In mid-November, Glass Lewis released its final proxy voting policies and methodologies for the upcoming year. While most compensation policies remained largely intact from prior years (see our complete summary of compensation and governance policy changes here), this year’s release includes much-needed guidance on Glass Lewis’ approach and requirements for reviewing the use of off-cycle equity grants.
Clawback provisions, referring to money or benefits that can be taken back as a result of special circumstances, are no new concept in the world of executive compensation. However, in a recent press release, the SEC proposed rules that would require companies to adopt and comply with a compensation recovery policy. This SEC proposal marks the final outstanding regulation required by the Dodd-Frank Act of 2010. Here is a bit of detail surrounding the proposed listing standards.
Board members bring of wealth of talent and experience to the companies they serve, but often have no practical exposure to the basic building blocks of effective compensation design. Before new compensation committee members jump into aligning incentives with company strategy, discussing “best practices” or considering accounting and tax implications, it can be very beneficial to review the concepts typically used by compensation professionals in incentive design.