Annual Total Compensation under the Pay Ratio Disclosure Rule

Although adopted back in 2015, the SEC’s pay ratio disclosure rule has been receiving a lot of attention lately, as companies grapple with it for the first time during the 2018 proxy season. The rule was mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act and generally requires a public company to disclose in its proxy statement the pay ratio between its chief executive officer and its median employee for the most recently completed fiscal year. In particular, the rule requires disclosure of each of the following items: READ MORE

Should Compensation Be Tailor-Made?

In today’s business reality, an organization’s biggest investment is its human capital. In fact, employees are the key to any successful company. Unfortunately, the insurance industry faces an increasingly challenging war for talent. From a mass exodus of tenured, skilled professionals to a shallow talent pool, the recruiting climate within insurance is heating up. READ MORE

Employees Afraid to Make Mistakes Exercising Equity Compensation

Employees who receive equity compensation from their employer like the perk a lot, but when it comes to exercising options or selling shares, they tend to freeze, fearing that they will make costly mistakes. That's according to a recent survey by Charles Schwab of employees that participate in an equity compensation plan, and it underscores the hand-holding help that advisors can provide.  READ MORE

 

Many Employers Plan to Use Tax Breaks on Compensation, Benefits

Following the passage of the Tax Cuts and Jobs Act, Aon conducted a survey of 504 mid-sized to large employers to find out how they plan to use the additional capital, as well as a survey of 2,079 employees to learn how they would like to see that money allocated.

The employer survey showed that 29% of employers plan to use the funds for employee compensation and benefits. Another 26% plan to spend the money on capital structure, 24% on infrastructure and 23% as a direct return to shareholders. READ MORE

Why employers should revisit their executive compensation strategies

Roughly four in 10 companies are planning or considering changes to their executive pay programs, or have already taken action, according to a recent study by Willis Towers Watson.

While 59% of surveyed employers say they do not plan to make any changes to their executive compensation strategies, experts say they may seek to revisit their pay metrics later in the year once they set their 2018 fiscal goals. READ MORE

Tax Cuts and Jobs Act – New Compensation Tax for Non-Profit Organizations on Excess Compensation and Excess Parachute Payments

The Tax Cuts and Jobs Act passed late last year and became effective as of January 1, 2018.  The Act includes a new provision that subjects certain “excess compensation” paid by exempt organizations (organizations exempt from income tax under section 501(a) of the Internal Revenue Code (the Code)) to the corporate income tax. READ MORE

Should Companies Disclose Employee Compensation?

Organizational transparency is a much contested topic in boardrooms and lunchrooms these days, with two primary questions confronting leaders:

1. How much information should be shared inside the organization?

2. Do we have a choice?

A recent example suggests that the disclosure debate might well be extended to information that generally has been considered off-limits: compensation data. READ MORE

New Executive Compensation Plan A Signal To Sell Tesla

Everyone already knows that Tesla (TSLA) loses a great deal of money and has massive growth expectations baked into its stock price (I’ve addressed these concerns here and here). Despite these obvious concerns, the stock has continued to soar on the hope that the company’s technological advantage will allow it to dominate the growing electronic vehicle (EV) market and play a big role in energy storage. READ MORE

Shareholder proposal to exclude impact of share buybacks on executive compensation

In 2016, the AFL-CIO submitted several shareholder proposals designed to curb the impact of stock buybacks on executive compensation. (See this PubCo post.) The question at the time was whether we would see many more of these proposals. However, amid significant media and academic criticism, as well as relatively high stock valuations, the levels of stock buybacks declined, and the anticipated wave of proposals on buybacks did not materialize. However, the new tax act is expected to trigger a new spike in the levels of stock buybacks. (See this MarketWatch article.) Perhaps with that in mind, one of the most prolific proponents of shareholder proposals has submitted a proposal to eliminate the impact of stock buybacks in determining executive compensation. Will these proposals now become a thing?  READ MORE

10 ways compensation committees can best guide executive pay and performance

As CEO incentive pay packages bring attention to transparency issues in executive compensation, a group of directors and chief risk officers from The Directors and Chief Risk Officers Group published a set of guiding principles for compensation committees around the governance of risk related to pay and performance.

The report aims to give a company's board of directors and board-level compensation committees guidelines for the governance of risks linked to an organization's compensation culture.

Here are 10 guidelines for compensation committees to best guide executive pay and performance, according to the report. READ MORE