Partners Dan Laddin and Eric Hosken’s article on 2023 Compensation Committee priorities was published by Directors & Boards this week. The article explains their predictions in light of the impending high degree of economic uncertainty. Some priorities listed include pressure-testing incentive plan goals, ensuring appropriate equity incentives, addressing new regulatory requirements, and navigating a challenging shareholder environment.
Partner Eric Hosken recently participated in a Q&A with Directors & Boards. In this interview, Eric answered several questions regarding the new clawback rules that the SEC approved in October 2022. The SEC initially proposed these rules back in 2015. You can find additional information about the new policies here.
The early filers report, which was published by Principals Lauren Peek and Joanna Czyzewski, was cited by Directors & Boards in their article about soaring CEO pay. CAP found that CEO compensation in 2021 was able to “bounce back” after it was affected in 2020 due to the pandemic. This increase was primarily driven by a 75% increase in bonus payouts from 2020. This is the fourth time this report has been cited by a business publication.
Partners Dan Laddin and Eric Hosken recently authored an article detailing top compensation committee priorities for this upcoming year that was published by Directors & Boards. Laddin and Hosken explain how the market for talent was at an all-time high level of movement and turnover; the talent war and the ‘great resignation’ will be major players for management teams this year. In addition, they also discussed the fourth quarter of 2021 and how inflation was running at an annualized rate of more then 6%, a level that has not been seen in decades. Purchasing power of employees will be diminished and many companies have found themselves raising their annual salary increase budgets to 4% or more for 2022. A last highlight continues the conversation of ESG. This will be a continued area of focus from last year and they expect compensation committees to continue the use and implementation of ESG metrics in their incentive plan designs as way to complement and communicate their business strategy.
Senior Associate Ryan Colucci and Senior Analyst Stefanie Kushner review say on pay voting at Russell 3000 companies. They tracked results of the votes from inception (2011) to 2020 to gauge the current landscape and predict what may occur with 2021 say on pay results. Colucci and Kushner expect a downward shift in the median level of support and in the percentage of companies receiving at least 90% support. For companies that do receive an against recommendation from proxy advisors, the level of support may decline compared to historic norms if disclosures do not sufficiently justify the COVID-related actions taken.
Partners Eric Hosken and Dan Laddin discuss top priorities for compensation committees, from incentive plan design in an uncertain environment to supporting the company’s human capital strategy.
Principals Shaun Bisman and Bonnie Schindler break down ISS and Glass Lewis’ recently released guidance on the impact of COVID-19 on executive pay decisions and on gender and racial diversity in the boardroom.