CEO Compensation Rose Sharply in 2010

In the aftermath of last year’s passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act and its requirement that public companies hold shareowner votes on executive compensation in 2011, many sustainable investors and other shareowner activists anticipated that this year’s proxy season could result in a watershed year for corporate governance. As Lisa Woll, CEO of the Social Investment Forum (SIF) said following the bill’s passage, “The most recent financial crisis highlighted for all Americans the urgent need to instill greater discipline among corporate boards and in financial markets…say on pay will help address these failures and strengthen America’s financial markets.”

via Institutional Shareowner, 6/10/2011. I’m on my way to the Yale Governance Forum so no time to blog. (Follow the conference on Twitter at #YaleGovForum. See my coverage of the 2009 and 2008 events.) However, I did take note of this excellent article by Robert Kropp with several quotes from me and others.

Thanks Robert for mentioning the USPX Draft Shareowner Guidelines for Say-on-Pay Voting. Several members of USPX had a little get together outside Boston last weekend. We previewed and strategized around the new website that should be fully functional in a few months offering retail shareowners a great platform around which to network.

We didn’t get a chance to work on the draft guidelines, so there is still time to add your comments at the bottom. Adam Foulke recently suggested, for example, that we look at the ratio of CEO pay versus the next highest paid NEO. Companies with a ratio of 3-1 or higher may be demonstrating serious succession plan weakness.

I like that idea. Retail shareowners can check that very easily in the compensation summary table of the proxy… very little time or thinking required for a meaningful measure. I think we should add it to the mix.

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