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Board Related Governance & Board Compensation

Find coverage of the latest news and strategies in board related governance, including company risk assessments, clawback policies and other common pay governance policies. Also find the latest on board compensation, including discussions of director pay magnitude and payment mechanisms.

Ask the Experts: What Will be a Hot Topic in Corporate Governance in 2015?

Now is the time for Boards to take a fresh look at their goal setting approach. At the time this was written, the SEC had not provided final rules on the CEO Pay Ratio or clawback requirements. While these topics will be hot in 2015 if final rules are provided, I view goal setting as potentially a more complicated and pressing issue for many Boards. Read more

CEO Performance Reviews: Five Tips for Moving from Good to Great

Most CEOs welcome information that can improve their impact and effectiveness. As such, CEOs depend on directors for thorough annual reviews—reviews that cover not only financial results but also management and leadership competencies and operational excellence. The weakness in many reviews is that they underestimate the value of rigor behind the feedback and the quality of the conversation. Here are five tips to revitalize reviews to help the CEO deliver long-term sustainable performance. Read more

New Data on Clawback Policies

A recent PWC study of 100 large companies revealed that the two most common clawback policy triggers are misconduct and restatement of financials—which are disclosed in 84% and 68% of policies, respectively. Risk management, performance, and compliance violations were the most seldom used triggers, with risk management predominantly used by financial companies. Many companies initially adjusted their clawback guidelines following the Sarbanes-Oxley Act of 2002, and more are predicted to do so following the finalization of the Dodd-Frank clawback rule, expected later this year. Clawback Policies Vary by Company, Industry: PwC (WSJ CFO Journal (subscription required)) Executive Compensation: Clawbacks—2013 Proxy Disclosure Study (PricewaterhouseCoopers LLP) Read more

Don’t Take Favorable Votes at Face Value

Since the 2010 Dodd Frank Act gave shareholders of public companies the right to an advisory vote on executive compensation practices, we’ve been tracking the results through our say-on-pay database and reading between the lines. As companies begin to approach the 4th year on say-on-pay, it’s important they learn from the lessons of the past three seasons: Don’t be lulled into a false sense of security by the largely favorable votes. Read more

Aiming For Best-in-Class Decision Making

Best-in-class decision-making is what every compensation committee wants. How do committee members move themselves from feeling overwhelmed by the tactical to making the tactical seem routine? This article by Barry Sullivan explores specific processes compensation committees can utilize to foster best-in-class decision-making. Read more

Maximizing Your Comp Risk Assessment

Companies that have not completed a sufficiently well-rounded assessment may find themselves exposed if they disclose that their compensation programs do not incur undue risk and cannot back up that claim. Read the entire article written by Mark Emanuel and Blair Jones. Read more

A Cautionary Tale for New Compensation Committee Members

New directors bring fresh perspectives that contribute to a healthy discussion of all aspects of a business, including compensation, and often challenge the status quo (a notion which can be both good and bad). However, where compensation is concerned, directors would be well advised to look before they leap. This article provides a cautionary tale for companies with well-intentioned directors who may not appreciate that the changes they desire may be more suited to cultures they had known in the past. Read more