|
Note: For the Schering-Plough report anticipated in the article below, and a copy of the survey itself, see |
CompensationStandards.com, September 10, 2009 posting
September 10, 2009More Executive Pay Surveys: A Comparison - Broc Romanek, CompensationStandards.com
Following a trend commenced last year by
Schering-Plough, industry rivals Lockheed Martin and Northrop Grumman
recently posted shareholder surveys regarding executive pay on their
websites. The principal idea behind these surveys is to provide a better
avenue than say-on-pay for shareholders to weigh in on compensation (egs.
shareholders can provide specific comments and the questions are more
narrowly focused).
You may recall that I recently conducted a
podcast with Susan Wolf of
Schering-Plough regarding how the experience worked out for them this past
proxy season. Schering-Plough intends to announce the results of its
survey sometime during the next few months. Amgen also canvassed
shareholders this past proxy season. We have compiled all these surveys in
our "Say-on-Pay"
Practice Area.
A Comparison of the Surveys
1. Posting Surveys Online - The two newest
surveys are posted online - but Schering-Plough mailed their
survey as part of their proxy
materials (as noted in this
press release). Amgen also posted
its
survey online. It will be
interesting to see whether posting surveys increases - or decreases -
shareholder participation. My guess is "increase" - but you never know
(for example, note how e-proxy has resulted in a decrease in retail
votes).
2. Evaluation of CD&A Transparency - To some
degree, all of the surveys piggyback on TIAA-CREF's
list of ten questions for
evaluating CD&As that was released back in August '07 (in fact, Amgen's
survey is identical to TIAA-CREF's survey). All of the surveys ask whether
shareholders found their CD&As clear and useful and allow for five types
of answers.
3. Tying Pay to Performance - The surveys ask
whether shareholders think pay is tied to performance in slightly
different ways. Lockheed Martin's
survey asks whether its executive
pay as disclosed ties pay to performance and is aligned with shareholder
value. Northrop Grumman's
survey asks whether its
compensation play is aligned with the long-term creation of shareholder
value. Schering-Plough asks whether its executive pay program is tied to
performance and then also drills down with questions about specific
performance metrics.
4. Does Pay Matter? - Northrop Grumman asks two
interesting questions that the others do not: whether the shareholder
analyzed the company's pay policies and practices before becoming a
shareholder and whether the company's compensation plan was a material
consideration in becoming a shareholder.
5. Retention and Mix of Equity - Schering-Plough
was the only company to ask whether shareholders thought that the
company's pay plan allows it to attract and retain well-qualified
executives, as well as ask questions about the mix of equity in both its
executive's and director's pay.
6. Whether Shareholders Support Pay - Both of
the newest surveys - Lockheed Martin and Northrop Grumman - cut to the
chase and ask the $64,000 question: whether shareholders support the
company's compensation plan as described in the CD&A.
7. Additional Comments - All of the surveys
allow for shareholders to submit their own comments, a smart move since
the use of multiple choice answers can be limiting. Amgen's survey doesn't
even provide an opportunity to select from a multiple choice menu - each
question has a text box below it. I think providing multiple choice
selections will increase the likelihood of obtaining more responses - as
some potential respondents may be daunted by the burden of spending too
much time on a survey.
© 2004-2009,
Executive Press, Inc. |
