This Willis Towers Watson memo identifies 20 questions to ask yourself when reviewing annual incentive plan design. They’re organized into these five categories:
1. Eligibility: Determine annual incentive plan eligibility based on market norms alongside one’s ability to impact the achievement of financial and nonfinancial objectives
2. Metrics and levels of metric measurement: Take time to understand your sector and your company goals, then select metrics accordingly
3. Performance ranges: Set the right target goals and calibrate the optimal performance ranges; use predictive analytics to model performance targets and ranges that are best fit for purpose through forecast performance simulations
4. Funding: Ensure you have the proper incentive plan funding mechanism in place and communicate how your plan is funded, in good times and bad
5. Calculation of payout: Work to ensure that pay and performance are within a realizable range of alignment
Last year, I blogged about Citigroup being the first US company to disclose its “unadjusted pay gap” – which compares the median earnings of women & minorities in the US to the median pay of men & non-minorities and can be an indicator of these groups’ opportunities for advancement. Citi’s voluntary disclosure came in response to a shareholder proposal from Arjuna Capital.
Of course, global companies may already have to disclose similar info in other countries – e.g. the UK, Australia, Germany and Iceland – and I’ve blogged that there’s been a lot of back & forth on an EEOC reporting requirement here in the US.
Citi’s move didn’t exactly open the floodgates to information sharing. But Arjuna and other shareholders have persisted – and last week Starbucks become the second US company to add website disclosure of its gender & minority pay gap in exchange for Arjuna’s withdrawal of a proposal. It’s very simple & concise.
The gaps in the US were zero dollars! Understandably, Starbucks is getting a lot of positive press for that.
Meanwhile, Microsoft sent a similar Arjuna proposal to a vote last week – where it garnered almost 30% approval. This press release says that Arjuna intends to file median pay gap proposals at more than a dozen companies during the upcoming proxy season – it’ll be “naming names” next month. See this blog I ran last spring for a recap of Arjuna’s efforts to-date and a link to their “Scorecard” that contains example language from resolutions.
For resources about preparing for these types of proposals, the expanding role of the compensation committee, stakeholder expectations and intersecting legal requirements, visit our “Gender Pay Equity” Practice Area or use the search feature for this blog…
Here’s an interesting piece from Exequity that explores the usage of relative total shareholder return (RTSR) within long-term incentive plans across S&P 500 companies using data from 2019 filings. There are nifty charts that show overall prevalence of RTSR, differences in usage between industry sectors, and key design elements of these plans…
A member recently said this about my “Cap’n Cashbags” videos: “I will say this for you – you have a singular cinematic style. The Cap’n Cashbags films are a unique combination of post-World War I German Expressionism & mid-1970s “Superfriends” cartoons.”
In this 25-second video, Cap’n Cashbags is just hanging out with his fellow CEO pals who serve on his board’s compensation committee – talking about wage cuts for all workers (except himself):
As noted in this Davis Polk blog, ISS recently released its “preliminary” updates to its compensation policies – which consists of 8 FAQs. Check out the Davis Polk blog for some analysis…
This is the hardest blog I’ve written in my 17 years of blogging. My love letter to you. After pouring my heart & soul into our community for 17 years, I’m heeding the many signs that it’s time for a change. My last day in this job will be the end of this month.
So as hard as it is to leave y’all, I know in my ‘heart of hearts’ that it’s time to go. And that change starts with a nice, long break before I decide where my journey takes me next. The next few months are what I’m calling my “Epic Time of Yes.”
What will I miss the most? You. I will miss the daily dialogue – mainly by email – with so many of you. I cherish our friendship, our kinship, our love for securities law & corporate governance. I’m hesitant to name any names because there are many hundreds I would mention specifically. I hope we stay in touch. Either via LinkedIn or my gmail account (broc.romanek@).
I want to thank Jesse Brill for believing in me (his family owns the company; not me). Back in 2002, he hired someone who didn’t realize he had the skill set he apparently had. Until a year ago, I was responsible for our marketing, led our strategic direction, engaged in quiet sales efforts & participated in many other behind-the-scenes functions that helped made this job so enjoyable. Of course, the “in-front-of-the scenes” stuff was fabulously rewarding too. In this job, I have worn so many hats – journalist, event planner, publisher and of course, corporate lawyer – that whenever I filled out a form that asked for my occupation, I always paused before deciding which label to assign to myself.
I particularly like to cultivate creativity. I’m proactive in the way that I accomplish that – and I’m happy to share if you’re ever curious about how you can do so too. I recently received what I consider the kindest compliment – that I have a knack for building community. That’s the motto upon which I built the websites for this company from the first day I arrived. I’m proud of the innovations that I have brought to our events – I employed novel ways to make conferences not only bearable, but enjoyable. I think my “Blue Justice League” – a business casual game – is still ahead of its time. And I have heard nothing but rave reviews about the practical way I’ve put together our treatises, handbooks, checklists & paperbacks. Not to mention the sheer number of pages I’ve drafted for those things. Throw in the crazy total of blogs, podcasts, webcasts. The statistics are staggering.
Of course, I couldn’t have done it without the assistance & inspiration of our wonderful team. Dave Lynn and Alan Dye have been invaluable, both as colleagues and friends. Randi Morrison, Julie Hoffman, Linda DeMelis and Susan O’Reilly before they left us. The founder of course, Jesse Brill (and his son Nathan) – and his cohort Mike Gettelman. Barbara Baksa, Mark Borges and Mike Melbinger.
And in our HQ, too many to name – but I will give props to the ones that have been around the longest: Karen, Adam, Mike, Serge, Jacob, Denise, Sun Mi, Raychelle, Ron, Brian and Albert. I have sent more emails to Anne Triola than anyone in the world, our terrific webmaster – I’ll be visiting her in Seattle soon enough. And I will sorely miss the delightful Nona who does our typesetting.
Knowing that I am leaving Liz and John has been the hardest part of this difficult decision. They say good managers hire people that are smarter than they are. I certainly got that right. Working with them the past few years has been truly special. You are in good hands.
Anyway, after my extended holiday, I’m sure I will be wide-eyed & primed for a new adventure. I’m not sure yet whether that will be something that falls within our community – it might, it might not. Luckily, my wife & I recently cut our last tuition check so I’m in no rush to figure that out. I know that I bring passion and a yeoman’s effort to whatever I put my mind to – so hopefully I’ll find a situation that can help bring out the best in me.
In every end, there is a new beginning. Namaste.
“If Not For You”
I’m into all sorts of music. I like to think that I live through “theme songs” that I hear in my head each day. Today’s theme song is George Harrison’s “If Not For You” (written by Bob Dylan). Here’s an excerpt:
If not for you
Babe, I couldn’t even find the door
I couldn’t even see the floor
I’d be sad and blue, if not for you
If not for you
Babe, the night would see me wide awake
The day would surely have to break
It would not be new, if not for you
If not for you, my sky would fall
Rain would gather, too
Without your love I’d be nowhere at all
I’d be lost, if not for you
