Resource Library Insights

Emerging themes from this year’s Say on Pay and proxy voting season suggests a fundamental shift in shareholder and proxy advisor perspectives on compensation.

A "First Question" starting point that explains how to understand the immediate key steps that can help turnaround a Say on Pay outcome.

Corporate boards of directors face a more acute set of challenges in setting their compensation than they have in recent years. Until recently, a primary focus was the risk of shareholder litigation challenging allegedly excessive director compensation. That concern has receded as many companies have taken steps to mitigate the risk of lawsuits.

2020 had a profound impact on corporate governance and responsibility, with the pandemic shining a spotlight on health and safety and the national focus on racial justice drawing sharp attention to diversity and inclusion in corporate America.

Corporate sustainability risks and opportunities have received increasing interest from investors for the past decade. Environmental concerns initially led the list, but attention to human capital has swiftly emerged as an additional focal point of discussion in the boardroom.

Eager to give greater attention to stakeholders beyond investors, corporate boards have been adding environmental, social and governance (ESG) issues to their agenda.

The support of E&S proposals continues to be higher this proxy season with twenty social proposals (18%) and fourteen environmental proposals (40%) receiving greater than 50% support thus far in 2021.

While the Covid-19 crisis has caused a significant increase in board workload, the increased responsibilities relating to environmental, social and governance (ESG) matters will continue.

Going public means adding structure and formality to many areas of a company. Part of that structure includes forming a compensation committee with a clear charter, delineated responsibilities, and a calendar of actions.

Brick-and-mortar retailers have faced a mounting set of challenges in recent years as they’ve sought to adapt to an increasingly omnichannel ecosystem. While the trend was slow-moving at first, the pandemic’s impacts on consumer behavior has been anything but—accelerating the growth of digital channels and driving changes from which there is no turning back.

The turbulent events of 2020 have heightened many American corporations’ sense of political and social responsibility. With the pandemic exacerbating income inequality and climate change still a long-term threat, investors and critics are calling on companies to care for all stakeholders, not just investors. Many boards are attending to their long-standing interests in environmental, social and governance issues more than ever before.

In setting or adjusting executive compensation for 2020, boards employed a variety of reactions and solutions. All of these were well intended, and some look to hold up well over time. Other compensation arrangements, by contrast, will look incongruous given what we know now.