ExecutiveLoyalty.org

STRUCTURING EXECUTIVE COMPENSATION

General Advice:

• 2021.02.18 Wachtell Alert: 2021 Proxy Season: Executive Compensation Considerations
  
• 2020.05.09  Smart Structures for Executive Compensation: The More Things Change ... It's been 15 years since an article of mine began: "the decision-making environment is right for awards that are formula driven, that vest based on future performance, and that impose postemployment risks of forfeiture for disloyal actions, such as joining a competitor or soliciting customers or employees." Rolling that forward to today, the best employers are going one further step: implementation. The intervening years have shown that executive compensation has the potential both to inspire excellent performance, to retain the best talent, and to protect the best customers. It does not take rocket science or buckets of money to refine executive compensation to achieve these goals. It merely takes a proactive mindset, and advice from someone like me.  :)  For assistance or more information, contact Mark.
  
• 2020.05.28  Skechers Hit by Red Flag for Shareholder Litigation... "Neither our management nor the Compensation Committee retained a compensation consultant in 2019 to review policies and procedures with respect to executive compensation or to advise us on compensation matters." That quote comes from the 2020 proxy statement for Skechers, with today's news being that $20 million of its past executive stock awards are being cancelled in order to settle shareholder derivative litigation. The settlement includes a commitment to have the compensation committee consider input from a compensation consultant.  For public companies, the consideration of survey data and independent executive compensation advice should be hardwired into the decision-making process. It's more than a best practice (even for private companies), because sound executive compensation to structures are essential for attracting, retaining, and motivating the best talent.
  

Articles about the Design of Executive Compensation:

• Candor for Compensation Committees (from Board Member Magazine, about making decisions that advance corporate best interests)
  • ​See also: Wachtell's 2017 Guide for Compensation Committees (137 pages!).
    
• Crossing the Pond . . . in Search of Better Executive Compensation Practices
• Executive Loyalty: From Velvet Glove to Iron Fist
• U.S. Executive Compensation Litigation: Cannons to the Right, and to the Left (reprinted from International Pension and Employee Benefit Lawyers Association)

Governance and Decision-making about Executive Compensation

• Independence  -- of Compensation Committees and their Advisors
  
• Director Compensation -- see Survey Data / Litigation / Shareholder-approved Limits
  
• Clawbacks
  
• Forms of Compensation - from types to business, tax, and accounting considerations.
• Proxy Advisory Firms (e.g. ISS) - see ISS Problematic Practices
  
• Securities Disclosure Issues
• Shareholder Approval(of Equity Plans)
  
• Stock Ownership Guidelines
  
• Survey Data
  
• D&O Insurance and Indemnification