The Advisors' Blog

This blog features wisdom from respected compensation consultants and lawyers

January 6, 2014

Parsing a Few More Pay Ratio Comments

– Broc Romanek, CompensationStandards.com

Over the past few weeks, I have highlighted some of the 115,000 comment letters sent to the SEC on its pay ratio proposal from investors and companies. Here are a few more to consider:

– Group of 33 companies
– Society of Corporate Secretaries
– New York City Bar Assc.
– Calvert Investments
– Prof. Charles Elson
– Mark Van Clieaf
– Network for Sustainable Financial Markets
– CalPERS

January 3, 2014

The French Go Wild! 75% Corporate Tax If Execs Paid More Than 1 Million Euros

– Broc Romanek, CompensationStandards.com

Here’s news from this article:

France’s Constitutional Council – the country’s highest court – gave the go ahead on Sunday for President François Hollande’s “Millionaires’ Tax”, a 75-percent levy to be paid in 2013 and 2014 by companies on their portion of wages exceeding 1 million euros ($1.38 million). The new tax was part of Hollande’s campaign promise to make France fairer for the middle class by making the wealthy do their fair share to help France’s struggling economy.

Hollande’s initial plan called for a 75-percent tax to be paid by high earners on the part of their incomes exceeding 1 million euros was struck down in December 2012 by members of the Constitutional Council, who argued that 66 percent was the legal maximum for individuals. Hollande’s Socialist government reworked the tax to levy it on companies instead, infuriating corporate leaders.

The new plan, which the Council found constitutional Sunday, will be an exceptional 50 percent levy on the portion of wages exceeding 1 million euros paid in 2013 and 2014. Including social contributions, its rate will effectively remain roughly 75 percent. The Council, a court made up of judges and former French presidents, has the power to annul laws if they are deemed to violate France’s constitution.

December 30, 2013

European Cap on Banker Bonuses: More Guidance Issued

– Broc Romanek, CompensationStandards.com

This Morgan Lewis memo describes the European “Capital Requirements Directive IV” (CRD IV), which contains a new cap on bonuses payable to certain classes of employees within the financial services sector. It takes effect on January 1st. Here’s the new development, excerpted from the memo:

Once in force, CRD IV will apply to all bonus payments made to “material risk takers”, which commentators initially assumed would, in broad terms, amount to those employees previously identified as “code staff” under the Financial Conduct Authority’s Remuneration Code. However, in May 2013, the EBA published a consultation
paper in which it sought to significantly widen the class of employees who would be caught by the bonus cap. After receiving negative feedback to the consultation paper, the EBA, on December 17, issued its final draft RTS, which adopt a far narrower approach.

December 23, 2013

Corp Fin’s Regulation S-K Study: Will Executive Pay Disclosures Be Reformed?

– Broc Romanek, CompensationStandards.com

I just blogged more fully about Corp Fin’s Reg S-K study that came out on Friday over on TheCorporateCounsel.net. From page 100, here is the excerpt from the study about how executive pay disclosures could be changed:

Executive compensation requirements. Although the requirements for executive compensation disclosure have been amended more often than any of the other disclosure requirements in Regulation S-K, executive compensation disclosure is sometimes pointed to by companies and practitioners as an area with lengthy, technical disclosure. The executive compensation disclosure requirements should be evaluated in light of these concerns and reviewed to confirm that the required information is useful to investors. The review could also evaluate whether further scaling is appropriate.

December 19, 2013

Glass Lewis Releases 2014 Proxy Voting Guidelines

– Broc Romanek, CompensationStandards.com

Last week, Glass Lewis made available it’s 2014 proxy voting guidelines to its subscribers only. Here’s some analysis of the new guidelines from Towers Watson and Goodmans (I’m posting memos on GL’s update in our “Glass Lewis Policies” Practice Area).