February 16, 2011

Study: Benchmarking the Number of “Executive Officers”

As reflected by how many times I get asked “how many executive officers should we have?” by members, a common challenge that all public companies have to make is the determination of who should be considered an “executive officer” for purposes of disclosure in their SEC filings. Not only does such a decision have an impact on the company’s disclosure obligations, but it has other consequences as well.

To assist in these determinations, companies often benchmark against their peers to gain comfort that the number of employees designated as “executive officers” is not too far off the norm. Given the dearth of benchmarking data available in this area, I jumped at the chance to work with LogixData to compile a comprehensive benchmarking study that I have posted in our “Executive Officer Determination” Practice Area.

This study provides:

– Analysis of how “executive officer” determinations are made
– Key benchmarking statistics drawn from the Form 10-Ks and proxy statements filed by all public companies during 2010

Note at the end of our study, you can email LogixData if you wish to receive a more detailed breakout of the benchmarking stats.

Nugget #4: Board Evaluations – The Independent Directors Should Experiment With When to Hold Executive Sessions

Recently, I started dribbling out some of the gems that Alan Dye and I shared a number of years ago during a series of “50 Nuggets in 50 Minutes” webcasts. Here is #4:

Executive Sessions – The independent directors should experiment with when to hold executive sessions – Normally, executive sessions are held just before – or after – a regular board meeting. Holding an executive session after a board meeting enables the independent directors to react to matters discussed at the board meeting.

On the other hand, it may be preferable to hold executive sessions before board meetings as a way to prepare for the board meeting – and not be sidetracked by what transpires at the board meeting. However, these executive sessions might last forever and exhaust directors before they get to the board meeting. To solve this potential problem, we like the idea of having the executive session the afternoon before a board meeting that commences the next morning.

Boards should experiment and determine what works best for them. For example, Intel’s board holds executive sessions in the middle of their board meetings.

More on our “Proxy Season Blog”

With the proxy season in full swing, we are posting new items regularly on our “Proxy Season Blog” for members. Members can sign up to get that blog pushed out to them via email whenever there is a new entry by simply inputting their email address on the left side of that blog. Here are some of the latest entries:

– Recent Bylaw Amendments that Address Proxy Access
– Deja Vu: Apache Raises Proof-of-Ownership Objection Again
– Carpenters Ask Large-Cap Firms to Provide Board Access
– An Updated Proxy Season Time & Responsibility Schedule
– Proxy Advice: Glass Lewis Takes Over PGI’s Clients

– Broc Romanek