Director Data Annual Report 2019
By Directors and Boards

Trends for the 2019 Proxy Season

Shareholder voting during 1,024 meetings held during the “mini-season” between July 1 and Dec. 31, 2018 provides a window into what’s in store for the 2019 proxy season. A total of 3,637 directors stood for election this past season — 143 of them failed to receive majority support and 428 directors failed to attain at least 70% support, a threshold monitored by some proxy advisors.

Source: ProxyPulse, Broadridge and PwC

 

 

 

 

 

The Board’s Sustainability Responsibility

There is little unanimity at the board level when it comes to where the buck stops for environmental sustainability. Less than half of directors surveyed said environmental and sustainability issues are formally overseen at the board level. More specifically, 20% of respondents reported that their full board has a formal mandate covering environmental and sustainability issues, and 30% reported that a board committee is responsible for it.

Source: Diligent Institute: “Winds of Change: Environmental Sustainability Rises to the Board Level”

 

Long-term Incentives a Bigger Part of CEO Paychecks

Short- and long-term incentives grew by 7.5% in 2018, with long-term incentive (LTI) use reflecting the trend toward more performance shares and fewer stock options. Some other key findings:

• Median LTI values granted to CEOs in 2018 were just over $8.4 million, reflecting a 7.5% median increase over the prior year.

• Shares with vesting tied to performance metrics continue to be the most utilized LTI vehicle among the S&P 500 with prevalence increasing to 92% of the sample in 2018 compared to 84% in 2014.

• Over the same period, the prevalence of shares that vest solely based on service has increased to 62% from 54%, while stock option usage has declined to 58% from 66%. Long-term Incentives a Bigger Part of CEO Paychecks

Source: Mercer, CEO Pay Analysis of S&P 500 Early Proxy Filers

 

Company Success Not a Factor in CEO Pay Ratio

Advocates of the CEO pay ratio disclosure seem to be of the mindset that the ratio correlates with company performance. However, one study finds no such correlation. In fact, the lowest average three-year total shareholder return (TSR) was associated with the lowest pay ratio

band. While the highest average three-year TSR correlated with the band of ratios between 35 and 74, it dropped off as the ratio increased.

Source: Pearl Meyer, “The CEO Pay Ratio: Data and Perspectives from the 2018 Proxy Season”


Other related articles

  • Director Data Q2 2019
    Published April 10, 2019
    By Directors and Boards
    Gender Diversity Progresses SlowlyIn 2018, 85% of large company boards across 44 countries had at least one woman among their directors. But women hold only 20.4% of all director seats, up from 13.6% ...
  • Avoiding a Punch in the Mouth
    Published April 09, 2019
    By David Shaw
    Shifting some (or more) board focus to stakeholder interests sounds good in principle, but…Throughout this year, Directors & Boards is devoting space in every issue to discuss and analyze “The ...
  • My Board Journey: JANET KERR, Director, La-Z-Boy, Inc., Tilly’s, Inc., AppFolio.
    Published April 09, 2019
    By Eve Tahmincioglu
    Janet Kerr, Vice-Chancellor of Pepperdine University and Professor Emeritus of Law at Pepperdine University School of LawWhat was your first corporate board seat appointment and how did that come ...
  • Assessing Board Performance
    Published April 09, 2019
    By Sabine Dembkowski and Lauren E. Smith
    The secret sauce is in focusing on director strengths and skills.The need for high-performing and accountable board leadership is ever-increasing as the complexities of the business environment contin ...