TheCorporateCounsel.net

Last month, Premiere Global Services became the 40th company to file a Form 8-K reflecting a failure to get majority support for it’s say-on-pay agenda item (47%). A list of the Form 8-Ks of these companies is in CompensationStandards.com’s “Say-on-Pay” Practice Area (bearing in mind that totals for three of these companies are somewhat in dispute). 40 failures is less than 2% of all companies that had say-on-pay on their ballot this season.

So what does this all mean? On the one hand, the relatively low percentage of companies failing has led commentators to label say-on-pay as insignificant as a force for needed change, such as this blog by Bob Monks and this one from Paul Hodgson. On the other hand, many corporate advisors are holding up this season’s results as evidence that more change in pay practices is not necessary.

My take is that it’s too early to tell what it means (including what level of “against” votes is a red flag that some pay practices are problematic – clearly, there are levels below a majority that should give boards pause). I believe this year was a test year as many institutional investors weren’t prepared for the massive undertaking that a true look at pay packages for their portfolio companies entails. In addition, we didn’t see much in the way of grass roots movements – surprising in this social media age. The potential for potent and inexpensive campaigning online against a company’s say-on-pay vote will continue to loom. Five years from now – particularly when say-on-pay then applies to the numerous small companies that have a temporary bye right now – we’ll have a better sense of what say-on-pay really means.

To be honest, 40 failures is many more than I expected. That should be clear from the poll I posted on this blog back in January asking y’all to guess how many failures there would be. In hindsight, the choices I offered in the poll revealed how low I thought the numbers would be. I offered choices of 0 failures (which garnered 1% of votes); 1-2 failures (1%); 3-4 failures (3%); 5-10 failures (18%); and More than 10 failures (75%). I should have broadened the choices – and I will next year.

I’m still mystified that most directors appeared to be unsupportive of say-of-pay before Dodd-Frank mandated it. So many of them are now resting easy, having shareholders bless their pay packages with flying colors. As I blogged a few years back, these boards now have a likely shield from liability and from reputational attack. I could always understand why board advisors didn’t like say-on-pay – it’s a lot more work with no additional resources during an already busy proxy season – but I never understood why directors would be against it. But maybe they saw those say-on-pay lawsuits coming…

CEOs: When Too Many Luxury Homes Becomes a Hassle

If you follow me on Twitter, you know I fell off my chair reading this recent article in “Chief Executive” magazine that essentially provides guidance for CEOs buying that 3rd or 4th luxury home. The CEO featured in the article is the head of a private family-owned company but it’s still quite a brazen piece of journalism.

For those that argue that all the corporate jet trips to these far-flung homes are somehow for business purposes, there is no hint of that in the piece. In fact, the CEO in the article complains that his second biggest problem is that he works too much to get to these extra residences (although the article notes he gets to Martha’s Vineyard every weekend in the summer). His biggest problem? “He owns too many homes, likening his passion for collecting top-tier getaways to the way other people collect paintings.”

The Latest Compensation Disclosures: A Proxy Season Post-Mortem

We have posted the transcript for our recent CompensationStandards.com webcast: “The Latest Compensation Disclosures: A Proxy Season Post-Mortem.”

– Broc Romanek