The Advisors' Blog

We have posted the transcript for our recent webcast – “Pay Vs. Performance: Lessons From Season 1” – in which Weil’s Howard Dicker, Freshfields’ Nicole Foster, Aon’s Daniel Kapinos & Mercer’s Carol Silverman shared their insights on these topics:

– Challenges in the First Year & Approaches to Interpretive Questions
– Common Mistakes & Misconceptions
– Most Frequently Used Company-Selected Measures
– Most Frequently Used Company-Selected Measures
– Use & Placement of Supplemental Disclosures
– Recommendations for Shareholder Engagements & Voting Impact
– Longer-Term Impacts on Compensation Programs & Disclosures

Here’s an excerpt from Howard Dicker’s comments on the use and placement of supplemental disclosures:

Now, the PvP rule itself is very clear, that if a company adds more measures to the table (for example, in addition to the CSM), each additional measure must be accompanied by a clear description of the relationship between CAP and such measure across the fiscal years.

What is not in the rule, but is abundantly clear in the SEC’s adopting release, is that any supplemental measures of compensation or financial performance and other supplemental disclosures provided by companies must satisfy three conditions: 1) it must be clearly identified as supplemental; 2) it must not be misleading; and 3) it must not be presented with greater prominence than the required PvP disclosure.

According to the SEC, for example, a company could use a heading in the table indicating that the disclosure is supplemental, or include language in the text of the filing stating that the disclosure is supplemental. The proxy statement of Equinix is an example of a company clearly labeling its supplemental disclosures as supplemental.

Now, I know that the surveys are saying that very few companies use supplemental disclosure; however, based on my own non-scientific sampling, I’m seeing more supplemental disclosures than I expected but I’m not always seeing them labeled as supplemental.

– John Jenkins