Our Insights

Notes From the Field: Risk May Not Be Inherent in Pay Designs

One would be hard-pressed not to be slack-jawed over the revelation of fraud at Volkswagen in late 2015. The audacious scale of the perpetration—11 million cars, over 8 years, in 36 countries—was hard to fathom. Bad acting on both this and a lesser scale drives observers of corporate governance to reflexively ask, “What’s going on at the top?” Read more

Share repurchases: What influence on exec comp?

Corporate America has increasingly relied on share repurchases to fuel earnings per share (EPS) growth in recent years. A study by Reuters found that nearly 60% of nonfinancial, publicly traded companies have bought back shares in the last five years, and share repurchases and dividends exceeded capital spending in 2014. Read more

How Incentives for Long-Term Management Backfire

To hear long-term investors tell it, company executives have embraced short-term thinking like never before. Two obvious pieces of evidence: The use of earnings for share buybacks that cost more than they’re worth, and dividend increases that divert cash from long-term investment. Read more

Seeing Beyond the IPO

Leading up to an IPO, compensation planning and strategy often take a backseat to the immediate business demands and actions that are required to take the company public. With so many new requirements, the focus of the Compensation Committee is often on the work needed to prepare for the IPO event, and not on the tomorrows that follow. Read more

Establishing an Effective Equity Strategy as a Newly Public Company

Following an IPO, the outlook for employee equity programs changes overnight. The company instantly goes from a handful of investors to a diverse shareholder base. Governance requirements kick in. Regulators require significant disclosure of compensation and equity practices. Employee expectations shift. And as the company evolves, what worked at one stage doesn’t necessarily work at the next. Read more

Dodd-Frank Act, Section 956

U.S. financial regulators have recently re-proposed rules for Section 956 of the Dodd-Frank Act that would apply to incentive-based compensation at certain financial institutions. In addition to the rules that would apply to all with $1 billion or more, under the proposed rules, financial institutions with $50 billion or more in total consolidated assets would be required to subject incentive-based compensation for certain executives and significant risk-takers to: deferral of payment, risk of downward adjustment and forfeiture, and clawback. Semler Brossy has prepared an overview of the proposed rules and regulations. Read more