies that received “against” recommendations from ISS and still achieved more than 70% support has increased in the last three years, while the number of companies with those negative recommendations that received less than 70% favorable votes have fallen.
What may be most surprising to companies, however, is that about 10 to 15 companies each year received positive endorsement from ISS and still obtained less than 70% support.
Over on “TheCorporateCounsel.net Blog,” I blogged at length about the Treasury Department’s new 232-page report, as mandated by the Administration’s Executive Order that sets forth core principles for the markets. This is one of 4 reports coming out of Treasury dealing with various types of reform.
In this Treasury Report, there’s a bunch of recommendations that impact our area of law – and most of them can be accomplished at the agency level, not needing action by Congress. But there are some recommendations that do require legislative action by Congress. One of them is repealing Section 953(b) of Dodd-Frank – the pay ratio provision.
In the absence of legislative action, Treasury recommended that the SEC should consider exempting smaller reporting companies and emerging growth companies from some of the requirements – but that wouldn’t impact pay ratio because those categories of companies are already exempt. Read my blog for more details…
For those coming to next week’s “Pay Ratio & Proxy Disclosure Conference,” you’ll hear tidbits about the hot “employee reaction” topic all day long – but particularly during the panel entitled “Pay Ratio: How to Handle PR & Employee Fallout.” Recently, as noted in this press release, Willis Towers Watson found that this was the topic of largest concern when it surveyed companies. Here’s an excerpt:
Indeed, roughly half of the respondents polled (49%) cited forecasting how their employees will react to the ratio disclosure as their number one challenge, but that other challenges still loom. About four in 10 (39%) said determining the consistently applied compensation measure (CACM) is their great challenge followed by getting accurate pay data (38%), deciding how to craft their required disclosure (37%) and determining where their pay ratio stands compared with that of their peers, their industry and the market (35%).
For those coming to next week’s “Pay Ratio & Proxy Disclosure Conference,” you’ll hear directly from ISS’ David Kokell (he leads the U.S. compensation research team for ISS) – during the panel entitled “Navigating ISS & Glass Lewis” – about how ISS will consider the new pay ratios that companies disclose. But in the meantime, you can read this note from ISS about “Contextualizing CEO Pay Ratio Disclosure.” Here’s an excerpt:
Pay ratio disclosures loom, and there appears to be a gap in expectations between issuers and investors. According to the 2017-2018 ISS Global Policy Survey results, 44 percent of respondents from the corporate community believe that the pay ratio information is not meaningful; investor respondents, on the other hand, largely intend to analyze pay ratios, with 63 percent indicating that they would both compare ratios between companies and assess a company’s year-over-year changes.
1. Average support for say-on-pay reached 92%, the highest level to date.
2. The say-on-pay failure rate was an all-time low of 1.3%.
3. The vast majority of boards and shareholders supported an annual say-on-pay frequency in 2017.
4. Total S&P 500 CEO pay increased to its highest level since 2011, in contrast to a slight decline in CEO pay seen at smaller companies.
5. The gap between median CEO pay in the S&P 500 vs. the Russell 3000 is the largest since say-on-pay began.
6. Performance-based pay elements continue to be emphasized while reliance on discretionary awards declined.
7. The median CEO golden parachute payment rose by nearly 75% in 2017, whereas average support for golden parachute votes dropped and the failure rate more than doubled.
8. Average support for equity plan proposals was consistent with prior years.
9. Shareholder proposals on compensation topics remained on the decline and, for the second consecutive proxy season, no proposals received majority support.
We have posted the transcript for our recent pre-conference webcast: “Pay Ratio Workshop – What You (Truly Really) Need to Do Now.” Now get ready for the main event taking place in less than two weeks in Washington DC and by video webcast – 20 pay ratio panels over 2 days: “Pay Ratio & Proxy Disclosure Conference.” It’s time to register now…
– How to Attend by Video Webcast: If you are registered to attend online, just go to the home page of TheCorporateCounsel.net or CompensationStandards.com to watch it live or by archive (note that it will take a few hours to post the video archives after the panels are shown live). A prominent link called “Enter the Conference Here” – which will be visible on the home pages of those sites – will take you directly to the Conference (and on the top of that Conference page, you will select a link matching the video player on your computer: HTML5, Windows Media or Flash Player).
Remember to use the ID and password that you received for the Conferences (which may not be your normal ID/password for TheCorporateCounsel.net or CompensationStandards.com). If you are experiencing technical problems, follow these webcast troubleshooting tips. Here are the conference agendas; times are Eastern.
– How to Earn CLE Online: Please read these “FAQs about Earning CLE” carefully to see if it’s possible for you to earn CLE for watching online – and if so, how to accomplish that. Remember you will first need to input your bar number(s) and that you will need to click on the periodic “prompts” all throughout each Conference to earn credit. Both Conferences will be available for CLE credit in all states except for a few – but hours for each state vary; see our “CLE Credit By State” list.
– Register Now to Watch Online: There is still time to register for our upcoming pair of executive pay conferences – which starts on Tuesday, October 17th – to hear Keith Higgins, Meredith Cross, etc. If you can’t make it to Washington DC to catch the program in person, you can still watch it by video webcast – either live or by archive. Register now to watch it online.
– Register in Washington DC to Watch In-Person: Starting next Thursday, October 12th, you will no longer be able to register to attend in Washington DC through this site – but you you always register to attend when you arrive in DC! You just need to bring payment with you to the conference and register in-person. But until next Thursday, you can still register online to attend in DC…
Love this blog by “As You Sow” because it points out a number of “real life” examples of companies that took action after they received a low vote for their say-on-pay. Check it out!