If you’re in the midst of figuring out your pay vs. performance disclosure, join us next month – at our “Proxy Disclosure & 19th Annual Executive Compensation Conferences” – to get your action plan in place. In response to the SEC’s late-August adoption of final rules, we’ve lengthened the duration of our session on “Pay Versus Performance: Key Compliance Steps” – in which FW Cook’s Bindu Culas, Weil Gotshal’s Howard Dicker, Ropes & Gray’s Renata Ferrari and Latham’s Maj Vaseghi will discuss what the final rules require, key compliance steps, and practice pointers & predictions.

As everyone in this space knows, pay vs. performance is only one of the many important topics that are in motion right now. With game-changing new SEC rules that enhance the focus on director skills and board oversight, record numbers of shareholder proposals, and relentless regulatory & investor scrutiny, your proxy disclosures – and the actions that support them – are more important than ever. In 18 virtual panels over the course of 3 days, our Conferences provide practical guidance about rule changes, Staff interpretations, emerging disclosure risks, investor and proxy advisor positions, executive pay expectations, the board’s role, and more. Here’s the full agenda – and here’s more info about our expert speakers.

Here’s who should attend:

– Anyone responsible for preparing and reviewing proxy disclosures – including ESG and executive pay disclosures and responses to shareholder proposals.

– Anyone responsible for implementing executive and equity compensation plans or who counsels or advises boards on their oversight responsibilities, including CEOs, CFOs, independent directors, corporate secretaries, legal counsel, HR executives and staff, external reporting teams, accountants, consultants, and other advisors.

This is truly a “can’t miss” event for anyone involved with proxy disclosures, corporate governance, and executive compensation. You can still register to join us virtually Wednesday, October 12th – Friday, October 14th.

Conference attendees will not only get access to our unique & valuable course materials (coming soon) – we’ll also be making video archives and transcripts available after the conference, so that you can refer back to all of the practical nuggets when you’re grappling with your executive pay decisions, disclosures and engagements. Plus, our live, interactive format gives you a chance to earn CLE credit and ask real-time questions.

Register today! In addition, check out the agenda for our “1st Annual Practical ESG Conference” – which is happening virtually on Tuesday, October 11th. This event will help you avoid ESG landmines and anticipate opportunities. You can bundle the Conferences together for a discount.

– Liz Dunshee

Compensation is a key part of CEO succession planning, which – as one of the board’s most important responsibilities – should receive ongoing attention even when no immediate turnover is expected. This 14-page Semler Brossy memo describes questions to ask at each stage of the process:

1. No imminent change – Does compensation for rising stars & potential successors reflect their high value to the company and inspire them to stay?

2. Succession expected in the next two years – Do we need to take any bolder actions for the highest-potential candidates?

3. Just before the succession event – How should the new CEO’s pay be established relative to market and their predecessor?

4. Post-succession – How do we need to change pay to reflect changes in the business priorities & strategy?

The memo also points out that a transition event can be a time to add ESG incentives to executive pay packages or change pay structures for the C-suite as a whole – but all decisions need to be made with an eye to both internal & external scrutiny.

– Liz Dunshee

As a complement to our May-June issue of The Corporate Executive newsletter – and as a prelude to our upcoming “Proxy Disclosure & 19th Annual Executive Compensation Conferences” – we’ve now posted the transcript from our recent webcast, “Executive Compensation & Equity Trends in a Volatile Environment.” This program featured Semler Brossy’s Greg Arnold, Compensia’s Mark Borges, MoFo’s Dave Lynn and Gibson Dunn’s Ron Mueller. Here’s a nugget that Mark shared about off-cycle retention awards, which we’ll be discussing more at our Conferences:

I’ve had clients that decided it was in their best interest from a competitive standpoint to provide an off-cycle retention award to one or more of their executives. They granted them a time-based vesting award and they got dinged for it by the proxy advisory firms. That’s something to keep in mind when you’re doing anything that’s off-cycle. Should this be a performance award, to some extent, in order to mollify the proxy advisory firms?

In the spring, I saw many “moonshot,” or front-loaded, awards. This is where a company will grant one or more executives, usually the CEO, an award that is several times larger than what an annual award would be. It’s entirely performance-based. The performance measures are generally stock price triggers or market capitalization goals. I don’t know if that’s going to stop with the market being in the condition that it’s in, but it’s something companies have faced.

Some companies go to shareholders to get approval of those awards. In that situation, it’s the safest way to ensure you’re not going to run into problems with it. The proxy advisory firms have started to take notice of these awards and indicated that they are going to give them extra scrutiny under their pay-for-performance analysis. They’re going to expect things in the awards, such as commitments not to grant additional awards for a certain number of years after the front-loaded award has been made. They’re also looking for a more detailed explanation of the rationale for the award. Why are you doing this? What’s the deliberative process that you went through to arrive at the terms of the award that you’ve granted?

A lot of these were granted without shareholder approval and, to an extent, went without any negative repercussions from the proxy advisory firms. The important thing to keep in mind here is the size of the award. The proxy advisory firms tend to issue negative recommendations on these awards when they think the size is just too much for the company and its circumstances. These awards may be halted temporarily, but they aren’t going away and they are something the proxy advisory firms are starting to focus their attention on.

Greg & Mark went on to discuss that market volatility may make the performance hurdles for these awards extra challenging – and companies & boards might be painted into a corner if they’ve agreed not to make any additional grants.

– Liz Dunshee