The Advisors' Blog

Meridian recently published its 2024 Corporate Governance & Incentive Design Survey. The survey contains 56 pages of benchmarking data, pulled from the latest proxy statements of 200 large-cap companies (median revenue of $25 billion and median market cap of $41 billion), on topics including proxy disclosure practices, compensation-related shareholder proposal trends, annual & long-term incentive design practices, corporate governance practices, and more.

Meridian’s analysis confirms data that we’ve previously shared: most large companies are going “above & beyond” when it comes to clawback policies. Here’s more detail:

All Meridian 200 companies maintain a clawback policy that aligns with the standards outlined by the Dodd-Frank Act. Over three-quarters (78%) of companies also maintain additional clawback policies or provisions that exceed the requirements mandated by Dodd-Frank. Some companies implemented these policies while waiting for the Dodd-Frank mandatory clawback rules to go into effect, while others approved new, additional requirements at the same time as adopting the mandatory Dodd-Frank clawback policy.

Companies expand upon the mandatory Dodd-Frank provisions in different ways, namely:

– Additional triggers (i.e., beyond financial restatement – such as ethical misconduct, violation of restrictive covenants, reputational risk, failure to supervise, or other triggers),

– A broader covered employee group (e.g., all incentive plan participants), or

– More elements of compensation (e.g., time-based equity awards).

For companies with expanded policies, typically the board (or compensation committee) has discretionary authority to recoup compensation. They are not required to recoup pay (as they are with the mandatory Dodd-Frank policy).

Meridian predicts that more companies will consider expanding their approach to clawback policies in 2024-2025. To learn more about what companies are doing, join us for our “Proxy Disclosure & Executive Compensation Conferences” October 14th – 15th, where Compensia’s Mark Borges, Ropes & Gray’s Renata Ferrari, Davis Polk’s Kyoko Takahashi Lin, and Gibson Dunn’s Ron Mueller will be discussing “Living with Clawbacks: What Are We Learning?” Check out the agenda for more details!

– Liz Dunshee