The Advisors' Blog

– Liz Dunshee

Director pay is coming under more scrutiny due to ISS policy changes and recent Delaware cases. But according to this Pearl Meyer survey, most companies are unconcerned:

– Enhanced external scrutiny of NED pay does not concern most respondents (87%), with only 4% indicating a concern and 9% saying the issue has not yet been discussed

– To date, just 16% of public company respondents have made or are planning proxy disclosure changes for NED pay

– Slightly less than half (45%) of public company respondents have established NED pay caps within shareholder approved incentive plans, most commonly applying for equity grant values or total compensation

These results surprised me. True, only a few companies will be “outliers” each year under the ISS policy and boards are very busy. But if you pay too much without a “compelling rationale,” the results are pretty serious – a recommended vote against the compensation committee members. And who knows when a plaintiff will come knocking. The directors won’t be happy in either of these scenarios, and the advisors will get blamed. It might be worth a discussion and some beefed-up disclosure!