Factors That Will Impact Proxy Season 2023

Choppy market valuations, more engaged shareholders, and new regulations will create new challenges for corporate governance in the upcoming proxy season. Companies and boards should anticipate pressure from stakeholders regarding director elections and say on pay, high numbers of shareholder proposals on environmental and social matters, and added disclosure in proxy statements.

Broadridge’s analysis shows that in 2022 the most directors over the past five years failed to attain majority support, there was a decline in shareholder support for say on pay, and there were more shareholder proposals than at any time over the preceding five years. Directors and management should expect the following factors to weigh on the upcoming 2023 proxy season: READ MORE

SEC Adopts Final Executive Compensation Clawback Rules: What This Means and How to Prepare

On October 26, 2022, the Securities and Exchange Commission (SEC) adopted final rules that will require public companies to implement policies to recover, or claw back, erroneously awarded incentive-based compensation from current and former executive officers in the event of an accounting restatement, regardless of whether the executive officer was in any way responsible for the causes of the restatement. The SEC originally proposed clawback rules pursuant to the requirements of Section 10D of the Securities Exchange Act of 1934 (added by Section 954 of the Dodd-Frank Act) in July 2015. These rules remained dormant until October 14, 2021, when the SEC reopened the comment period on its proposed rules twice (on October 14, 2021 and June 8, 2022), leading to the adoption of final Exchange Act Rule 10D-1 (Rule 10D-1) at the end of October 2022 with certain changes in response to the collective comments received. READ MORE

Fostering a Culture of Pay Transparency

Openly discussing individual salaries is slowly becoming less taboo as younger generations enter the workforce, but it does not mean an employer has to go “all in” to embrace pay transparency in pay administration.

Transparency in compensation practices can positively impact workplace culture. Pay is a sensitive and personal subject for many, so when staff are comfortable and feel trusting in this area, it can translate to overall trust in the organization. READ MORE

Compensating for compensation: Keeping talent when dollars don’t work

Competitive compensation has always been essential to attracting and retaining talent. And today, it’s become an increasingly significant piece of the puzzle. Recent US job growth numbers amplify the hyper-competitive hiring conditions in many sectors. Inflation places pressure on family budgets. And pay transparency allows people to not just imagine that the grass would be greener elsewhere, but to calculate exactly how much more “green” they might expect to tuck away in their wallets if they made a move. READ MORE

Why Pay Equity Needs To Be Addressed Now

Pay equity is a hot topic for people leaders. New pay transparency laws are only going to make it hotter. Organizations are under increased pressure to address pay disparities and ensure that all employees get fair treatment. Why the urgency? As compensation information is made public for new roles, current employees will have access to this information and become aware of disparities. So to retain your best talent, prioritize your compensation adjustments accordingly. READ MORE

Pay transparency is good for workers — and employers see more of the top job applicants

Posting salary ranges on job listings is the smart move for employers looking to attract stronger candidates and build a relationship based on mutual trust from the get-go.

One in five Americans live in a state that requires pay transparency. For companies, colleges and public agencies in states that don’t require salary disclosure, it makes sense to stop listing “competitive salary” and start providing potential job candidates with meaningful financial information upfront. Why waste your time or theirs on one or two interviews that are likely to end with a rejected offer? READ MORE

Proxy Advisory Firm Policy Updates for the 2023 Proxy Season

In preparation for the 2023 proxy season, proxy advisory firms Glass Lewis and Institutional Shareholder Services (ISS) announced updates to their voting guidelines for investors, effective on January 1, 2023, and February 1, 2023, respectively. Several updates to these guidelines relate to environmental, social, and governance (ESG) topics, including—as discussed below—updates related to climate-related accountability and climate disclosures as well as racial equity audits. The firms’ approaches to ESG, including their guidelines, recently drew criticism as 21 state attorneys general sent a letter to Glass Lewis and ISS accusing the firms of violating their fiduciary duty by prioritizing social goals over the financial interests of their clients. READ MORE

Are executive pay cuts the ‘bold move’ your organization needs?

As concerns over a slowing economy drive continued layoffs, particularly in the tech industry, individual contributors aren’t the only ones feeling the impact. In the last few weeks, a number of large firms have announced pay cuts for their highest-paying executives, creating what experts say could be an opportunity for HR to boost employee morale, and ideally, drive retention. READ MORE

10 jobs with the biggest salary increases in 2023

While news of big corporate layoffs and growing interest rates have left many workers nervous about their earning potential, it looks like the job market remains competitive — for some more than others.

Adzuna, a job search engine, examined 17.9 million U.S. jobs advertised on their site, comparing the salaries posted in November 2021 to those posted in December 2022. Certain roles are seeing substantial salary increases, hinting at the continued effort companies are making to recruit new talent. READ MORE

Companies save billions of dollars by giving employees fake "manager" titles, study shows

Would you rather be a front-desk clerk or "Director of First Impressions"? A barber or a "Grooming Manager"?

How you answer could mean a significant difference in annual earnings. That's because companies routinely inflate workers' titles to avoid paying them in full for overtime work, according to researchers from the University of Texas and Harvard Business School. READ MORE

The SEC Incentive-Based Compensation Clawback Rule is now effective

On January 27, 2023, the SEC’s new Executive Compensation Clawback Rules became effective. The rules require listed companies to: (1) develop and implement a policy to recover erroneously awarded incentive-based compensation received by current or former executive officers; and (2) satisfy related disclosure obligations. With new rules, come new risks. At a minimum, companies will have to closely examine the new rules and establish protocol to ensure adequate compliance and disclosure. READ MORE

Proxy Advisory Firms Issue 2023 Voting Guidelines

As companies begin preparing for the 2023 proxy season, we note that Institutional Shareholder Services Inc. (ISS) and Glass Lewis, the leading providers of corporate governance solutions and proxy advisory services, issued updated benchmark policies (proxy voting guidelines), which can be found here and here, respectively. The updated proxy voting guidelines generally focus on board accountability and oversight considerations and address topics such as climate accountability, board diversity, shareholder rights, corporate governance standards, executive compensation and social issues. What follows is a summary of the proxy voting guidelines published by ISS and Glass Lewis for the 2023 proxy season. READ MORE