Financial Regulatory Forum

U.S. compliance salary report: More jobs, higher pay, but post-crisis boost is limited

By Emmanuel Olaoye and Stuart Gittleman, Compliance Complete

NEW YORK, May 29, 2014 (Thomson Reuters Accelus) - The job market for compliance professionals is picking up. But the high fines and complicated investigations financial services firms face as regulators and enforcers sharpen their scrutiny after the 2008 financial crisis have had a limited impact on compensation trends, boutique recruiters and global firms told Compliance Complete.

Average starting salaries in a broad range of financial compliance positions rose 2.3 percent to 4.2 percent in 2013, according to figures from Robert Half, an international recruitment firm. (See chart) That compares with about 3.4 percent among financial professionals as a group. (more…)

Governance reforms gain momentum with SEC pay-ratio disclosure proposal

By Bora Yagiz, Compliance Complete

NEW YORK, Oct. 9 (Thomson Reuters Accelus) - The U.S. Securities and Exchange Commission has proposed a rule that would make public companies disclose the pay gap between their top executive and the rest of the staff. But the divided 3-2 vote by which the proposal was advanced reflects the fierce debate between opponents to call it difficult and unnecessary, and advocates who say it provides a useful measurement for shareholders who want to rein in excessive compensation.

The proposed rule represents an attempt to alleviate the classical principal-agency problem, where the interest of the senior management may front-run that of the shareholders’ through overcompensation. It may also help regulators in furthering a growing effort to improve corporate risk-management practices. But the challenges of compiling useful figures may be daunting. (more…)

Corporate governance watch: vote failures signal investor dissatisfaction with executive pay

By Alex Lee

NEW YORK, May 10 (Business Law Currents) – Stockholders are making their discontent heard through say-on-pay votes that have not been flattering to executives. So far this year, multiple companies have outright failed these votes and even more have not been able to reach the 70 percent approval threshold. In light of Institutional Shareholder Services’ (ISS) 2012 Corporate Governance Policy Updates, evaluations of company pay policies are in line for even greater scrutiny.

According to ISS, a majority vote that does not reach at least a 70 percent approval rate is considered as a failure. A simple majority alone is no longer deemed a mandate of a board’s policies, and any approval level below 70 percent is now perceived as a serious exhibition of shareholder dissatisfaction. (more…)

Corporate governance: SEC, shareholder activism driving enhanced director disclosure

By Alex Lee

NEW YORK, Feb. 17 (Business Law Currents) – With a slew of Dodd-Frank and SEC driven regulations headlining the 2012 proxy season, enhanced director disclosure will be a prominent issue as investors demand heightened corporate accountability and broader levels of transparency. Rules put in place a couple years ago on compensation policies, risk incentivizing, director/nominee disclosure, board structure and oversight have now had the time to incubate sufficiently for companies to respond in a serious manner.

The Main Street versus Wall Street debate and the ensuing Occupy Wall Street movements have done much to expand public angst from mere disgruntlement with corporate America to even more emphasis on corporate governance in general. The public battle is now being waged increasingly on the battlefield of executive compensation, and as a consequence, on director disclosure. (more…)

Corporate Governance: proxy advisory guidelines and the shifting landscape of benchmarking executive compensation

By Alex Lee

NEW YORK, Jan. 30 (Business Law Currents) – Last year’s introduction of say-on-pay regulations via Dodd-Frank helped to arm shareholders with the capacity to disapprove compensation policies, but the SEC’s evolving compensation disclosure regulations and recent updates from proxy advisory firms’ guidelines indicate that executive compensation remains a key issue. While the post-Lehman headlines of public outrage and calls for legislative scrutiny over executive compensation may have waned, now more than ever, companies need to exercise great care when considering executive compensation policies.

Boards are stuck between a rock and a hard place. On one hand, they must recruit, retain, incentivize, and properly compensate prized executives. On the other, the must deal with a growing public animosity towards excessive executive compensation and shareholder unrest, especially in periods where companies are not performing optimally. (more…)

New Canadian compensation rules make work for issuers in coming proxy season

By John Mackie

Aug. 16  (Business Law Currents) With the recent announcement by the Canadian Securities Administrators (CSA) that changes in executive disclosure requirements will apply for financial years ending on or after October 31, Canadian issuers may want to do some advance planning in order to avoid last minute scrambling in the New Year.

The proposed amendments to Form 51-102F6 – Statement of Executive Compensation range from simple drafting changes and clarifications to new substantive requirements, and reflect both the proposal issued last November and the comments received in response.

Perhaps the biggest changes contemplated by the new form are the obligation to disclose an issuer’s risk management practices vis-à-vis compensation policies and practices, and the emphasis placed on discussions of performance targets. For issuers, the former may require stepping onto unfamiliar ground, and the latter may test their willingness to share financial planning data with the street at large.

U.S. corporate shareholders gain more (frequent) say-on-pay (Westlaw Business)

Lloyd Blankfein (R) of Goldman Sachs and his wife Laura arrive for the state dinner hosted by U.S. President Barack Obama and first lady Michelle Obama for President of China Hu Jintao at the White House in Washington, January 19, 2011. REUTERS/Jonathan ErnstBy Erik Krusch

Feb. 2 (Westlaw Business) – Dodd-Frank and SEC-bolstered shareholders officially have a say on company pay. The SEC recently adopted rules requiring companies to hold say-on-pay, say-on-pay frequency, and golden parachute approval votes. Companies from Deere & Co. and Apple to Johnson Controls and Monsanto’s proxies are drafted, filed and poised to comply with the new rules. Companies and shareholders, however, still have plenty to hash out around the mechanics of executive compensation votes this proxy season. (more…)

US SEC cracks down on how companies are governed

Rachelle Younglai

WASHINGTON, Dec 16 (Reuters) – U.S. companies will have to disclose their compensation practices and board members’ qualifications under rules adopted by the Securities and Exchange Commission on Wednesday.

The SEC voted 4-1 to change how companies govern themselves and provide more information to investors, who have criticized lax boards and lavish executive compensation.

“Good corporate governance is a system in which those who manage a company … are effectively held accountable for their decisions and performance,” SEC Chairman Mary Schapiro said at an open meeting.

US pay czar caps more salaries at bailed out firms

By Karey Wutkowski and Steve Eder

WASHINGTON/NEW YORK, Dec 11 (Reuters) – The U.S. pay czar on Friday expanded a crackdown on pay packages at four companies rescued with taxpayer money, limiting most cash salaries at $500,000 for a second tier of top earners.

The Treasury Department’s Kenneth Feinberg issued the new limits amid outcries from some companies on a government lifeline that they cannot retain or attract key employees, sending the firms racing for a bailout exit.

He set the compensation structures for the 26th through 100th highest-paid employees at four firms: Citigroup Inc, American International Group, General Motors Co, and GMAC.

Goldman top executives to take bonuses in stock

By Steve Eder

NEW YORK, Dec 10 (Reuters) – Goldman Sachs Group Inc plans to pay top managers their 2009 bonuses in stock, rather than cash, as it seeks to deflect outrage over a near-record pay haul months after it repaid billions of dollars in taxpayer aid.

The decision to pay top managers in stock that cannot be sold for five years puts Goldman at the forefront of the push to align Wall Street pay with long-term performance. Still, the firm’s total compensation is on pace to top $20 billion this year.

That figure has put Goldman in the crosshairs of an international debate on pay.

  •