2022 Proxy Season: A Look Ahead to Executive Compensation Issues

Autumn’s chill has settled in, which means the 2022 proxy season is just around the corner. Given (1) the continuing impact of the COVID-19 pandemic and related supply chain issues and (2) the unprecedented interest in issues surrounding executive compensation, it is important to prepare early to avoid any unanticipated hitches and take advantage of opportunities to proactively address compensation matters through effective proxy disclosures, well-executed shareholder engagement, and informed compensation committee actions. READ MORE

Proposed Minimum Tax on Book Income Would Hit Stock-Based Compensation

One way employees can be compensated for their work, in addition to wages, salaries, and benefits, is through awards of company stock. The tax treatment of stock-based compensation has received attention for contributing to the gap between corporate taxable income and book income reported on financial statements, which President Biden has proposed targeting with a new minimum tax. It also adds to concerns over executive pay and income inequality.

Critics of stock compensation, however, neglect how it helps align incentives between employees and employers and the underlying rationale for how it is taxed. READ MORE

Oracle opposes Glass Lewis proposals on board, compensation

Oracle Corp. said it strongly disagreed with Glass Lewis & Co.’s proposals to vote against the election of Chief Executive Safra Catz, Board Director Vishal Sikka and members of the compensation committee at its annual shareholder meeting on Nov. 10, as well as the proxy adviser’s rejection of advisory approval of the company’s executive compensation plan.

Oracle said that it disagreed with the proxy adviser’s recommendation to withhold votes for Catz, stating that she is helpful in bringing knowledge of the company’s strategic vision, management and operations to the board. READ MORE

Do we even want to go back to pre-pandemic work conditions?

Not since 1942, when women flooded into the workplace in support of the war effort, have we seen a worker revolution such as we are experiencing now. A just-released Duke Fuqua School of Business global survey of Chief Financial Officers reports job openings are at a 20-year high. Total employment today is 5 million below the pre-pandemic peak. How can this be explained in a growing economy?

Some voices say workers are just lazy and don’t want to work, reasoning that many are still living off the overly generous unemployment benefits they received. Others believe the continued fear of the pandemic is keeping some from returning to work. Both are wrong! READ MORE

6 myths women are told about the gender pay gap

It’s not the kind of date of festive holiday celebrations, but October 21 is momentous nonetheless. It’s the last Equal Pay Day of the year, this time dedicated to the additional 293 days the average Latina had to work in 2021 to earn the same pay a white, non-Hispanic man earned last year.

Unfortunately, we’ll be celebrating Equal Pay Days for at least another century, when Black and Hispanic women are estimated to finally catch up and close the gap — although the general estimate for all women is 2059. READ MORE

Does Raising the Minimum Wage Kill Jobs?

For decades it was conventional wisdom in the field of economics that a higher minimum wage results in fewer jobs.

In part, that’s because it’s based on the law of supply and demand, one of the most well-known ideas in economics. Despite it being called a “law,” it’s actually two theories that suggest if the price of something goes up – wages, for example—demand will fall—in this case, for workers. Meanwhile, their supply will rise. Thus an introduction of a high minimum wage would cause the supply of labor to exceed demand, resulting in unemployment. READ MORE

As Minimum Wages Rise, Prepare for Pay Compression Issues

ressure to increase wages for the lowest-paid employees, driven by the need to attract workers and to stay ahead of rising local, state and federal minimum wage mandates, is "a red-hot compensation topic right now," according to a panel of pay authorities who spoke at WorldatWork's 2021 Total Rewards Conference, held virtually in October.

Raising minimum pay levels can require revisiting pay ranges throughout the compensation structure, the panelists noted. As a related issue, many benefits costs, such as 401(k) matching contributions and incentive bonuses, are linked to employees' base pay and will become more expensive as wage rates trend higher. READ MORE

Five Themes Likely to Impact Executive Compensation in 2022

Executive compensation has become increasingly sensitive and is under heightened scrutiny. During the past two years the environment in which businesses operate has changed dramatically. The COVID-19 pandemic, rise of stakeholder capitalism, intensified talent mobility, regulatory changes and other external factors will continue to impact the governance of executive pay and performance programs.

So what should boards, remuneration/compensation committees and senior executives be thinking about to address these complexities? Willis Towers Watson’s research and consulting experience working with leading clients globally points to five themes that will likely impact executive compensation programs in 2022 and beyond. READ MORE

Should Remote Work Pay Be Based On Location?

For the past 12 years, Brian Hartvigsen has worked remotely from Boise, Idaho. Now an engineering director for the analytics platform ChartHop, he first began working remotely shortly out of college for OpenDNS in 2009.

At first, he didn’t realize that where he lived played a factor in his compensation. He figured he was doing a job and was going to be paid appropriately for that job. “A little naive on my part,” he said. READ MORE

Gender isn’t the problem during salary negotiation, researchers say. Here’s what’s to blame

It’s a common misconception women aren’t as skilled as men when it comes to salary negotiation. A new study out of the University of Southern California offers more evidence it’s a myth.

As they explored barriers to equitable pay in STEM fields, researchers determined neither gender excels when negotiating compensation. If women appear worse in real-world scenarios, they said, it can be chalked up to recruiters’ implicit biases. READ MORE

Sen. Bernie Sanders backs John Deere strike, citing CEO salary up 160% during pandemic

Senator Bernie Sanders, the unofficial leader of the progressive movement, has released a statement of support for 10,000 union workers at John Deere now on strike. Union members are demanding higher pay after the company reported a jump in profits, and executive salaries increased during the pandemic. Supporters say workers on the factories deserve a slice of the profit after staying on the job during the outbreak of COVID-19. READ MORE

SEC reopens Dodd-Frank Act comment component

Securities and Exchange Commission (SEC) officials said the agency has reopened the comment period regarding proposed rules addressing listing standards for erroneously awarded compensation recovery.

According to the SEC, interested parties will be able to submit additional comments and data related to rule amendments the SEC initially proposed in 2015, in addition to comments surrounding questions raised by the panel in its reopening release. READ MORE

Microsoft’s board boosts CEO Satya Nadella’s annual compensation to nearly $50M

Microsoft CEO Satya Nadella’s total compensation rose more than 12% to $49.9 million in fiscal year 2021, ended June 30, the company’s new proxy statement shows.

Nadella’s base salary remained the same, at $2.5 million. The increase in total compensation came in stock awards, totaling $33 million for 2021, up from $30.7 million for 2020; and cash bonus, or “non-equity incentive plan compensation,” which was $14.2 million for 2021, up from about $11 million for 2020. READ MORE

How to ask for a raise when companies are desperate for workers

Asking for more money? In this economy? Exactly.

After a tremendous amount of instability over the past couple of years, demand for workers is up and many businesses are hoping to retain their employees. That feat has seemingly become more difficult as some 4.3 million people quit their jobs in August, a sign American workers are looking for better opportunities and pay. In September, a disappointing 194,000 jobs were added, but job openings still outnumber unemployed workers. READ MORE

SEC Reopens Comments on Compensation Clawbacks

In 2015 the SEC proposed rules to implement Section 954 of the Dodd-Frank which added Section 10D to the Securities Exchange Act of 1934. Section 10D requires the SEC to adopt rules directing the national securities exchanges and national securities associations to prohibit the listing of any security of an issuer that is not in compliance with Section 10D’s requirements for disclosure of the issuer’s policy on incentive-based compensation and recovery of incentive-based compensation that is received in excess of what would have been received under an accounting restatement. Many refer to Section 10D as the clawback rules. READ MORE

States With the Widest Income Gaps

The United States has some of the highest levels of income and wealth inequality in the world. U.S. Federal Reserve data shows that the wealthiest 10% of Americans control $93.8 trillion, more than double the $40.3 trillion in the hands of the remaining 90% of Americans. 

The income and wealth divide only appears to be growing wider. A January 2020 report published by the Pew Research Center found that over the last four decades, income growth for the top 5% of families by earnings has far outpaced income growth for families in lower income strata.  READ MORE

ISS Releases Results Of 2021 Policy Surveys

This alert summarizes the results from ISS’s 2021 policy surveys, which were released on October 1, 2021. As we explained in our previous alert, ISS collects information each year from institutional shareholders, corporate issuers, corporate directors and other market constituents in the form of a survey to inform its policymaking decisions for the following year. The survey questions are interesting because they provide a first glance into policies that ISS is considering changing or adopting – although of course not all of the questions translate into policy updates, and there are typically policy updates that weren’t reflected in the survey. READ MORE

Bill introduced in Congress to end executive bonuses in bankruptcy

A Democratic Congresswoman from Illinois has introduced a bill in the U.S. House of Representatives to end bonuses awarded both before and during bankruptcies for executives who make more than $250,000 per year.

Representative Cheri Bustos, who was joined by Tennessee Republican Representative Tim Burchett in sponsoring the bill, said in an interview with Reuters that the legislation introduced Tuesday is intended to prevent top officers from taking home additional compensation while lower-level employees are laid off as a result of the bankruptcy. READ MORE