January 19, 2016

Online Forum: Executive Pay Disclosure Evolves

The CFA Institute’s recent, creative online forum – “Executive Pay Disclosure in the Say-on-Pay Era” – is a convenient way for practitioners and boards to access the views of key, seasoned stakeholders in executive compensation engagement and disclosure.

In the forum, ISS’s Carol Bowie, Apache director & former Compensation Committee Chair Chip Lawrence, Covington & Burling’s Keir Gumbs, Towers Watson James Kroll, Prudential’s Peggy Foran and NIRI’s Ted Allen weigh in on a series of practical questions posed by CFA Institute Moderator, Matt Orsagh including:

  • What do investors want from the CD&A section of the proxy statement?
  • What are some of the most significant improvements you have seen in the CD&A over the past 5–10 years? Please highlight some best practices that investors have found helpful.
  • What is the state of engagement around executive compensation between companies and investors? How has increased engagement improved the CD&A?
  • Re: engagement – who should be involved in the process from a companies point of view? At what point does the compensation committee speak with investors about compensation issues?
  • What process do issuers go through in creating a strong CD&A — who is involved, what is the timeline?
  • For small-cap and mid-cap companies with limited resources to devote to the CD&A, what are some of the most important things to focus on?
  • Is the CD&A all about “say on pay” these days or are there other substantive issues at play?
  • Are there any nascent compensation issues you expect to grow in importance this proxy season or in coming years?

See Matt’s blog about the forum and the CFA Institute’s CD&A Template.

Compensation Peer Group Analytics

Audit Analytics’ recent analysis of Russell 3000 executive pay peer groups revealed these and other interesting findings:

– Notwithstanding the fact that pay benchmarking peers usually include close competitors, companies of similar size and stature, regional companies, etc., 12 of the 13 companies most frequently named as a peer by others (at least 44 times) are considered manufacturing companies according to their SIC codes, and all are mature – with more than half having been public since at least 1965.

– Ten companies listed 100 or more peers (one company listed 366 peers), whereas the typical peer group for this index consists of 17 peers:


– Some companies don’t use any outside peers or other benchmarks.

– The most frequently cited peer company, 3M Company, disclosed in its March 2015 proxy statement  the following compensation peer group selection factors:


Webcast: “Proxy Drafting – Mid-Cap & Smaller Company Perspective”

Tune in tomorrow, Wednesday, January 20th for the webcast – “Proxy Drafting: Mid-Cap & Smaller Company Perspective” – to hear Gunderson Dettmer’s Richard Blake, Denbury Resources’ Sarah Wood Braley, Covington & Burling’s Keir Gumbs, KBR’s Adam Kramer and JetBlue Airways’ Eileen McCarthy provide practice pointers on what approaches to preparing the proxy for mid-cap & smaller companies work best. Please print these “Course Materials” in advance.


– by Randi Val Morrison