The Advisors' Blog

– Broc Romanek, CompensationStandards.com

Last month, MGP Ingredients became the 73rd failure in ’13 with 21% support (Form 8-K) – and Syntroleum became the 74th with 49% support (Form 8-K). Thanks to Karla Bos! And that’s our finals for ’13…

– Broc Romanek, CompensationStandards.com

In her NY Times column last Sunday, Gretchen Morgenson covered clawbacks at length…

– 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.

– 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.

– Broc Romanek, CompensationStandards.com

Here’s a funny t-shirt that I recently spotted during my travels:

– 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).

– Broc Romanek, CompensationStandards.com

Here’s the most recent global look at the state of say-on-pay, courtesy of Profs. Thomas & Van der Elst…

– Broc Romanek, CompensationStandards.com

As noted in this Towers Watson study, pay for directors increased 3% at the median among the Fortune 500 according to proxies filed by June 30th. The findings include:

– Total direct compensation for outside directors increased 3% at the median over the prior year. The typical Fortune 500 director receives almost $227,000 in total direct compensation, up from about $220,000 in last year’s study.

– The median value of total cash compensation increased 8% over the last year, while median stock compensation remained flat. The increase in total cash fees was driven primarily by increases in annual cash retainer values as well as the continuing shift toward flat, retainer-based committee compensation and away from more variable forms of pay, such as per-meeting fees.

– Compensation committee members received a pay bump due, in part, to the additional time and effort required for service on this committee. The median retainer paid to compensation committee members increased 25% last year and now equals what audit committee members receive ($10,000).

Also check out Shearman & Sterling’s annual review of director comp disclosures for large companies that just came out…

– Broc Romanek, CompensationStandards.com

Over the last few weeks, Fusion-io became the 71st failure in ’13 with 36% support (Form 8-K) with just 26% support – and RCM Technologies (Form 8-K) became the 72nd with 28% support.

Did you realize that the number of say-on-pay failures has risen 75% in two years? Here is my 45-second video about the success rates for say-on-pay over the past three years (that I made before the 72nd failure occurred):

– Broc Romanek, CompensationStandards.com

I thought that I should clarify my blog from last week – when Nasdaq filed the compensation committee independence proposed rule changes on November 26th, they were immediately effective. Two days ago, the SEC published the notice of filing and immediate effectiveness of the proposed rule change.

As noted in Section III of the notice (pp. 9-10), the rule change has a 30-day operative delay from the date of filing. That period will expire before companies are required to comply with Nasdaq’s compensation committee composition rules since the transition period for compliance is unchanged. Specifically, companies must comply by the earlier of: (i) their first annual meeting after January 15, 2014, or (ii) October 31, 2014.

In addition, at any time within 60 days of the filing of the proposed rule change, the SEC summarily may temporarily suspend such rule change if it appears to the SEC that such action is: (i) necessary or appropriate in the public interest; (ii) for the protection of investors; or (iii) otherwise in furtherance of the purposes of the Exchange Act. I have no expectation that they would take such action. I have posted memos on the Nasdaq’s changes in our “Compensation Committee” Practice Area.