TheCorporateCounsel.net

In connection with last week’s Special Session: “Tackling Your Pay Vs. Performance Disclosures” over on CompensationStandards.com, we discussed the potential reaction to the new disclosures that could be expected from the proxy advisory firms and institutional investors. The main takeaway from that discussion is that it is still way too early to tell.

The proxy advisory firms and institutional investors have not commented on how they plan to use the new disclosure, and it is expected that many will likely take a wait-and-see approach during the upcoming proxy season. That said, it is still important to draft your new pay versus performance disclosure with an eye toward how the proxy advisory firms and institutional investors will perceive it, and the key watchword we settled on is “consistency.”

You should carefully evaluate whether the new pay versus performance disclosure is consistent with the story that you are telling in the CD&A about the relationship between compensation and performance, which companies will continue to provide and which will not be replaced by the new disclosures. You definitely do not want the new pay versus performance disclosure (which, for most companies, will likely not be presented as part of the CD&A, but rather somewhere further back in the tabular compensation disclosures) to present any “surprises,” because even if the institutional investors or proxy advisory firms are not really using the data as part of their evaluation in the 2023 proxy season, they certainly will not be ignoring the disclosure. Therefore, consistency – and clarity – is the key.

If you missed last week’s Special Session, you can still purchase the recording by contacting a member of our Sales Team at Sales@CCRcorp.com or 800.737.1271. Archive sales end November 30, 2022.

– Dave Lynn