This year’s mandatory Say-on-Pay (SOP) brought new challenges for issuers. Not only did the pace of failed plans accelerate, but last year’s votes proved to be a poor indicator of how companies’ plans would fare this season. This report, which will be updated at the conclusion of the calendar year, will point out some high-level trends in the voting data for companies with low SOP votes so far this year.
Although receiving at least 50% support on SOP is the primary goal for issuers, in many cases the institutional investor community will apply heightened scrutiny to compensation plans that received “significant” opposition. Thus, the data set we reviewed in this report—shown in Appendix A—covers plans that received less than 70% support. Following our analysis of these data is a brief section on guidance for issuers, both how to recover from a failed SOP vote in 2012 and how to prepare for 2013.
Alliance Advisors Newsletter March 2012 (A Look Ahead to the 2012 Proxy Season)Alliance Advisors
The 2012 proxy season is shaping up to be highly charged due to the stagnating economy, Occupy Wall Street protests, and presidential election. Key issues include continued focus on executive compensation and say on pay votes, debates around expanding shareholder proxy access and political spending disclosure. While some companies have adopted reforms preemptively, shareholder proposals on these topics are numerous and gaining more support. The season remains uncertain as shareholder activism and regulatory actions could significantly impact many companies.
FTI Consulting publie cette semaine une étude globale sur le thème de l’activisme actionnarial, disponible en pièce jointe de ce message.
FTI Consulting a interrogé plus de 100 investisseurs institutionnels, représentant collectivement plus de 1 700 milliards de dollars d’actifs sous gestion, sur leur perception des campagnes activistes.
Cette étude démontre que les investisseurs institutionnels sont de plus en plus favorables aux activistes, et qu’ils soutiennent plus facilement la nomination d’administrateurs indépendants au sein des conseils d'administration.
Plus de la moitié des sociétés de gestion interrogées a indiqué qu'au moins 15% des sociétés actuellement présentes dans leur portefeuille « pourraient bénéficier » d'une situation activiste. Considérant que les activistes ciblent publiquement, ou non, des centaines d'entreprises par an, ce ratio confirme l’ampleur du mouvement. La tendance actuelle devrait se poursuivre.
D’autre part, si les entreprises ont une meilleure approche et une meilleure gestion des campagnes activistes, l’enquête menée par FTI Consulting démontre que leur efficacité peut être encore augmentée. La condition préalable est de reconnaître que les investisseurs institutionnels soutiennent alors un «changement» stratégique de l’entreprise sans pour autant s’intéresser aux moyens d’y parvenir.
FTI Consulting peut ainsi contribuer à élaborer une communication transparente avec les investisseurs, mettant en valeur les changements entrepris par la société et démontrant la création de valeur à long terme, et ainsi se défendre efficacement contre les fonds activistes.
La division Strategic Communications de FTI Consulting est l'une des plus réputées au monde, avec plus de 25 ans d'expérience dans le conseil auprès des équipes dirigeantes dans le cadre de situations sensibles. Pour ses clients, FTI active les leviers de communications pour protéger et améliorer réputation et valeur d'entreprise.
N'hésitez pas à nous contacter pour plus d'informations.
L'équipe FTI Consulting
Institutional Shareholders and
Activist Investors
Professor David F. Larcker
Corporate Governance Research Program
Stanford Graduate School of Business
2011
This document summarizes the results of a 2013 survey of 38 executive search consulting firms on their equity structures and compensation models. Key findings include:
- 45% of firms are 100% founder-owned, while 55% have a mix of founder and other owners. Revenue generation is the most important factor in inviting new owners.
- Ownership is typically purchased from individual owners or the firm. Payment is often loan-based and structured over 1-5 years.
- Consultant compensation averages 45% of revenue generated and increases with performance. Bonuses make up a larger portion of pay for top performers.
- Advice to new firms includes making ownership and pay clearly performance-based and incentivizing business development.
This report touches upon themes such as increasing complex reporting requirements, growing demand for transparency, the adoption of big data technology solutions, the management of environmental, social and governance (ESG) factors in private equity portfolio companies as well as the growing popularity of various private equity fund structures, and how this is set to change over the next 12 to 24 months.
The document summarizes findings from a survey of professionals in private capital markets and privately-held businesses. Key findings include:
1) Significant declines in lending across all private capital market segments due to reduced credit quality and demand, with mezzanine finance being the only segment to increase in size.
2) Privately-held businesses have high return expectations but show signs of struggle, with many reporting decreased access to capital and increased competitive pressures and failure risks.
3) While businesses are optimistic about fundraising prospects, their qualification rates are actually lower than reported, especially for smaller companies.
Shareholders Are Dissatisfied with CEO Compensation and Disclosure--Proxies Are Too Long, Difficult to Read.
Only 38 percent of institutional investors believe that corporate disclosure about executive compensation is clear and easy to understand. “Shareholders want to know that the size, structure, and performance targets used in executive compensation contracts are appropriate,” says Professor David F. Larcker of the Stanford Graduate School of Business. “Our research shows that, across the board, they are dissatisfied with the quality and clarity of the information they receive about compensation in the corporate proxy. Even the largest, most sophisticated investors are unhappy.”
“With new pressure from activist investors and annual ‘Say on Pay’ (SOP) votes, it is more important than ever that companies explain to their shareholder base why the compensation packages they offer are appropriate in size and structure,” says Aaron Boyd, director of Governance Research at Equilar. “Investors are noticing the wide range in quality and clarity among various companies’ proxies. They want companies to communicate and explain, rather than simply disclose,” adds Ron Schneider, director of Corporate Governance Services at RR Donnelley Financial Services. “This represents a significant opportunity for many companies to improve the clarity of their proxies.”
In the fall of 2014, RR Donnelley, Equilar, and the Rock Center for Corporate Governance at Stanford University surveyed 64 asset managers and owners with a combined $17 trillion in assets to understand how institutional investors use the information in corporate proxies.
Institutional investors are always looking for better ways to increase returns, reduce risk and achieve specific investment goals. Particularly in the wake of the financial crisis, investors have been seeking more robust ways to diversify and reduce risk.
Alliance Advisors Newsletter March 2012 (A Look Ahead to the 2012 Proxy Season)Alliance Advisors
The 2012 proxy season is shaping up to be highly charged due to the stagnating economy, Occupy Wall Street protests, and presidential election. Key issues include continued focus on executive compensation and say on pay votes, debates around expanding shareholder proxy access and political spending disclosure. While some companies have adopted reforms preemptively, shareholder proposals on these topics are numerous and gaining more support. The season remains uncertain as shareholder activism and regulatory actions could significantly impact many companies.
FTI Consulting publie cette semaine une étude globale sur le thème de l’activisme actionnarial, disponible en pièce jointe de ce message.
FTI Consulting a interrogé plus de 100 investisseurs institutionnels, représentant collectivement plus de 1 700 milliards de dollars d’actifs sous gestion, sur leur perception des campagnes activistes.
Cette étude démontre que les investisseurs institutionnels sont de plus en plus favorables aux activistes, et qu’ils soutiennent plus facilement la nomination d’administrateurs indépendants au sein des conseils d'administration.
Plus de la moitié des sociétés de gestion interrogées a indiqué qu'au moins 15% des sociétés actuellement présentes dans leur portefeuille « pourraient bénéficier » d'une situation activiste. Considérant que les activistes ciblent publiquement, ou non, des centaines d'entreprises par an, ce ratio confirme l’ampleur du mouvement. La tendance actuelle devrait se poursuivre.
D’autre part, si les entreprises ont une meilleure approche et une meilleure gestion des campagnes activistes, l’enquête menée par FTI Consulting démontre que leur efficacité peut être encore augmentée. La condition préalable est de reconnaître que les investisseurs institutionnels soutiennent alors un «changement» stratégique de l’entreprise sans pour autant s’intéresser aux moyens d’y parvenir.
FTI Consulting peut ainsi contribuer à élaborer une communication transparente avec les investisseurs, mettant en valeur les changements entrepris par la société et démontrant la création de valeur à long terme, et ainsi se défendre efficacement contre les fonds activistes.
La division Strategic Communications de FTI Consulting est l'une des plus réputées au monde, avec plus de 25 ans d'expérience dans le conseil auprès des équipes dirigeantes dans le cadre de situations sensibles. Pour ses clients, FTI active les leviers de communications pour protéger et améliorer réputation et valeur d'entreprise.
N'hésitez pas à nous contacter pour plus d'informations.
L'équipe FTI Consulting
Institutional Shareholders and
Activist Investors
Professor David F. Larcker
Corporate Governance Research Program
Stanford Graduate School of Business
2011
This document summarizes the results of a 2013 survey of 38 executive search consulting firms on their equity structures and compensation models. Key findings include:
- 45% of firms are 100% founder-owned, while 55% have a mix of founder and other owners. Revenue generation is the most important factor in inviting new owners.
- Ownership is typically purchased from individual owners or the firm. Payment is often loan-based and structured over 1-5 years.
- Consultant compensation averages 45% of revenue generated and increases with performance. Bonuses make up a larger portion of pay for top performers.
- Advice to new firms includes making ownership and pay clearly performance-based and incentivizing business development.
This report touches upon themes such as increasing complex reporting requirements, growing demand for transparency, the adoption of big data technology solutions, the management of environmental, social and governance (ESG) factors in private equity portfolio companies as well as the growing popularity of various private equity fund structures, and how this is set to change over the next 12 to 24 months.
The document summarizes findings from a survey of professionals in private capital markets and privately-held businesses. Key findings include:
1) Significant declines in lending across all private capital market segments due to reduced credit quality and demand, with mezzanine finance being the only segment to increase in size.
2) Privately-held businesses have high return expectations but show signs of struggle, with many reporting decreased access to capital and increased competitive pressures and failure risks.
3) While businesses are optimistic about fundraising prospects, their qualification rates are actually lower than reported, especially for smaller companies.
Shareholders Are Dissatisfied with CEO Compensation and Disclosure--Proxies Are Too Long, Difficult to Read.
Only 38 percent of institutional investors believe that corporate disclosure about executive compensation is clear and easy to understand. “Shareholders want to know that the size, structure, and performance targets used in executive compensation contracts are appropriate,” says Professor David F. Larcker of the Stanford Graduate School of Business. “Our research shows that, across the board, they are dissatisfied with the quality and clarity of the information they receive about compensation in the corporate proxy. Even the largest, most sophisticated investors are unhappy.”
“With new pressure from activist investors and annual ‘Say on Pay’ (SOP) votes, it is more important than ever that companies explain to their shareholder base why the compensation packages they offer are appropriate in size and structure,” says Aaron Boyd, director of Governance Research at Equilar. “Investors are noticing the wide range in quality and clarity among various companies’ proxies. They want companies to communicate and explain, rather than simply disclose,” adds Ron Schneider, director of Corporate Governance Services at RR Donnelley Financial Services. “This represents a significant opportunity for many companies to improve the clarity of their proxies.”
In the fall of 2014, RR Donnelley, Equilar, and the Rock Center for Corporate Governance at Stanford University surveyed 64 asset managers and owners with a combined $17 trillion in assets to understand how institutional investors use the information in corporate proxies.
Institutional investors are always looking for better ways to increase returns, reduce risk and achieve specific investment goals. Particularly in the wake of the financial crisis, investors have been seeking more robust ways to diversify and reduce risk.
This document provides an overview and key findings of a study on how core vendor contracts impact community banks and credit unions. Some of the main points summarized are:
- On average, community banks and credit unions pay 24% above fair market value for core processing and related IT services. Renegotiating contracts can result in annual savings ranging from 11.5-43.4%.
- Tight margins, regulatory compliance, and slow economic growth are the top challenges cited. Growing loans and cutting costs are the top priorities.
- Nearly two-thirds want to reduce non-interest expenses and over half want to increase non-interest income. A third cite adding new technologies as a priority.
- The
Authored by: James R. Copland, David F. Larcker, and Brian Tayan Stanford Closer Look Series, May 30, 2018
Proxy advisory firms have significant influence over the voting decisions of institutional investors and the governance choices of publicly traded companies. However, it is not clear that the recommendations of these firms are correct and generally lead to better outcomes for companies and their shareholders. This Closer Look provides a comprehensive review of the proxy advisory industry and the influence of these firms on voting behavior, corporate choices, and outcomes, and it outlines potential reforms for the industry.
We ask:
• How accurate are the voting recommendations of proxy advisory firms?
• How influential are they over voting practices and corporate choices?
• Should steps be taken to reduce their influence or improve the reliability of their recommendations?
• Would greater transparency, back-testing, and regulation improve the market for their services?
The document summarizes the results of a compensation survey of 554 financial executives. It finds that the average salary increase was 3% for both public and private companies. Less than a quarter receive long-term cash incentives, but nearly half receive stock-based incentives like stock options. Benefits like health insurance and retirement plans are standard. Cell phones remain the most common perquisite. Public company executives earn higher average salaries than private counterparts in most roles.
Reserves planning: Determining the appropriate level of reserves for your org...Grant Thornton LLP
Maintaining adequate reserves is essential to establishing financial stability. These reserves provide a cushion to deal with operating deficits that may arise due to unexpected events, economic uncertainties, lean funding periods or opportunities for strategic investment. This presentation offers Grant Thornton’s latest thinking on how to establish appropriate reserves levels and our methodology for developing a sophisticated and robust risk-based approach to establishing a reserves policy within your organization.
Our release today, summarizing results from our survey with Canadian individual investors about financial advice and advisor compensation. Two detailed reports on our site offer detailed findings about advisor compensation, mutual fund purchase options and deferred sales charges and data concerning Canadian investors’ reliance on professional and digital advice services.
This publication includes the deal activity in the insurance sector such as overall highlights, key announced transactions, and the outlook ahead. Read our full report to learn more.
2017 Top Issues - DOL Fiduciary Rule - January 2017PwC
The document discusses the impact of the Department of Labor's Fiduciary Rule on the insurance industry. The rule requires financial advisors to act as fiduciaries, putting clients' interests ahead of their own. This will significantly impact compensation structures and require changes to training, products offered, and data collection. Insurers will need to streamline compensation, rationalize products, enhance agent training on fiduciary responsibilities, and improve data and technology to demonstrate compliance. The rule is spurring widespread changes beyond just compliance, including potential consolidation in the insurance and distribution sectors.
The group insurance market shows real promise but, as of yet, most carriers are still trying to determine the best path forward. Moving from being in a quiet sector to the front lines of new ways of doing business has shaken the industry and confronted it with challenges –and opportunities – many could not have foreseen even a decade ago.
One of the fastest growing concerns on insurers’ enterprise risk agenda is model risk
management. From being a phrase that primarily actuaries and other modelers used, “model risk” has become a major focus of regulators and the subject of intense activity and debate at insurers. How model risk management has evolved from ad hoc efforts to its currentproactive stage is an interesting story. But more interesting still is
what we believe could be its next stage – generating measurable business value.
Most nonprofits are not satisfied with their investment processes and are taking on more risk than planned. While many have investment policies, there is often a disconnect between the policies and the actual investments made. This can jeopardize the organization's mission. Additionally, most nonprofits do not fully understand the fees and investment products they use. They also struggle to find advisors who act as fiduciaries. Governance over investments needs strengthening as well, such as setting term limits for finance committees. Nonprofit boards tend to be slower to change investment strategies and adopt new tools compared to individual board members' personal investments.
Insurers are upgrading their technology to support more complex
products, lower operating costs, and get closer to their customers.
But they can do more harm than good when they make changes
that alienate their independent agents. We’ve identified five steps
that can help insurers engage agents early and create a
transition plan that meets agents’ needs—converting these
important stakeholders into enthusiastic advocates.
DOL fiduciary rule: How it affects the insurance industry Grant Thornton LLP
We explore how the Department of Labor's final rule expanding the definition of fiduciary investment advice for advisers to retirement plans, participants and beneficiaries will affect the insurance industry.
Benefits-of-Financial-Technology-for-Banks_RMA Jan 2017Max Zahner
This document summarizes how community banks can use technology to successfully compete in commercial and industrial lending. It discusses that C&I lending can provide higher returns than other types of lending but is difficult for banks to do well due to the complex underwriting and loan administration processes required. It then describes how adopting new technology can streamline these processes, reducing the time and costs to underwrite loans and conduct loan reviews. This allows community banks to profitably lend to smaller businesses and increase their return on equity through expanding their C&I lending business.
The document summarizes the findings of a study on IT risk management conducted by IBM. Some key findings include:
- Most IT managers expect their risk-related responsibilities to increase as IT infrastructure plays a more critical role in businesses.
- While over half of respondents rated their overall approach to mitigating IT risk as good or expert, over 30% viewed it as average or poor.
- Many organizations still struggle with securing enough funding and senior leadership support for risk management initiatives.
- While risk planning is often conducted in business silos, greater collaboration across organizations is seen as a challenge.
In spring 2016, PwC investigated the current state and
future direction of stress testing. We surveyed 55 insurers
operating in the US about their stress testing framework and
the specific stresses that they test. We also engaged in more
detailed dialogue with a number of insurers in the US and
globally, as well as with some North American insurance
regulators.
The BBB Small Business Finance Markets Report 2020/21 provides an in-depth analysis of the impact of Covid-19 on smaller businesses in the UK and their outlook on recovery.
David F. Larcker, Brian Tayan, Vinay Trivedi, and Owen Wurzbacher, Stanford Closer Look Series, July 2, 2019
Currently, there is much debate about the role that non-investor stakeholder interests play in the governance of public companies. Critics argue that greater attention should be paid to the interest of stakeholders and that by investing in initiatives and programs to promote their interests, companies will create long-term value that is greater, more sustainable, and more equitably shared among investors and society. However, advocacy for a more stakeholder-centric governance model is based on assumptions about managerial behavior that are relatively untested. In this Closer Look, we examine survey data of the CEOs and CFOs of companies in the S&P 1500 Index to understand the extent to which they incorporate stakeholder needs into the business planning and long-term strategy, and their view of the costs and benefits of ESG-related programs.
We ask:
• What are the real costs and benefits of ESG?
• How do companies signal to constituents that they take ESG activities seriously?
• How accurate are the ratings of third-party providers that rate companies on ESG factors?
• Do boards understand the short- and long-term impact of ESG activities?
• Do boards believe this investment is beneficial for the company?
Doing business in China – Recent anti-corruption and briberyGrant Thornton LLP
China enforcement agencies have recently made headlines in their crackdown on corruption within the several industries. As a result of these high-profile investigations, multinationals are refreshing their current anti-corruption compliance and oversight programs to address China’s bribery laws.
Regulators and financial intelligence units are tasked with challenging jobs to fight money laundering and terrorism financing, but some have room for improvement. Financial institutions observe that some regulators and units give unfavorable audit reports not necessarily due to legal breaches, but because of subjective methods rather than proper risk assessment. Excessive compliance costs are incurred without clear evidence that they reduce financial crimes. Regulators and units should ensure regulatory actions have benefits exceeding costs to avoid counterproductive policies. Proper risk understanding and mitigation is important over prescriptive rules and one-size-fits-all approaches.
The proxy fight for board seats at Oshkosh Corporation is underway, with Icahn Associates nominating six directors. While OSK's stock performance has lagged peers, the company has significant defense business exposure. Icahn will argue OSK has failed to execute on acquisitions or develop business segments. Shareholders will evaluate if change is needed and if Icahn's nominees can add value, considering four have Icahn ties raising independence questions.
Alliance Advisors is a shareholder communications firm specializing in proxy solicitation and governance consulting founded in 2005. The firm assists over 200 clients, including Fortune 500 companies, with shareholder activism matters. The document discusses trends in shareholder activism such as more activists seeking minority board representation rather than control and the impact of poor stock performance on vulnerability to activism. It also provides an overview of ISS' framework for evaluating proxy contests and contested mergers and outlines considerations for companies facing shareholder activism.
Alliance Advisors Newsletter January 2012 (Debating Corporate Political Contr...Alliance Advisors
This document summarizes the debate around corporate political contributions and shareholder activism on this issue. It discusses the various types of shareholder proposals being filed in 2012, including those calling for disclosure of political spending and lobbying activities, as well as proposals seeking a shareholder vote on political contributions. The document also examines investor and proxy advisor perspectives on these issues and provides guidance to companies on best practices regarding political spending policies and disclosure.
This document provides an overview and key findings of a study on how core vendor contracts impact community banks and credit unions. Some of the main points summarized are:
- On average, community banks and credit unions pay 24% above fair market value for core processing and related IT services. Renegotiating contracts can result in annual savings ranging from 11.5-43.4%.
- Tight margins, regulatory compliance, and slow economic growth are the top challenges cited. Growing loans and cutting costs are the top priorities.
- Nearly two-thirds want to reduce non-interest expenses and over half want to increase non-interest income. A third cite adding new technologies as a priority.
- The
Authored by: James R. Copland, David F. Larcker, and Brian Tayan Stanford Closer Look Series, May 30, 2018
Proxy advisory firms have significant influence over the voting decisions of institutional investors and the governance choices of publicly traded companies. However, it is not clear that the recommendations of these firms are correct and generally lead to better outcomes for companies and their shareholders. This Closer Look provides a comprehensive review of the proxy advisory industry and the influence of these firms on voting behavior, corporate choices, and outcomes, and it outlines potential reforms for the industry.
We ask:
• How accurate are the voting recommendations of proxy advisory firms?
• How influential are they over voting practices and corporate choices?
• Should steps be taken to reduce their influence or improve the reliability of their recommendations?
• Would greater transparency, back-testing, and regulation improve the market for their services?
The document summarizes the results of a compensation survey of 554 financial executives. It finds that the average salary increase was 3% for both public and private companies. Less than a quarter receive long-term cash incentives, but nearly half receive stock-based incentives like stock options. Benefits like health insurance and retirement plans are standard. Cell phones remain the most common perquisite. Public company executives earn higher average salaries than private counterparts in most roles.
Reserves planning: Determining the appropriate level of reserves for your org...Grant Thornton LLP
Maintaining adequate reserves is essential to establishing financial stability. These reserves provide a cushion to deal with operating deficits that may arise due to unexpected events, economic uncertainties, lean funding periods or opportunities for strategic investment. This presentation offers Grant Thornton’s latest thinking on how to establish appropriate reserves levels and our methodology for developing a sophisticated and robust risk-based approach to establishing a reserves policy within your organization.
Our release today, summarizing results from our survey with Canadian individual investors about financial advice and advisor compensation. Two detailed reports on our site offer detailed findings about advisor compensation, mutual fund purchase options and deferred sales charges and data concerning Canadian investors’ reliance on professional and digital advice services.
This publication includes the deal activity in the insurance sector such as overall highlights, key announced transactions, and the outlook ahead. Read our full report to learn more.
2017 Top Issues - DOL Fiduciary Rule - January 2017PwC
The document discusses the impact of the Department of Labor's Fiduciary Rule on the insurance industry. The rule requires financial advisors to act as fiduciaries, putting clients' interests ahead of their own. This will significantly impact compensation structures and require changes to training, products offered, and data collection. Insurers will need to streamline compensation, rationalize products, enhance agent training on fiduciary responsibilities, and improve data and technology to demonstrate compliance. The rule is spurring widespread changes beyond just compliance, including potential consolidation in the insurance and distribution sectors.
The group insurance market shows real promise but, as of yet, most carriers are still trying to determine the best path forward. Moving from being in a quiet sector to the front lines of new ways of doing business has shaken the industry and confronted it with challenges –and opportunities – many could not have foreseen even a decade ago.
One of the fastest growing concerns on insurers’ enterprise risk agenda is model risk
management. From being a phrase that primarily actuaries and other modelers used, “model risk” has become a major focus of regulators and the subject of intense activity and debate at insurers. How model risk management has evolved from ad hoc efforts to its currentproactive stage is an interesting story. But more interesting still is
what we believe could be its next stage – generating measurable business value.
Most nonprofits are not satisfied with their investment processes and are taking on more risk than planned. While many have investment policies, there is often a disconnect between the policies and the actual investments made. This can jeopardize the organization's mission. Additionally, most nonprofits do not fully understand the fees and investment products they use. They also struggle to find advisors who act as fiduciaries. Governance over investments needs strengthening as well, such as setting term limits for finance committees. Nonprofit boards tend to be slower to change investment strategies and adopt new tools compared to individual board members' personal investments.
Insurers are upgrading their technology to support more complex
products, lower operating costs, and get closer to their customers.
But they can do more harm than good when they make changes
that alienate their independent agents. We’ve identified five steps
that can help insurers engage agents early and create a
transition plan that meets agents’ needs—converting these
important stakeholders into enthusiastic advocates.
DOL fiduciary rule: How it affects the insurance industry Grant Thornton LLP
We explore how the Department of Labor's final rule expanding the definition of fiduciary investment advice for advisers to retirement plans, participants and beneficiaries will affect the insurance industry.
Benefits-of-Financial-Technology-for-Banks_RMA Jan 2017Max Zahner
This document summarizes how community banks can use technology to successfully compete in commercial and industrial lending. It discusses that C&I lending can provide higher returns than other types of lending but is difficult for banks to do well due to the complex underwriting and loan administration processes required. It then describes how adopting new technology can streamline these processes, reducing the time and costs to underwrite loans and conduct loan reviews. This allows community banks to profitably lend to smaller businesses and increase their return on equity through expanding their C&I lending business.
The document summarizes the findings of a study on IT risk management conducted by IBM. Some key findings include:
- Most IT managers expect their risk-related responsibilities to increase as IT infrastructure plays a more critical role in businesses.
- While over half of respondents rated their overall approach to mitigating IT risk as good or expert, over 30% viewed it as average or poor.
- Many organizations still struggle with securing enough funding and senior leadership support for risk management initiatives.
- While risk planning is often conducted in business silos, greater collaboration across organizations is seen as a challenge.
In spring 2016, PwC investigated the current state and
future direction of stress testing. We surveyed 55 insurers
operating in the US about their stress testing framework and
the specific stresses that they test. We also engaged in more
detailed dialogue with a number of insurers in the US and
globally, as well as with some North American insurance
regulators.
The BBB Small Business Finance Markets Report 2020/21 provides an in-depth analysis of the impact of Covid-19 on smaller businesses in the UK and their outlook on recovery.
David F. Larcker, Brian Tayan, Vinay Trivedi, and Owen Wurzbacher, Stanford Closer Look Series, July 2, 2019
Currently, there is much debate about the role that non-investor stakeholder interests play in the governance of public companies. Critics argue that greater attention should be paid to the interest of stakeholders and that by investing in initiatives and programs to promote their interests, companies will create long-term value that is greater, more sustainable, and more equitably shared among investors and society. However, advocacy for a more stakeholder-centric governance model is based on assumptions about managerial behavior that are relatively untested. In this Closer Look, we examine survey data of the CEOs and CFOs of companies in the S&P 1500 Index to understand the extent to which they incorporate stakeholder needs into the business planning and long-term strategy, and their view of the costs and benefits of ESG-related programs.
We ask:
• What are the real costs and benefits of ESG?
• How do companies signal to constituents that they take ESG activities seriously?
• How accurate are the ratings of third-party providers that rate companies on ESG factors?
• Do boards understand the short- and long-term impact of ESG activities?
• Do boards believe this investment is beneficial for the company?
Doing business in China – Recent anti-corruption and briberyGrant Thornton LLP
China enforcement agencies have recently made headlines in their crackdown on corruption within the several industries. As a result of these high-profile investigations, multinationals are refreshing their current anti-corruption compliance and oversight programs to address China’s bribery laws.
Regulators and financial intelligence units are tasked with challenging jobs to fight money laundering and terrorism financing, but some have room for improvement. Financial institutions observe that some regulators and units give unfavorable audit reports not necessarily due to legal breaches, but because of subjective methods rather than proper risk assessment. Excessive compliance costs are incurred without clear evidence that they reduce financial crimes. Regulators and units should ensure regulatory actions have benefits exceeding costs to avoid counterproductive policies. Proper risk understanding and mitigation is important over prescriptive rules and one-size-fits-all approaches.
The proxy fight for board seats at Oshkosh Corporation is underway, with Icahn Associates nominating six directors. While OSK's stock performance has lagged peers, the company has significant defense business exposure. Icahn will argue OSK has failed to execute on acquisitions or develop business segments. Shareholders will evaluate if change is needed and if Icahn's nominees can add value, considering four have Icahn ties raising independence questions.
Alliance Advisors is a shareholder communications firm specializing in proxy solicitation and governance consulting founded in 2005. The firm assists over 200 clients, including Fortune 500 companies, with shareholder activism matters. The document discusses trends in shareholder activism such as more activists seeking minority board representation rather than control and the impact of poor stock performance on vulnerability to activism. It also provides an overview of ISS' framework for evaluating proxy contests and contested mergers and outlines considerations for companies facing shareholder activism.
Alliance Advisors Newsletter January 2012 (Debating Corporate Political Contr...Alliance Advisors
This document summarizes the debate around corporate political contributions and shareholder activism on this issue. It discusses the various types of shareholder proposals being filed in 2012, including those calling for disclosure of political spending and lobbying activities, as well as proposals seeking a shareholder vote on political contributions. The document also examines investor and proxy advisor perspectives on these issues and provides guidance to companies on best practices regarding political spending policies and disclosure.
ISS released their 2011 policy updates which take effect for shareholder meetings on or after February 1, 2011. The changes do not appear to be as substantive as prior years. Key updates include: ISS will recommend annual say on pay votes; companies must commit to current year burn rate caps rather than blended caps; ISS will no longer accept future commitments to address problematic pay practices such as tax gross-ups; ISS strengthened its director attendance policy and will recommend voting against directors who miss 75% of meetings without acceptable disclosure; and ISS will review proposals for shareholder ability to act by written consent on a case-by-case basis considering additional factors.
- Martin Marietta Materials (MLM) made an unsolicited bid to acquire Vulcan Materials (VMC) but the offer of 0.5 MLM shares for each VMC share was deemed too low by the analyst.
- While the offer was reasonably certain, it did not represent a reasonable premium to VMC's standalone valuation or historical trading ratios with MLM.
- There was potential conflict of interest as VMC's CEO insisted on retaining a leadership role in the combined company during negotiations.
- However, MLM may still succeed in the proxy contest due to significant overlapping shareholders in both companies who would benefit financially from the merger.
This document provides an overview and summary of a presentation on proxy contests in M&A from 2012. The presentation discusses the basic information about proxy contests, including what they are and why they occur. It also covers the types of proxy contests, trends in proxy contests, the steps involved and applicable laws, fiduciary duties of directors, and considerations for winning a proxy contest. The presentation was intended to provide information to attendees on these topics related to proxy contests in M&A situations from 2012.
As companies diligently prepare for the 2012 proxy season, they need to be mindful of changes that proxy advisors are making to their voting policies. Institutional Shareholders Services (ISS) recently released its draft policy changes for 2012, which include significant revisions to its methodology for evaluating management say-on-pay (SOP) proposals. Although ISS is accepting comments on its proposed policy changes through November 7th, it is unlikely that there will be any material modifications to them when finalized in November. This article covers the key updates issuers can expect from ISS for 2012.
ISS’s recently announced 2014 policy changes for U.S. companies are relatively limited in scope compared to past years. The updates, which are largely unchanged from the draft policies released in November, will take effect for annual meetings beginning in February 2014.
More substantive policy revisions, however, are already in the works for the 2015 proxy season. ISS has opened a new consultation period through February 2014 to solicit feedback from governance stakeholders on five additional issues: independent chairman shareholder proposals, director tenure, director independence, auditor tenure, and equity plan scoring. Details of these and ISS’s 2014 policy updates are presented in this newsletter.
The document describes a business model canvas for software credit unions. It discusses key partnerships with the Department of Cooperatives, key activities like making software for credit unions, value propositions around being multi-user and cooperative friendly, customer relationships through free updates and info via email, customer segments like village cooperatives and employee cooperatives in Indonesia, key resources as hosting and developers, channels of online websites and offline cooperative offices, cost structures of hosting and employee costs, and revenue streams from training, software sales, and royalties.
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The survey found that mid-market companies are moderating their spending and investments compared to six months ago, despite remaining confident in the economy. Hiring and capital spending growth have slowed, though companies expect better results in the coming year than the previous year. Voluntary employee attrition is also increasing as the labor market strengthens. While pursuing organic growth strategies over partnerships, companies report focusing internally on aspects like technology, customers, and productivity to fuel future expansion. Uncertain economic conditions remain the top challenge to company growth according to the survey.
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The inaugural report reveals that roughly half of institutional investors think that most companies do not acknowledge the risks to their business from the current political climate, reflecting broader concerns raised in the Trust Barometer Global Report 2017.
Ten Myths of “Say On Pay”
Authors: Professor David F. Larcker, Stanford Graduate School of Business; Allan McCall, co-founder of Compensia and currently a PhD candidate at the Stanford GSB; Gaizka Ormazabal, Assistant Professor of Accounting at IESE Business School at the University of Navarra; and Brian Tayan, Researcher, Corporate Governance Research Program, Stanford GSB.
Published: July 28, 2012
Say on pay is the practice of granting shareholders the right to vote on a company’s executive compensation program at the annual shareholder meeting. Under the Dodd-Frank Act of 2010, publicly traded companies in the U.S. are required to adopt say on pay. Advocates of this approach believe that say on pay will increase the accountability of corporate directors and lead to improved compensation practices.
In recent years, several myths have come to be accepted by the media and governance experts. These myths include the beliefs that:
There is only one approach to “say on pay”
All shareholders want the right to vote on executive compensation
Say on pay reduces executive compensation levels Pay plans are a failure if they do not receive high shareholder support
Say on pay improves “pay for performance”
Plain-vanilla equity awards are not performance-based
Discretionary bonuses should not be allowed
Shareholders should reject nonstandard benefits
Boards should adjust pay plans to satisfy dissatisfied shareholders
Proxy advisory firm recommendations for say on pay are correct
We examine each of these myths in the context of the research evidence and explain why they are incorrect.
We ask:
* Should the U.S. rescind the requirement for mandatory say on pay and return to a voluntary regime?
Read the attached Closer Look and let us know what you think!
To receive monthly alerts about the Closer Look series, please email the Stanford Corporate Governance Research Program at corpgovernance@gsb.stanford.edu. You can also follow more corporate governance
A renewed focus on enhancing extended enterprise risk management (EERM) maturity has emerged in the last year amid increasing perceptions of dependence on third parties, although moving up the maturity curve has been slower than expected.
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Commercial finance broker Hilton-Baird Financial Solutions conducted its latest SME Trends Index in September 2014, questioning 238 business owners and finance directors on their challenges and expectations.
Here are the results, which include 50% of respondents labelling the level of funding support that's currently available to them as "inadequate".
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Navigating the Waters of Special Meetings and Written Consent Proposals 05-20...Alliance Advisors
This year’s vote tallies point to two emerging trends on these proposals which may give companies a brief sigh of relief: (1) opinions of proxy advisors, particularly ISS, are having less of an impact on the vote outcomes, and (2) investors, like the corporate community, are growing weary of these resolutions.
By David F. Larcker, Brendan Sheehan, and Brian Tayan
September 1, 2016, Stanford Corporate Governance Initiative, and Stanford Rock Center for Corporate Governance
The Pepperdine Private Capital Markets Project, available at http://bschool.pepperdine.edu/privatecapital, is the first comprehensive and simultaneous investigation of the major private capital market segments. The initial research survey examined the behavior of the private capital market participants, investment types, expected and historical rates of return, financial ratio thresholds, coupon rate distributions and other investment characteristics.
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After reading this survey, Zyme concluded that only few incentives of the companies are being met by the channels. Therefore, there is a strong requirement of channel data management in order to assess and keep track of the channels. To Know More:-http://www.zyme.com/channel-data-management
According to results of Callan Associates’ 2013 Risk Management Survey, more than half of fund sponsors (55%) say their risk management tools are effective at mitigating investment risk, but 14% see them as simply a means to improve risk identification and monitoring. One-third of respondents indicated they do not know yet the effectiveness of their risk management tools because they are new and untested in a true market crisis.
The survey found formal risk management processes are most prevalent at large funds. Half of the medium and small funds have adopted a risk management process or are doing so in 2013. Forty-two percent of respondents employ proprietary and/or third-party risk measurement tools, such as software or data services. Usage of third-party tools is most prevalent at public funds, while endowments and foundations more often use in-house (proprietary) tools.
Corporate and public funds are embracing policy-level approaches to risk management more so than endowments and foundations. Public funds have implemented economic regime asset allocations, risk parity, and risk factor-based asset allocations, while corporate funds favor liability-driven investing and funded status-based glide path de-risking.
Strategy-level approaches to mitigate risk are easier to implement than those that alter the fund’s overall investment policy, and Callan observed higher levels of adoption of strategy changes across fund types. Public funds and foundations and endowments are most heavily implementing or considering real assets, opportunistic fixed income, absolute return and long/short equity. Corporate funds are also embracing absolute return, but long duration is the most favored strategy-level approach used to address risk.
Many fund sponsors wrestle with whether or not to tactically manage plan risk. Only 30% of sponsors have made rebalancing decisions based on risk management findings. Of those that have not done so, 82% do not plan to in the future.Public (31%) and large (25%) funds are the most likely to use tactical implementations going forward.
According to the survey, most funds (94%) do not have a formal risk budget, but explicitly address risk management in their plan governance via asset allocation, investment objectives and disciplined rebalancing.
The investment committee is the body most regularly tasked with deciding when to take action based on the findings of risk management tools. The most common actions taken were asset allocation changes (64% of respondents), manager due diligence/search (56%) and increased manager monitoring (52%). Twenty percent of respondents had not yet taken any actions based on risk management findings.
The survey was conducted in November 2012 and includes responses from 53 fund sponsors representing $576 billion in assets.
This document summarizes the results of a survey conducted by Callan Institute regarding asset managers' approaches to environmental, social, and governance (ESG) investing. The survey found that larger asset management firms are more likely to have formal ESG policies and sign the UN Principles for Responsible Investment. Over half of firms surveyed do not have an ESG policy, but interest is growing. Larger firms see greater opportunities in ESG strategies and expect increasing client demand from the US, Canada, and Europe.
2013 Callan Cost of Doing Business Survey: U.S. Funds and TrustsCallan
The survey found that on average funds spent 54 basis points of total assets to operate in 2012. External investment management fees represented 90% of total expenses, the largest portion. These fees have risen 55% since 1998. Non-investment management external advisor fees, the second largest expense, increased 115% over the same period. Overall, average total fund expenses have increased more than 50% since 1998.
The survey found that 37% of respondents have incorporated ESG factors into investment decisions, up from 29% in 2015. Adoption rates were highest among health care funds (62%), endowments (53%), and foundations (48%). Large funds (> $20B assets) had the highest adoption rate at 71%. The most common way of implementing ESG was by adding language to investment policies (53%). While the value proposition of ESG remains unclear for some, personal views on ESG are becoming more defined, and more funds are considering ESG incorporation.
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In this new Accenture Finance & Risk document we present the key finding from a global study across financial services firms to assess the impact of the LIBOR transition. Visit www.accenture.com/LIBORsurvey for more information
The ES&G Accountability Forum (2013) provided participants and panelists with an opportunity to examine the question of how information (both financial and non-financial) can best be provided in a form that is useful to decision makers that are affected by, or have an affect on Canada’s companies.
This document captures key points made by panelists, their answers to questions posed, and the Forum’s participants’ table discussions. It is organized around each panel: investors, companies, evaluation organizations. We hope to encourage all groups to consider the advice and comments discussed at the Forum, and to take action on the outstanding questions and issues to improve the state of ES&G disclosure, analysis and investing that are highlighted on pages 9 & 10.
This year on September 23, 2014 in Calgary, many of these unanswered questions will be addressed at the ES&G Forum 2014: "Non-financial performance... A missed opportunity?"
Building on the last two years' discussions, participants will hear how investors and businesses are implementing innovative methods to manage investor demand for ES&G information. To learn more about & register for this year's ES&G Forum, please visit: http://bit.ly/esg-forum-2014
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Dive into the steadfast world of the Taurus Zodiac Sign. Discover the grounded, stable, and logical nature of Taurus individuals, and explore their key personality traits, important dates, and horoscope insights. Learn how the determination and patience of the Taurus sign make them the rock-steady achievers and anchors of the zodiac.
How MJ Global Leads the Packaging Industry.pdfMJ Global
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This presentation is a curated compilation of PowerPoint diagrams and templates designed to illustrate 20 different digital transformation frameworks and models. These frameworks are based on recent industry trends and best practices, ensuring that the content remains relevant and up-to-date.
Key highlights include Microsoft's Digital Transformation Framework, which focuses on driving innovation and efficiency, and McKinsey's Ten Guiding Principles, which provide strategic insights for successful digital transformation. Additionally, Forrester's framework emphasizes enhancing customer experiences and modernizing IT infrastructure, while IDC's MaturityScape helps assess and develop organizational digital maturity. MIT's framework explores cutting-edge strategies for achieving digital success.
These materials are perfect for enhancing your business or classroom presentations, offering visual aids to supplement your insights. Please note that while comprehensive, these slides are intended as supplementary resources and may not be complete for standalone instructional purposes.
Frameworks/Models included:
Microsoft’s Digital Transformation Framework
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Forrester’s Digital Transformation Framework
IDC’s Digital Transformation MaturityScape
MIT’s Digital Transformation Framework
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Capgemini’s Digital Transformation Framework
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P: 973.873.7700
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www.allianceadvisorsllc.com
The Shareholder Communication Strategists
July 2012
2012 Say-on-Pay Votes: Fulfilled Expectations, Though Not Without Surprises
By Shirley Westcott
This year’s mandatory Say-on-Pay (SOP) brought new challenges for issuers. Not only did the pace of
failed plans accelerate, but last year’s votes proved to be a poor indicator of how companies’ plans
would fare this season. This report, which will be updated at the conclusion of the calendar year, will
point out some high-level trends in the voting data for companies with low SOP votes so far this year.
Although receiving at least 50% support on SOP is the primary goal for issuers, in many cases the
institutional investor community will apply heightened scrutiny to compensation plans that received
“significant” opposition. Thus, the data set we reviewed in this report—shown in Appendix A—covers
plans that received less than 70% support. Following our analysis of these data is a brief section on
guidance for issuers, both how to recover from a failed SOP vote in 2012 and how to prepare for 2013.
Failed SOP Votes
Through June 25, 2012 annual meeting dates, 53 SOP proposals had been rejected by shareholders
(2.4% of the total), up from 37 (1.4% of the total) for the same period last year.1
Among these were 12
S&P 500 companies, double the number of S&P 500 firms that failed SOP in 2011.2
The magnitude of dissent has also increased. To date, 10 SOP proposals have received less than 30%
support, with the lowest levels recorded at Digital River (19.2%) and Chiquita Brands International
(19.8%). During all of 2011, only two companies received less than 30% support on SOP: American
Defense Systems (11.1%) and Regis (28.9%).
Most companies whose SOP proposals were rejected last year addressed shareholders’ concerns and
made meaningful changes to their pay programs, thereby garnering high approval this year. To date,
only four companies have had their plans voted down for two consecutive years: Kilroy Realty, Hercules
Offshore, Nabors Industries, and Tutor Perini.
This season’s surprise, however, has been the number of companies whose compensation plans sank
from stellar to dismal support levels in only a year, Citigroup being the most highly publicized example.
To date, 61 companies have seen their SOP approval levels plunge from over 90% in 2011 to below 70%
in 2012, including 13 plans that failed. This reversal of fortune can be partly attributed to the influence
of proxy advisory firms, particularly Institutional Shareholder Services (ISS).
1
During all of 2011, 43 SOP proposals failed: 1.3% of the total.
2
The 12 S&P 500 companies that failed SOP through June 25, 2012 are Abercrombie & Fitch, Best Buy, Big Lots, Chesapeake Energy, Citigroup,
Cooper Industries, International Game Technology, Mylan, Nabors Industries, NRG Energy, Pitney Bowes and Simon Property. The six S&P 500
firms that failed SOP in 2011 are Freeport-McMoRan Copper & Gold, Hewlett-Packard, Jacobs Engineering, Masco, Nabors Industries, and
Stanley Black & Decker.
2. 2 | P a g e
The Shareholder Communication Strategists
Advisory Service Recommendations
Although the impact of the major proxy advisors’ recommendations on executive pay has been
documented in several studies (discussed below), this year it appears more pronounced. Through June
25, 91% of the companies that received less than 70% approval on SOP had also been issued a negative
opinion by ISS, compared to 87% for the same period in 2011. Over half of these companies (64%)
received an unfavorable recommendation from both ISS and Glass Lewis.
Similarly, as in 2011, virtually every failed SOP vote this year was opposed by ISS. The only exceptions
were at First California Financial Group, InSite Vision, and Safety Insurance Group, whose plans were
voted down despite being endorsed by ISS. However, two of these companies have significant
ownership by hedge funds or private foundations, and the third (Safety Insurance Group) received a
negative SOP recommendation from Glass Lewis. Although Glass Lewis has rejected fewer
compensation plans this year than in 2011 (15.4% vs. 17.4%), its influence has contributed to the high
SOP failure rate. Of the 53 plans that have failed to date, Glass Lewis vetoed 47.
This year, issuers are feeling the repercussions of ISS’s new Pay-for-Performance (PFP) model, which
went into effect for February annual meetings onwards. Under its revised methodology, ISS is
evaluating CEO pay and total shareholder return (TSR) performance on both a relative and an absolute
basis. The relative analysis ranks CEO pay and performance against peers over one and three years,
while the absolute analysis examines the trend in CEO pay and performance over five years. Moreover,
instead of employing standardized GICS peer groups, ISS has developed smaller (14-24 company) peer
categories based on market capitalization, revenue, and industry.
Although ISS’s new PFP methodology has produced about the same percentage of negative SOP
recommendations as in 2011 (12%), the plans it is singling out for “no” votes has changed dramatically.
Nearly two thirds of the companies that received a negative ISS recommendation this year had received
a favorable ISS opinion on SOP last year, and a majority had also received strong investor support (over
80%) in 2011. This has been particularly unsettling for issuers whose compensation programs were
unexpectedly voted down this year. Of the 53 plans that have failed so far in 2012, nearly half (22) had
received over 80% shareholder support last year, and 13 had received over 90% support. One such
company, Tower Group, observed in its 8-K filing that its executive compensation policies and programs
had not substantially changed since the previous year. In fact, its CEO’s compensation was 40% lower
than the previous year due to reductions in his annual cash and equity bonus.
Arguing with the Advisors
Many companies caught off guard by a negative proxy advisor opinion countered with supplemental
proxy filings to better explain their compensation programs to investors. In many cases, they pushed
back at the proxy advisors’ methodologies, most often disputing their choice of peer groups, or took
issue with errors in their reports. Indeed, one company (Invesco) received a favorable recommendation
from both ISS and Glass Lewis, yet still filed a supplemental proxy statement, noting that while the proxy
advisors “reached the correct result,” ISS should have employed a more appropriate peer group, while
Glass Lewis should have disclosed its comparators.
3. 3 | P a g e
The Shareholder Communication Strategists
Proxy Advisor Policies – Don’t Ignore Them
Notwithstanding criticisms of their methodologies, the reality is that mandatory SOP has compelled
more investors to rely on proxy advisors’ research to contend with the sheer volume of proxy voting. A
recent survey conducted by the IRRC Institute and Tapestry Networks of 19 North American asset
managers found that most make use of proxy firm data to assist with their voting decisions on SOP.3
Proxy advisors’ policies on executive compensation have also shaped corporate behavior. In a March
2012 survey of 110 large and mid-cap companies conducted by The Conference Board, NASDAQ OMX
Group and Stanford University, 70% of respondents said that their compensation programs were
influenced by the guidelines of proxy advisory firms.4
While it is evident that investors do not follow proxy advisor recommendations in lockstep—far fewer
compensation plans have been rejected by shareholders than by proxy advisors—issuers need to be
cognizant of the extent to which their major holders follow proxy advisors’ policies and also what factors
trigger the greatest dissent.5
A March 2012 study by academics at Columbia University, Duke University
and the University of St. Gallen, concluded that proxy advisor recommendations were the key
determinants of SOP voting outcomes in 2011.6
According to their findings:
A negative ISS recommendation was associated with 24.7% more votes against SOP.
A negative Glass Lewis recommendation was associated with 12.9% more votes against SOP.
Negative recommendations by both proxy advisors led to 37.9% higher voting dissent.
However, the degree an “against” recommendation affected shareholder votes depended on the
severity and nature of concerns raised by the proxy advisor. The study found that dissent was higher
when ISS cited multiple areas of concern, such as PFP and change-in-control agreements, or when Glass
Lewis assigned an “F” grade to a company’s PFP. This underscores what many investors have been
saying for years: although they use proxy advisors’ research to screen companies for further
examination, they will still make their own voting determinations.
Guidance for Issuers
When preparing and drafting your compensation plan, it pays to know your shareholder base. Who are
your top holders? Do they follow ISS or Glass Lewis, or do they have their own internal voting guidelines
for evaluating executive compensation?
With assistance from their advisors (proxy solicitor, legal counsel, etc.), issuers should analyze their
shareholder base to determine the levels of influence ISS and Glass Lewis have on their investors. This
analysis should also identify those holders that maintain their own internal voting guidelines. As with
3
The IRRC Institute/Tapestry Networks study is available at http://www.irrcinstitute.org/projects.php?project=57.
4
The Conference Board study is available at https://www.conference-board.org/retrievefile.cfm?filename=TCB-DN-V4N5-12.pdf&type=subsite.
5
In 2011, ISS opposed 11.9% of SOP proposals and Glass Lewis opposed 17.2%. Investors voted down 1.3% of SOP proposals.
6
The academic study is available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2019239.
4. 4 | P a g e
The Shareholder Communication Strategists
the policies of ISS and Glass Lewis, issuers should familiarize themselves with the critical vote drivers
their top institutional investors will use to make their SOP decision.
When drafting the Compensation Discussion & Analysis (CD&A) section of the proxy statement:
Be clear when telling your story
Include narrative: many of the vote decision makers at the major institutions are not industry
experts, help them understand your compensation decisions.
Issuers can take a number of measures to avoid or deflect a negative proxy advisor recommendation on
SOP. Indeed, 91 companies were able to prevail in this year’s shareholder vote on SOP in the face of
negative recommendations from both ISS and Glass Lewis—in some cases by a strong margin (over
70%). To date Alliance has identified 18 companies that received over 70% support despite negative
recommendations from both ISS and Glass Lewis.
As an initial step, issuers should become familiar with proxy advisor policies on executive compensation
and stay apprised of any revisions to them in advance of proxy season. While it is difficult to reverse-
engineer black box models, ISS’s and Glass Lewis’s proxy reports and websites provide some
transparency of their PFP methodologies and their checklists of problematic pay practices. Issuers
should expect changes for 2013. Glass Lewis has already announced a partnership with Equilar, an
executive compensation research firm, whereby Glass Lewis will integrate Equilar’s market-based peer
groups and realizable pay data into its PFP model for annual meetings beginning in July 2012. ISS, for its
part, is likely to rethink certain aspects of its PFP model for 2013, particularly its choice of peer groups,
in view of the severe blowback it faced from issuers this year.
For proxy season issuers, Alliance recommends a targeted outreach campaign during the late summer
and early fall. During the solicitation period it pays to “hope for the best, prepare for the worst.”
Prepare a strategy outlining whether to engage communications with a proxy/compliance department
contact(s) and/or the buy/sell side which will help determine responsibility (who will reach out to
whom—whether a proxy solicitation firm will handle the initial outreach call or whether the company
should be involved). In addition, prepare to have a team from the issuer available to speak with
investors on their concerns.
It is impossible to over-emphasize the importance of ongoing engagement with top holders, even if the
issuer’s SOP vote was “safe” this year. ISS and Glass Lewis give additional scrutiny to companies who
received less than 70%-75% approval on SOP in the prior year. However, as witnessed this season,
changes to proxy advisors’ compensation models can unexpectedly shift companies to the SOP penalty
zone. While it is difficult to reverse an unfavorable proxy advisor recommendation—short of modifying
a compensation plan—the best way to diminish proxy advisors’ influence is for the issuer to make its
case directly to its major shareholders, both in terms of dialogue and proxy disclosure to help win over
their support.
Don’t be reluctant to refute an advisory firm(s) in a supplemental filing. Some advantages of filing
supplemental material are to (i) strengthen their case on compensation decisions and practices (ii)
5. 5 | P a g e
The Shareholder Communication Strategists
address any flaws or inaccuracies towards the advisory firm report(s) and (iii) provide information that
can be passed along to institutional vote decision makers that may not have the time to speak during
proxy season on SOP.
Every vote counts. Make a concerted effort to reach out to investors that can make a difference as well
as considering solicitation tactics to drive in support from the individual investors whether it be a phone
campaign and/or follow up mailings.
For further information, please contact Alliance Advisors, LLC at:
Phone: 973-873-7700
Email: SOP@allianceadvisorsllc.com
6. 6 | P a g e
The Shareholder Communication Strategists
Appendix A:
Issuer
Meeting
Date
ISS
Glass
Lewis
Vote
Result
% FOR*
Supplement
al Filing
Abercrombie & Fitch Co. 14-Jun-12 Against Against Fail 24.5%
Actuant Corporation 10-Jan-12 Against Against Fail 46.7% Yes
Adobe Systems Incorporated 12-Apr-12 Against Against Pass 57.9% Yes
AECOM Technology Corp. 8-Mar-12 Against Against Pass 58.4%
Affymax, Inc. 13-Jun-12 Against Against Pass 64.7%
Affymetrix, Inc. 11-May-12 Against Against Pass 53.5%
AK Steel Holding Corporation 24-May-12 Against For Pass 69.5% Yes
Akamai Technologies, Inc. 16-May-12 Against For Pass 52.3% Yes
Allegheny Technologies Incorporated 11-May-12 Against Against Pass 59.5% Yes
Altera Corp. 8-May-12 Against For Pass 66.3% Yes
American Eagle Outfitters, Inc. 6-Jun-12 Against Against Fail 39.9% Yes
Argo Group International Holdings, Ltd. (Bermuda) 8-May-12 Against Against Fail 45.5%
Artio Global Investors Inc. 11-May-12 Against Against Pass 69.9%
AsiaInfo-Linkage, Inc. 20-Apr-12 Against Against Pass 65.2%
Associated Banc-Corp 24-Apr-12 Against Against Pass 64.3% Yes
Atlas Air Worldwide Holdings, Inc. 1-Jun-12 Against For Pass 67.8% Yes
Autodesk, Inc. 7-Jun-12 Against Against Pass 54.0% Yes
Avid Technology, Inc. 15-May-12 Against Against Pass 50.8% Yes
Bank of New York Mellon Corporation 10-Apr-12 Against Against Pass 58.6%
Best Buy Co., Inc. 21-Jun-12 Against For Fail 38.3%
Big Lots, Inc. 23-May-12 Against For Fail 31.2%
Brink's Company 4-May-12 Against For Pass 55.3% Yes
C. R. Bard, Inc. 18-Apr-12 Against Against Pass 60.2% Yes
California Water Service Group 22-May-12 Against For Pass 62.1% Yes
Career Education Corporation 17-May-12 Against Against Pass 52.0% Yes
Cedar Realty Trust, Inc. 15-Jun-12 Against Against Fail 38.3%
Central Federal Corporation 17-May-12 For For Pass 53.4%
Cenveo, Inc. 2-May-12 Against For Fail 40.4%
Charles River Laboratories International, Inc. 8-May-12 Against Against Fail 36.1% Yes
Chelsea Therapeutics International, Ltd. 12-Jun-12 For For Pass 64.2%
Chemed Corporation 21-May-12 Against Against Fail 47.9% Yes
Chesapeake Energy Corp. 8-Jun-12 Against Against Fail 20.0% Yes
Children's Place Retail Stores, Inc. 13-Jun-12 Against For Pass 56.6% Yes
Chiquita Brands International, Inc. 22-May-12 Against Against Fail 19.8% Yes
Citigroup Inc. 17-Apr-12 Against Against Fail 45.2%
Cleveland BioLabs, Inc. 13-Jun-12 For For Pass 67.1%
Cogent Communications Group, Inc. 19-Apr-12 Against Against Pass 68.5%
Community Health Systems, Inc. 15-May-12 Against Against Fail 32.9% Yes
Comstock Resources, Inc. 8-May-12 Against Against Fail 34.7%
Comtech Telecommunications Corp. 13-Jan-12 For Against Pass 68.4%
Concur Technologies, Inc. 14-Mar-12 Against Against Pass 61.7%
CONSOL Energy Inc. 1-May-12 Against For Pass 54.2% Yes
Consolidated Water Co. Ltd. (Cayman) 22-May-12 Against For Pass 65.7%
Cooper Industries plc (Ireland) 23-Apr-12 Against For Fail 29.4%
Cousins Properties Incorporated 8-May-12 Against For Pass 60.6%
CryoLife, Inc. 16-May-12 Against Against Fail 38.8% Yes
Cutera, Inc. 13-Jun-12 Against For Pass 55.4%
Delcath Systems, Inc. 23-May-12 Against For Pass 52.5%
Devon Energy Corp. 6-Jun-12 Against Against Pass 60.1% Yes
Digital River, Inc. 31-May-12 Against Against Fail 19.2%
Doral Financial Corp. 13-Jun-12 Against Against Pass 55.4%
Dun & Bradstreet Corp. 9-May-12 Against For Pass 64.8%
7. 7 | P a g e
The Shareholder Communication Strategists
Issuer
Meeting
Date
ISS
Glass
Lewis
Vote
Result
% FOR*
Supplement
al Filing
ECB Bancorp, Inc. 7-Jun-12 For For Pass 68.8%
EnergySolutions, Inc. 23-May-12 Against Against Pass 58.2% Yes
EnPro Industries, Inc. 2-May-12 Against For Pass 63.1%
Enzo Biochem, Inc. 26-Jan-12 Against For Pass 60.3%
Epiq Systems, Inc. 5-Jun-12 Against Against Fail 30.1%
First California Financial Group, Inc. 7-May-12 For For Fail 49.1%
First PacTrust Bancorp, Inc. 21-May-12 Against For Pass 67.6%
FirstEnergy Corp. 15-May-12 Against Against Pass 62.5% Yes
FirstMerit Corporation 18-Apr-12 Against Against Fail 46.6% Yes
Forest Oil Corporation 8-May-12 Against Against Pass 50.2%
Foster Wheeler AG (Switzerland) 1-May-12 For For Pass 65.9%
Freeport-McMoRan Copper & Gold Inc. 14-Jun-12 Against For Pass 67.1% Yes
Gentiva Health Services, Inc. 10-May-12 Against Against Fail 36.5%
GEO Group, Inc. 4-May-12 Against Against Pass 60.1% Yes
Geron Corporation 17-May-12 For Against Pass 63.3% Yes
G-III Apparel Group, Ltd. 5-Jun-12 Against Against Fail 35.2%
GMX Resources Inc. 16-May-12 Against For Pass 65.7% Yes
Greenbrier Companies, Inc. 6-Jan-12 Against Against Pass 53.0%
Greenhill & Co., Inc. 18-Apr-12 Against Against Pass 59.5%
Health Care REIT, Inc. 3-May-12 Against For Pass 63.9% Yes
Healthways, Inc. 31-May-12 Against Against Fail 33.2% Yes
Heidrick & Struggles International, Inc. 24-May-12 For Against Pass 69.2%
Hercules Offshore, Inc. 15-May-12 Against Against Fail 48.0% Yes
Hess Corporation 2-May-12 Against Against Pass 57.8% Yes
Huntington Bancshares Incorporated 19-Apr-12 Against Against Pass 61.0% Yes
Imation Corp. 2-May-12 Against For Pass 65.8% Yes
Infinera Corp. 16-May-12 Against Against Fail 41.6%
InSite Vision Incorporated 31-May-12 For For Fail 58.7%
Integra LifeSciences Holdings Corporation 17-May-12 Against Against Pass 50.7% Yes
InterMune, Inc. 4-Jun-12 Against Against Pass 50.9% Yes
International Game Technology 5-Mar-12 Against For Fail 44.4% Yes
Isis Pharmaceuticals, Inc. 7-Jun-12 Against Against Pass 63.0% Yes
iStar Financial Inc. 31-May-12 Against For Pass 68.3%
Itron, Inc. 4-May-12 Against Against Pass 51.9%
ITT Educational Services, Inc. 8-May-12 Against Against Pass 65.3%
J.C. Penney Co., Inc. 18-May-12 Against Against Pass 57.3% Yes
Janus Capital Group Inc. 26-Apr-12 Against Against Pass 61.4% Yes
Jarden Corp. 17-May-12 Against For Pass 51.0%
Johnson & Johnson 26-Apr-12 Against Against Pass 56.8% Yes
Johnson Controls, Inc. 25-Jan-12 Against Against Pass 58.2% Yes
Juniper Networks, Inc. 22-May-12 Against For Pass 66.8% Yes
KB Home 12-Apr-12 Against Against Fail 48.4%
Kforce Inc. 19-Jun-12 Against Against Fail 39.8% Yes
Kilroy Realty Corporation 17-May-12 Against Against Fail 29.9% Yes
Knight Capital Group, Inc. 9-May-12 Against Against Fail 32.0%
Kratos Defense & Security Solutions, Inc. 23-May-12 Against Against Pass 58.4% Yes
Layne Christensen Company 7-Jun-12 Against For Pass 57.0%
Lazard Ltd. (Bermuda) 24-Apr-12 Against Against Pass 52.2%
Lender Processing Services, Inc. 24-May-12 Against Against Pass 58.7% Yes
Leucadia National Corporation 15-May-12 Against Against Pass 64.1%
Level 3 Communications, Inc. 24-May-12 Against Against Pass 57.9%
Lincoln Educational Services Corporation 1-May-12 For Against Pass 64.0%
Live Nation Entertainment, Inc. 8-Jun-12 Against Against Pass 58.8%
Lockheed Martin Corporation 26-Apr-12 For Against Pass 68.1%
8. 8 | P a g e
The Shareholder Communication Strategists
Issuer
Meeting
Date
ISS
Glass
Lewis
Vote
Result
% FOR*
Supplement
al Filing
Manitowoc Company, Inc. 1-May-12 Against Against Fail 48.4% Yes
Masimo Corporation 7-Jun-12 Against Against Fail 37.7%
Medicis Pharmaceutical Corporation 15-May-12 Against For Pass 66.3%
MGM Resorts International 12-Jun-12 Against Against Pass 64.2%
Middleby Corporation 10-May-12 Against For Pass 53.3%
Minerals Technologies Inc. 16-May-12 Against Against Pass 52.8%
Morgans Hotel Group Co. 16-May-12 Against For Pass 66.0%
Motorola Solutions, Inc. 30-Apr-12 Against Against Pass 58.8%
Multimedia Games Holding Company, Inc. 1-Feb-12 Against For Pass 69.6%
Mylan Inc. 4-May-12 Against Against Fail 47.9% Yes
Nabors Industries Ltd. 5-Jun-12 Against Against Fail 25.2%
National CineMedia, Inc. 1-May-12 Against For Pass 69.9% Yes
Newpark Resources, Inc. 7-Jun-12 Against For Pass 64.1%
Noble Corp. (Switzerland) 27-Apr-12 Against For Pass 53.0%
NorthStar Realty Finance Corp. 24-May-12 Against Against Pass 62.1%
NRG Energy, Inc. 25-Apr-12 Against Against Fail 44.9%
Nutrisystem, Inc. 6-Jun-12 For Against Pass 66.2%
NuVasive, Inc. 24-May-12 Against Against Fail 32.7% Yes
NYSE Euronext 26-Apr-12 Against Against Pass 57.0% Yes
OM Group, Inc. 8-May-12 Against Against Fail 23.6% Yes
Orion Marine Group, Inc. 22-May-12 Against For Pass 53.0% Yes
Overseas Shipholding Group, Inc. 14-Jun-12 Against Against Pass 64.4%
Pain Therapeutics, Inc. 17-May-12 Against Against Pass 56.2%
Palomar Medical Technologies, Inc. 16-May-12 Against Against Fail 47.0%
Penn National Gaming, Inc. 6-Jun-12 Against Against Pass 53.4% Yes
Phoenix Companies, Inc. 15-May-12 Against Against Fail 46.1%
Pitney Bowes Inc. 14-May-12 Against Against Fail 35.2% Yes
Plains Exploration & Production Company 18-May-12 Against Against Pass 59.3%
QUALCOMM Inc. 6-Mar-12 Against For Pass 68.8% Yes
Quest Diagnostics Incorporated 11-May-12 Against Against Pass 63.5% Yes
Rambus Inc. 26-Apr-12 Against Against Pass 52.4%
Rigel Pharmaceuticals, Inc. 22-May-12 Against Against Fail 44.6%
Rimage Corporation 17-May-12 Against For Pass 65.1%
Ryland Group, Inc. 25-Apr-12 Against Against Fail 40.9%
Safety Insurance Group, Inc. 23-May-12 For Against Fail 42.9%
Safeway Inc. 15-May-12 Against Against Pass 50.8% Yes
Schnitzer Steel Industries, Inc. 25-Jan-12 Against Against Pass 58.9%
Sequenom, Inc. 11-Jun-12 Against Against Fail 48.3%
Shutterfly, Inc. 23-May-12 Against For Pass 63.5%
Simon Property Group, Inc. 17-May-12 Against Against Fail 26.7% Yes
Smith Micro Software, Inc. 21-Jun-12 Against Against Pass 59.6%
Spectrum Pharmaceuticals, Inc. 22-Jun-12 Against Against Pass 53.7%
SPX Corporation 3-May-12 Against Against Pass 52.1% Yes
Staples Inc. 4-Jun-12 Against For Pass 60.9% Yes
Sterling Bancorp 3-May-12 Against Against Fail 40.0% Yes
Strategic Hotels & Resorts, Inc. 24-May-12 Against For Pass 68.1% Yes
Synchronoss Technologies, Inc. 8-May-12 Against For Pass 69.4%
Targacept, Inc. 31-May-12 Against For Pass 68.1% Yes
Tower Group, Inc. 3-May-12 Against Against Fail 30.3%
TransDigm Group Incorporated 23-Feb-12 Against Against Pass 54.3%
True Religion Apparel, Inc. 25-Apr-12 Against For Pass 59.0%
Tutor Perini Corporation 31-May-12 Against Against Fail 38.3% Yes
Ultimate Software Group, Inc. 18-May-12 Against Against Pass 66.9%
Ultra Petroleum Corp. 22-May-12 Against Against Pass 65.7%
9. 9 | P a g e
The Shareholder Communication Strategists
Issuer
Meeting
Date
ISS
Glass
Lewis
Vote
Result
% FOR*
Supplement
al Filing
United Online, Inc. 31-May-12 Against Against Fail 31.9% Yes
United States Steel Corporation 24-Apr-12 Against Against Pass 65.3%
United Technologies Corporation 11-Apr-12 Against For Pass 61.0% Yes
USEC Inc. 26-Apr-12 Against For Pass 69.8%
VCA Antech, Inc. 21-May-12 Against For Fail 40.9%
Ventas, Inc. 17-May-12 Against For Pass 66.5% Yes
Vertex Pharmaceuticals Incorporated 16-May-12 Against Against Pass 51.3%
Viad Corp 15-May-12 Against Against Fail 21.1% Yes
Vocus, Inc. 7-Jun-12 Against Against Pass 52.4%
Walt Disney Co. 13-Mar-12 Against Against Pass 56.9% Yes
Wave Systems Corp. 19-Jun-12 For For Pass 62.7%
Weatherford International Ltd. (Switzerland) 23-May-12 Against For Pass 54.5%
Willis Group Holdings Public Limited Co. (Ireland) 25-Apr-12 Against Against Pass 54.4%
*Based on votes cast For/For+Against.
Sources: SEC filings, ISS Voting Analytics, and Glass Lewis data.