Financial Regulatory Forum

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: 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…)

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…)

ANALYSIS-US companies tweak CEO pay packages ahead of vote

By Dena Aubin

NEW YORK, Jan. 5 (Reuters) - Corporate America is bracing for the judgment of shareholders on lucrative executive pay packages, tossing out some perks, tweaking pensions and taking pains to show how compensation is linked to performance.

Nearly half the U.S. companies surveyed by consulting firm Towers Watson were adjusting their pay-setting process ahead of the spring votes required at least every three years under the Dodd-Frank financial reform law.

The “say-on-pay” votes are non-binding and come after a strong rally in shares and two years of improved corporate earnings, perhaps blunting shareholder anger at packages that averaged $9.25 million for CEOs at S&P 500 companies in 2009. That is 263 times the average worker’s pay, according to AFL-CIO data. (more…)

BREAKINGVIEWS – Shareholders can’t do board’s work on U.K. bank bonuses

– The author is a Reuters Breakingviews columnist. The opinions expressed are his own –

By Peter Thal Larsen

LONDON, March 25 (Reuters Breakingviews) – The British government may have stopped short of regulating bank pay. But it is sparing no effort in encouraging others to rein in excess bonuses. Non-executive directors have already been handed a checklist for scrutinising pay. Now ministers want shareholders to make their voices heard as well.

During the boom, investors occasionally grumbled about pay for executive directors. But they almost never worried about remuneration of bankers below board level. They were free to earn as much as they could get away with.

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