Proxy season preview
Proxy season is just around the corner.
As usual, compensation will likely emerge as a front-burner issue at many annual meetings. Most boards should assume that say-on-pay will spark some sort of shareholder review and perhaps even a fight. If 2012 showed anything, it showed that proactive steps can mitigate the fireworks over the issue. That requires lots of preparation work that really should be underway already.
Business Finance notes the views of one professional, who says that "Companies should identify all disfavored pay practices. This will allow companies to modify or eliminate any such practices that are deemed no longer appropriate or for which the benefits no longer outweigh the costs, or to prepare a thorough explanation in the compensation discussion and analysis (CD&A) in the proxy statement as to why the pay practice is appropriate. Companies should also proactively communicate with shareholders and, as appropriate, proxy advisory firms regarding their executive compensation practices."
The article also lays out some other suggestions related to Say-on-Pay proposals and preparing CD&As. In addition, some new rules that kick in this year will require more disclosure about possible conflicts of interest on the part of compensation committee members. Boards should be addressing this now.
- here's the item