Resource Library Articles

The latest pressure from proxy advisory firms and shareholder activists emphasizes mandatory holding periods even after equity pay is vested, with some calling for the forced holding of stock into retirement.

This interview with Blair Jones provides advice on effective shareholder communications, including what it should focus on, depth and timing.

Companies are facing increasing pressure from shareholders and regulatory mandates to consider compensation vehicles that reward long-term performance. The success of these programs requires identifying the right metrics and establishing suitable goals. This article, written by Seymour Burchman and Blair Jones, provides four approaches to goal setting for performance-based pay programs.

Actions driven by a set of shared principles, coupled with open lines of communication, will serve a board well - ensuring it can proactively and effectively address problems and take action with conviction, appropriately balancing and responding to internal and external pressures.

The media and activist groups often point to company peer groups as a contributor to excessive executive pay. Shareholders deserve a compelling rationale as to why specific companies are considered peers and for what purpose, e.g., pay comparison, performance comparator, or models for program design?

Comparing the compensation and financial picture of three actual companies illustrates how three "tests" can help companies get a handle on the reasonableness of CEO pay. The tests check for correlation between pay and performance, value sharing, and peer alignment. The analyses provide a compelling story about the aspects of design that contribute to an appropriate alignment of pay and performance.

The success of a merger or acquisition transaction rests in large part on the strength and accuracy of the pre-M&A legwork.

Compensation can be critical to building and sustaining motivation and commitment, as well as ensuring the required talent is available and focusing in the right direction. Compensation can help a company attract the right talent to the key roles responsible for driving top-line growth.

Performance-based compensation for a company's directors can threaten board objectivity and create possible conflicts of interest. Yet with the right measures and goals, a company can avoid sub-optimization and directors aligned with shareholder interests. The best solution may lie in significant equity ownership tied to board tenure.

Without appropriate goals and measures, business results could be neutral. This article focuses on the identification of appropriate performance measures for all organizational levels and setting mutually supportive goals that reinforce key strategies and lead to improved shareholder value. Read the entire article (PDF) written by Seymour Burchman and Blair Jones.

The pressure is on to abandon once-popular equity vehicles, particularly stock options, which have taken the heat as a prime instigator of executive pay excess. The right LTI design for a given company should be based on a careful consideration of the needs and characteristics of the company, its shareholders and its employees.

Establishing principles to address specific pay program amounts and components will help the Board to ensure that decisions regarding director pay are made thoughtfully, holistically, and accurately.

Many companies are now adopting or considering long-term incentive plans where value realized by participants is contingent on achievement of specific performance goals, which are often not based on stock-price. While these types of plans provide opportunities to focus management on results that will drive shareholder value, they don't come without significant risk of unintended consequences.