The Advisors' Blog

– Broc Romanek, CompensationStandards.com

Here is info from a Towers Watson study about how larger companies are acting in a rebounding market when it comes to their incentive grants…

– Subodh Mishra, ISS Governance Exchange

Two compensation-related proposals are making the rounds this year in numbers equal to or greater than in 2012. The first, calling on executives to retain a significant portion of their equity awards until reaching retirement age, has been filed at more than 30 companies, according to ISS data, the bulk of which remain pending at companies including Apple, Hewlett-Packard, and others. Two resolutions have been withdrawn–including an AFSCME filing at Express Scripts Holding Company–and one has gone to a vote. At heavy truck manufacturer Oshkosh, the resolution drew 22.4 percent of votes cast “for” and “against,” slightly less than last year’s average of 24.5 percent spread across 31 proposals voted.

Stock retention filings topped out at 38 last year with more than two-thirds of those voted receiving support in the 20-30 percent range.

ISS is tracking a jump in the number of resolutions seeking to bar the accelerated vesting of equity awards upon a change-in-control. Roughly a dozen of these proposals came to a vote in 2012 with average support touching nearly 40 percent of votes cast “for” and “against” out of 13 resolutions filed. This year, the number of filings has doubled to more than 28 disclosed as of Feb. 1, thanks to a stepped up campaign by retail investors, though companies have responded to the campaign by seeking omission at the SEC.

Notably, more than one-quarter of the resolutions have been omitted at the SEC for reasons including “vague and misleading” resolved clauses, as well as being substantially duplicative of proposals being put forward by management. The SEC continues to deliberate on another four filings, suggesting the final tally of those going to a vote may mirror last year, despite a marked uptick in the volume of filings.

Meanwhile, a proposal filed by the United Brotherhood of Carpenters and Joiners of America calling on companies to change the frequency of the say-on-pay vote from annual to triennial failed to gain traction, with a number of issuers seeking to omit the resolution. The proposals, expected to number in the dozens for 2013, were challenged at the SEC by companies including PNC Financial Services Group, Occidental Petroleum, Abbott Laboratories, and Verizon Communications, with a number of companies arguing the Carpenters’ proposal would conflict with their own say-on-pay resolution and that the labor fund’s call had already been implemented though previous say-on-pay frequency votes. The Carpenters’ ultimately withdrew the resolutions, acknowledging its decision to do so was “based on its recognition that there is little interest among [p]roposal recipients to allow a new say-on-pay frequency vote at this time.”

– Broc Romanek, CompensationStandards.com

Yesterday, I complained about how some folks may have missed the news that a new wave of say-on-payish & proxy disclosure litigation has been rampant for the past 4 months – including the transcript from the recent webcast on the topic. Thanks to Mike Melbinger, I have posted numerous complaints and other pleadings from these lawsuits in the “Executive Compensation Litigation Portal.”

– Broc Romanek, CompensationStandards.com

With the Inauguration still fresh in our mind, it is interesting to read this article about the costs involved with a Presidency. Wouldn’t you love to see how this would look in a Summary Compensation Table? Hat tip to Chris Edwards of DLA Piper for pointing this out!

– Broc Romanek, CompensationStandards.com

Here is some follow-up on my blog about former Rep. Barney Frank’s fight against clawback insurance policies. In her article, Francine McKenna wades into the recent debate about the claws in clawbacks. And here is something that Bill Tysse of McGuireWoods blogged last year in his “Just Compensation” Blog:

This recent story in Insurance News reports that a major insurance firm, Marsh, is now offering protection to officers against potential clawback liability under Section 210 of the Dodd-Frank Act. Section 210 allows the FDIC to clawback compensation from officers and directors responsible for the failure of covered financial companies. The article mentions that Marsh is also considering extending the clawback protection coverage to Section 954 of Dodd-Frank, which requires all public companies to adopt a clawback policy covering erroneously paid compensation in the event of a financial restatement.

The enforceability of such protections may be in doubt. In a case of first impression last year, the Second Circuit Court of Appeals held that a company was prohibited from indemnifying an officer for clawback liability under Section 304 of the Sarbanes Oxley Act, a precursor to the Dodd Frank clawback provisions which only covers the CEO and CFO. If a company is prohibited from indemnifying an officer or director for such liability directly, then it may be unlikely a company could indemnify the officer or director indirectly through a D&O policy.

One member muses: Doesn’t this miss the points that (1) insurance has been treated differently that indemnification and (2) an approach may be for directors and officers to pay the premium associated with this portion of the insurance coverage as is now the case with D&O insurance?

– Broc Romanek, CompensationStandards.com

We have posted the transcript from our recent webcast: “The Latest Developments: Your Upcoming Proxy Disclosures–What You Need to Do Now!”

– Broc Romanek, CompensationStandards.com

Check out this piece by Steve Seelig of Towers Watson about the utility of changing your disclosures due to litigation worries…

– Broc Romanek, CompensationStandards.com

We have posted the transcript for our recent webcast:”The Litigation Explosion in Executive Compensation.”

– Mark Poerio, Paul Hastings

This posting on Harvard Law’s “Corporate Governance Blog” describes a new “Say Before Pay” law that took effect in Israel about a month ago. The authors advised the Justice Department’s committee that formulated Israel’s executive compensation reform. Although not going so far as to require binding say on pay, Israel has injected a twist in that the shareholder advisory vote on executive compensation – and CEO employment agreements – must occur before they become final. As described in the blog, Israel’s law reflects US and UK rules relating to compensation committee independence, as well as policies favoring clawbacks and long-term performance-based compensation that takes risk into consideration. These practices are consistently being endorsed as executive compensation controls continue to go global . . . with all trending toward more and more shareholder empowerment.

– Broc Romanek, CompensationStandards.com

We are excited to announce that we have just posted the registration information for our popular conferences – “Tackling Your 2014 Compensation Disclosures: The Proxy Disclosure Conference” & “Say-on-Pay Workshop: 10th Annual Executive Compensation Conference” – to be held September 23-24th in Washington DC and via Live Nationwide Video Webcast. Here are the agendas for the Conferences.

Early Bird Rates – Act by March 8th: Huge changes are afoot for executive compensation practices and the related disclosures – that will impact every public company. We are doing our part to help you address all these changes – and avoid costly pitfalls – by offering a special early bird discount rate to help you attend these critical conferences (both of the Conferences are bundled together with a single price). So register by March 8th to take advantage of the 33% discount.