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Thoughtful Pay Alerts Archive
Comparing the Executive Compensation Reform Proposals – An Update
May 26, 2010
Following the Senate’s recent approval of the “Restoring American Financial Stability Act of 2010,” this article updates our previous article comparing the executive compensation and corporate governance provisions in both the House and Senate versions of the financial services reform legislation currently pending before Congress.
Read the updated article »
Read the original article from March 2010 »
Dissecting GRId
May 24, 2010
RiskMetrics’ new risk assessment tool, Governance Risk Indicators (or GRId), is intended to help investors evaluate its portfolio companies’ governance-related risks. We have reviewed the technical materials that underlie the GRId methodology and offer our initial observations on how GRId is applied to a company’s compensation policies and practices.
10 Tips for Navigating the ISS Equity Plan Maze
May 24, 2010
One of the biggest challenges that companies face when implementing a new employee stock plan is running the gauntlet of the RiskMetrics” (or, more precisely, its Institutional Shareholder Services division’s) burn rate and dilution tests. This article offers 10 tips for avoiding an unfavorable vote recommendation.
RiskMetrics Introduces New Corporate Governance Tool
February 23, 2010
RiskMetrics has launched a new tool, Governance Risk Indicators, or GRId, to assess the corporate governance and compensation-related risks at public companies. GRId replaces the existing CGQ system for rating corporate governance practices.
Conducting a Risk Assessment
January 6, 2010
Public companies will need to review the risk profile of their compensation programs to satisfy the SEC’s new risk disclosure requirement. Here’s what’s involved in conducting this risk assessment.
10 Tips for Enhancing Your 2010 Executive Compensation Disclosure
January 6, 2010
Here is our annual list of tips for preparing your executive and director compensation disclosure in your 2010 proxy statement.
Executive Compensation in 2010 – What Lies Ahead
January 6, 2010
A number of regulatory changes, as well as pending federal legislative initiatives, are poised to have a dramatic impact on executive compensation practices in 2010.
SEC Adopts Disclosure Enhancements in Time for 2010 Proxy Season
December 16, 2009
The SEC has adopted changes to its proxy disclosure rules for 2010 that provide investors with additional information about how companies assess the risks in their compensation programs and other corporate governance and compensation-related matters.
RiskMetrics Issues Policy Updates for 2010 Proxy Season
December 4, 2009
RiskMetrics Group (the parent company of Institutional Shareholder Services (ISS) has updated its U.S. corporate governance policies for the 2010 proxy season, including several policies that affect executive and equity compensation matters.
Read the article »
Read a summary of this article »
Compensation Consultant Conflicts in the Spotlight in 2010
September 18, 2009
Pending new rules requiring companies to disclose the fees paid to compensation consultants will force compensation committees to identify and explain the non-compensation-related services that these advisors provide.
The SEC’s New Disclosure Proposals
July 27, 2009
The SEC is proposing changes to its proxy disclosure rules to provide investors with additional information about how companies assess the risks in their compensation programs and other corporate governance-related matters.
Shareholder Advisory Votes on Executive Compensation – A “Say on Pay” Primer
June 12, 2009
The Administration’s announcement that it intends to proposed legislation that would give shareholders an annual advisory vote on executive compensation at all public companies is just the latest indication that Say on Pay may be required during the 2010 proxy season. Here’s a summary of the origin and recent experiences with advisory votes on executive pay to help you get up-to-speed on this significant development.
Director Accountability in the Spotlight
June 12, 2009
Two pending corporate governance initiatives – a majority voting standard for the election of directors and a rule permitting large shareholders to nominate their own director candidates using the company’s proxy materials – are poised to dramatically alter director accountability for their actions and decisions, including those involving executive compensation.
Download a pdf of this article »
A Stock Option Exchange Update—Shareholder-Approved Exchanges
March 3, 2009
Here’s the latest information on companies that have sought shareholder approval for their stock option exchange program—a condition precedent that many companies must satisfy before conducting an exchange.
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Enhancing Your 2009 Executive Compensation Disclosure
January 5, 2009
With proxy season just a few short weeks away, here are 10 tips to help ensure that your pay disclosure is complete and effective.
Download a pdf of this article »
RiskMetrics Issues Policy Updates for 2009 Proxy Season
December 9, 2008
RiskMetrics Group (the parent company of Institutional Shareholder Services (ISS)) has updated its U.S. corporate governance policies for the 2009 proxy season, including several policies that affect executive and equity compensation matters.
Download a pdf of this article »
Treasury’s New Executive Compensation Standards—A Preview of Things to Come?
October 29, 2008
The Emergency Economic Stabilization Act of 2008 imposes significant executive compensation and corporate governance standards on financial institutions that participate in the government’s Troubled Assets Relief Program. Here’s a summary of these new standards, and our assessment of the impact that they are likely to have on other companies in the months ahead.
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10 Questions (and Answers) About Say on Pay
April 30, 2008
As activist shareholders step up their efforts to get companies to implement advisory votes on executive compensation, here’s what you need to know about Say on Pay.
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Enhancing Your 2008 Executive Compensation Disclosure
February 15, 2008
Here are 10 tips to help you make an effective presentation of your executive and director compensation information in this year’s proxy statement.
Download a pdf of this article »
ISS Issues Policy Updates for 2008 Proxy Season
ISS Governance Services (formerly Institutional Investor Services, and now a part of RiskMetrics Group) has updated its U.S. corporate governance policies for the 2008 proxy season, including several policies that affect executive and equity compensation matters.
Download a pdf of this article »
ISS Proposes Executive Pay Disclosure Best Practices
RiskMetrics, Inc. (the former Institutional Shareholder Services) is the first major shareholder advisory firm to publicly disclose its reaction to the first proxy season under the SEC’s new executive compensation disclosure rules, and to propose for discussion a set of disclosure best practices to guide future filings.
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SEC Offers Guidance for 2008 Executive Pay Disclosure
The SEC’s Division of Corporation Finance has issued its long-anticipated report summarizing its observations on the first proxy season under the Commission’s new executive compensation disclosure rules. Companies should find the report to be helpful in preparing their upcoming Compensation Discussion and Analysis and related tabular disclosure.
Download a pdf of this article »
Stock Option Vesting Acceleration Increases in Advance of SFAS 123R
A look at key parameters and current market trends, as companies who have not taken action in the past to restructure their underwater options face the prospect of recognizing an expense for awards that may unlikely provide any value to employees.
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Deferred Compensation Update
A summary of the more important issues covered by the IRS's Notice 2005-1 on the new IRC Section 409A.
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Thoughtful Pay Practices Archive
Dealing with Performance-Based Equity Awards upon a Change in Control
November 12, 2008
Implementing a performance-based equity plan raises several challenging issues. One that is often overlooked is the potential disposition of awards in the event that the granting company is acquired during the performance period. This article summarizes the various approaches that are used to address the treatment of awards upon a change in control and evaluates their relative strengths and weaknesses.
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Expecting the Unexpected – Preparing Your Change in Control Program for an Unsolicited Takeover Bid
October 28, 2008
With the recent volatility in the equities market, the stock prices at many technology and life sciences companies are at or near all-time lows; making them attractive targets for an unsolicited takeover bid. Here’s a process for evaluating whether your change-in-control program is meeting your objectives in this uncertain environment.
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Implementing an Option Exchange Program – How To Decide Whether It’s Right for You
October 21, 2008
Many companies are facing significant levels of underwater stock options due to the recent volatility in the stock market. We offer a roadmap for evaluating whether an option exchange program is the best response to this unsettling development.
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Is Your Compensation Committee’s Outside Advisor Independent?
Much has been written about the need for boards and compensation committees to seek advice from outside advisors who are independent of management. For example, the NACD Blue Ribbon Commission on Executive Compensation and the Role of the Compensation Committee suggests that compensation committees consider engaging an independent compensation consultant who is hired by and who reports directly to the committee and who has not been retained by the company in any other capacity. The failure to use outside advisors was cited in both the complaints filed against Cendant and Disney (re: Executive Compensation) as further evidence of the compensation committee’s failing.
Read the article »
Should Outside Advisors Attend Executive Sessions of the Compensation Committee?
Both Nasdaq and NYSE rules require Boards to regularly schedule executive sessions. Nasdaq requires that the executive sessions consist of “independent directors” only, while the NYSE rules require separate meetings of all outside directors, whether or not they are independent.
Many companies extend this practice to Board committees, including the compensation committee. Giving the company’s outside directors an opportunity to candidly review and discuss potentially sensitive matters such as CEO pay and performance and other elements of executive pay without management in attendance can lead to effective and thoughtful deliberation and oversight.
Read the article »
Section 162(m) Compliance
2004
Late in 2003, the IRS announced a pilot audit initiative
focused on executive compensation. Among other things, the
audit initiative focuses on compliance with the Section 162(m) deduction
limit. Section 162(m) limits the corporate tax deduction for non-“performance-based”
compensation paid to top executives of publicly-held corporations (“covered employees”)
to no more than $1,000,000 per executive per year.
Download a pdf of this article »
Inadvertent Section 162(m) Violations
2004
Compensation Committees may not be aware that certain elements
of their company’s executive compensation program are not fully
deductible. As a result, Compensation Committees may be making executive
compensation decisions without taking the full cost of those decisions into account.
Download a pdf of this article »
Assessing the Independence of the Compensation Committee’s Outside Advisors
2004
Much has been written about the need for Boards and
Compensation Committees to seek advice from outside
advisors who are independent of management. For
example, the NACD Blue Ribbon Commission on Executive Compensation and the Role of
the Compensation Committee suggests that Compensation Committees consider engaging
an independent compensation consultant who is hired by and who reports directly to
the Compensation Committee and who has not been retained by the Company in any
other capacity. The failure to use outside advisors was cited in both the Cendant and
Disney complaints as further evidence of the Compensation Committee’s failing.
Download a pdf of this article »
Should Outside Advisors Attend Executive Sessions of the Compensation Committee?
2004
Both Nasdaq and NYSE rules require Boards to regularly
schedule executive sessions. Nasdaq requires that the executive
sessions consist of “independent directors” only, while the NYSE rules
require separate meetings of all outside directors, whether or not they are independent.
Download a pdf of this article »
Other Publications Archive
The TARP Executive Compensation Standards – A Sign of Things to Come? by Compensia Principal, Mark Borges
Executive compensation guidance for TARP participants issued by Treasury in June to implement congressional acts expands the number of covered employees, imposes stricter limits on certain compensation payments, and adds new corporate governance requirements. Compensia Principal, Mark Borges, reviews these developments and suggests that certain of them are likely to become general practice in the corporate community.
(from the September 9, 2009 issue of The Review of Securities and Commodities Regulation)
Download a pdf of the article »
SEC Executive Compensation Disclosure Rules by Compensia Principal, Mark Borges
Under the SEC's executive compensation disclosure rules, public companies must provide detailed information in their annual proxy statements about their executive pay practices and decisions. Executive compensation expert Mark Borges outlines the implications of the rules and explains the requirements for preparing a Compensation Discussion and Analysis, Summary Compensation Table, and their related disclosures.
The Need for a Principled Approach to Compensation Reform
(from the August 7, 2009 issue of BNA’s Corporate Accountability Report)
A group of corporate governance and executive compensation experts, including Compensia’s Mark A. Borges, offer their thoughts as to how Congress should approach executive compensation reform in the current environment.
The Lynn, Borges & Romanek Executive Compensation Disclosure Treatise and Reporting Guide—and Annual Service
A “must” for this proxy season. The 2010 version of David Lynn, Mark Borges and Broc Romanek’s Treatise, addressing everything you need to know to comply with the SEC’s executive compensation rules—including the impact (and ramifications) of this summer’s proposed disclosure enhancements that will apply to all upcoming proxy statements.
Compensia Announcement: Compensia Expands to Los Angeles as Matt Quarles Joins Firm.
July 2009
Matt Quarles joined the firm as a Senior Consultant resident in Los Angeles effective July 1, 2009. Matt, who has 10 years experience as a consultant advising Board compensation committees and senior management on executive pay and equity compensation matters was formerly with Watson Wyatt.
Download a pdf of the announcement »
Surveys Archive
2009 Bay Area 150 Reports
October 2009
Compensia, Inc. is pleased to release its third annual Bay Area 150 reports (previously the Silicon Valley 135 reports), a comprehensive study analyzing the senior executive compensation policies and practices of Silicon Valley’s largest high-technology companies. As reflected in this year’s study (which expands the number of companies examined from last year’s 135 to this year’s 150), the pay practices of the country’s largest technology and life sciences firms reflect a distinctive approach to the use of annual and long-term incentives to attract, retain, and motivate the executives that drive the growth and innovation in one of the United States most dynamic business sectors.
These analyses are based upon a review of the companies’ executive and director compensation information as disclosed in the proxy statements and other public filings with the Securities and Exchange Commission from fall 2008 and winter and spring 2009, and cover the most recent fiscal year reported by each company.
The initial report looks at the current executive compensation practices of these companies as reported for their chief executive officer, chief financial officer, and three other most highly-compensated executive officers as of fiscal year-end. The second report addresses the use of equity compensation by these companies in their executive compensation programs. The third report examines how the companies compensated the members of their boards of directors during the past fiscal year.
For additional information or reprint permission, please contact Michael Benkowitz at mbenkowitz@compensia.com or Anna-Lisa Espinoza at alespinoza@compensia.com.
Download Executive Compensation Practices »
Download Equity Compensation Practices »
Download Board of Directors Compensation Practices »
Compensia Continues to Lead Bay Area Compensation Committee Consulting Engagements
August 2009
A recent survey of the top 150 public technology and life sciences companies in the Bay Area shows that, for the second consecutive year, Compensia was the advisor to nearly one-third of the companies’ Board Compensation Committees disclosing that they had engaged a compensation consultant—twice the next most frequently identified consultant.
Download a pdf of the report »
Update on Pre-IPO Pay Practices
March 2009
Continuing its survey of pre-IPO companies in the current down economy, Compensia has updated its information on the measures that these companies are taking to manage (and reduce) their compensation-related costs, including base salary, annual incentives, and equity awards.
Download a pdf of the report »
Report on Pre-IPO Pay Practices
December 2008
In response to the recent economic downturn, Compensia, Inc. has surveyed over three dozen pre-IPO companies to determine what measures they are taking to manage (and reduce) their compensation-related costs, including base salary, annual incentives, and equity awards, in the current environment.
Download a pdf of the report »
2008 Silicon Valley 135 Reports
October 2008
Compensia, Inc. is pleased to release its second annual Silicon Valley 135 reports, a comprehensive study analyzing the senior executive compensation policies and practices of Silicon Valley’s largest high-technology companies. As reflected in this year’s study (which expands the number of companies examined from last year’s 130 to this year’s 135), the pay practices of the country’s largest technology firms reflect a distinctive approach to the use of annual and long-term incentives to attract, retain, and motivate the executives that drive the growth and innovation in one of the United States most dynamic business sectors.
These analyses are based upon a review of the companies’ executive and director compensation information as disclosed in the proxy statements and other public filings with the Securities and Exchange Commission from fall 2007 and winter and spring 2008, and cover the most recent fiscal year reported by each company.
The initial report, which was published on October 7, 2008, looks at the current executive compensation practices of these companies as reported for their chief executive officer, chief financial officer, and three other most highly-compensated executive officers as of fiscal year-end. The second report, which was published on October 14, 2008, addresses the use of equity compensation by these companies in their executive compensation programs. The third report, issued October 21, 2008, examines how the companies compensated the members of their boards of directors during the past fiscal year.
For additional information or reprint permission, please contact Michael Benkowitz at mbenkowitz@compensia.com or Anna-Lisa Espinoza at alespinoza@compensia.com.
Download Executive Compensation Practices »
Download Equity Compensation Practices »
Download Board of Directors Compensation Practices »
The Silicon Valley 135: Advising the Compensation Committee
August 2008
Compensia continuously monitors the executive compensation practices of the largest 135 high-technology and life sciences companies with headquarters in the Silicon Valley (a group that we call the Silicon Valley 135).
Since 2007, companies have been required to identify any advisors that have a role in determining or recommending the amount or form of their executive and director compensation. A recent survey of the Silicon Valley 135 found that Compensia was the advisor to over one-quarter of the Board Compensation Committees that indicated that they had engaged an advisor (30 companies).
Download the full report »
Compensia’s 2007 Silicon Valley 130 Reports
October 2007
Compensia’s Silicon Valley 130 Reports analyze the senior executive compensation policies and practices of Silicon Valley’s largest high-technology companies during the fall of 2006 and winter and spring of 2007.
Download Executive Compensation Practices »
Download Equity Compensation Practices »
Download Board of Directors Compensation Practices »
Thoughtful Pay Survey: Corporate Governance and the Compensation Committee
May 2005