Partner Kelly Malafis was recently quoted in an Agenda article regarding the new SEC pay-versus-performance (PvP) disclosures. Malafis shares that proxy advisory firm ISS might include questions to investors in its annual policy survey this summer to get their views on PvP disclosures. To date, proxy advisory firms have been reviewing the information and publishing it in reports to investors but aren’t using it to inform their voting recommendations.
Principal Ryan Colucci’s report on early filers CEO and CFO compensation was written up and featured by Agenda recently. The write up shared that average total comp for CEOs and CFOs ticked up by 4% and 2%, respectively, last year among early filers in the S&P 1500. Read the full report here.
A recent article by Agenda discussing the lawsuit against Meta related to board of director stock ownership guidelines cited CAP research. Partner Matt Vnuk shared that less than one-third of the largest 100 U.S. public companies require that directors defer cashing in on their equity compensation until after the end of their service or after a certain number of months thereafter. The policies vary board to board and are known as hold-until-retirement or holding requirements.
Partner Kelly Malafis was recently quoted in Agenda’s article about the new pay-versus-performance (PvP) disclosures. Malafis shared that another trend that has emerged among the early filers is in the TSR peer group. About two-thirds of the first 25 companies that had filed PvP disclosures have opted to use industry or sector indexes. About a quarter used a custom peer group.
A new CAP report about the analysis of the first 25 pay-versus-performance (PvP) disclosures among the S&P 500 companies was recently referenced to in an Agenda article. The report identified common threads among the SEC-prescribed PvP tables, narratives, and graphs. Partner Kelly Malafis shares that amongst all of the early filers, 24 out of 25 chose a financial measure as the company-selected measure (CSM) and only a single company chose relative TSR. Malafis explained that companies use adjusted or non-GAAP measures when making incentive compensation plan decisions, noting companies’ decision to avoid GAAP measures as the CSM was not surprising. Read the full report here.
Partner Margaret Engel was quoted in an Agenda article discussing some recent clarifications the SEC made on the pay-versus-performance compensation disclosure rule. The clarifications were published last week and answered some outstanding questions surrounding the “murkier” aspects of the PVP rule. Engel explained that given proxy season is only a couple months away and these clarifications are only being published now, there are probably several companies that have already drafted their disclosure and, in some cases, may have to revise.
Principal Shaun Bisman was recently quoted in an Agenda article discussing severance. A recent ISS modification in addition to a regulatory enforcement action over a CEO exit has shone a spotlight on severance policies and practices in advance of the upcoming proxy season. In an update to its frequently asked questions document related to compensation policies, ISS specified that it evaluates company disclosures around terminations and severance packages to determine whether a specific instance can be considered a problematic pay practice. Bisman shares that the update to the FAQ document codifies a practice the proxy advisory firm has long exercised in assessing severance payments when termination is not disclosed as involuntary.
