November

What Are Investors Telling Boards About ESG and Pay

Dear Friend,

Website Marc

Directors may be fatigued with ESG issues, but according to the recent Seven Lessons From Engaged Investors report from Farient and our partners in the Global Governance and Executive Compensation Group, investors are more concerned than ever before with issues like climate change and diversity. At the same time, investors remain agitated with high executive pay that they perceive as being out-of-sync with performance.

In this month’s Comp & Gov Spotlight, we examine what investors are saying about ESG and compensation issues, and why boards and managers will need to continue to actively engage with shareholders on them.

Sincerely,

Marc Hodak

Hot Off the Press From Farient

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ESG and Pay Are Top Concerns Among Engaged Investors

The 2019 report Seven Lessons From Engaged Investors shows how ESG and executive compensation figure prominently in investor concerns over corporate governance. In this interview with IR Magazine, I explain what specifically shareholders are concerned about, and how boards can positively and proactively address those concerns through thoughtful and strategic investor engagement.

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Are Performance Shares Shareholder Friendly?

Today, a senior executive is likely to be granted over half of their long-term incentive awards in performance share units (PSUs) that vest at the end of three years. Though historically favored by institutional investors and proxy advisors, PSUs may not, in practice, work uniformly in shareholders’ interests, as I discuss in this article for the Journal of Applied Corporate Finance.

 

Related Stories About ESG & Pay

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Institutional Investors See ESG as Part of Their Fiduciary Duty

Many institutional investors. see ESG as a part of their fiduciary duty, according to a survey conducted by State Street Global Advisors. This indicates that whatever fatigue directors may have with ESG, these issues are not going away, and boards must be prepared to answer to engaged investors.

 

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UK Companies Urged to Switch from Long-Term Incentive Pay Plans

A study by the Purposeful Company found growing support among UK investors and companies for greater adoption of restricted or deferred share models, as opposed to long-term incentive plans (LTIPs). This trend illustrates growing dissatisfaction with executive pay escalating with compensation program complexity.

Events

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Why Compensation Alignment Still Matters in Governance

In this webinar conducted on November 12, I joined Abernathy MacGregor’s Eileen Cohen to discuss how to devise pay plans that align with rising investor concerns, disclosing the information investors want and engaging with active shareholders in meaningful, productive ways.

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Women on Boards 2020 "National Conversation on Board Diversity” Luncheon

Farient CEO Robin Ferracone, a board member of Women Corporate Directors (WCD), will be participating in the Women on Boards “National Conversation on Board Diversity” Luncheon on Friday, November 22 in Los Angeles. Robin will be engaging with her peers in this important event aimed at addressing the unique challenges women face as corporate board members.

Meet Marc Hodak

Marc Hodak is a Partner at Farient Advisors with more than 20 years of experience as a compensation and corporate governance consultant. He has developed executive and board compensation programs for global companies, both private and public including extensive work around goal setting, performance and perverse incentives. Read more about Marc here.

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Farient Advisors LLC is an independent executive compensation, performance, and corporate governance consultancy. Farient provides a comprehensive array of services to boards of directors and management including: compensation program design, goal setting and performance measurement, pay and performance alignment, board of directors compensation, and shareholder communication among others. Farient has offices in Los Angeles and New York and covers clients in more than 30 countries through our partnership in the Global Governance Executive Compensation Group (GECN).

New York: 55 E. 59th Street Suite 12B New York NY 


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