What to do if you risk a material vote against your executive pay arrangements
12
NOVEMBER 2016 What to do if you risk a material vote against your executive pay arrangements © 2016 Willis Towers Watson. All rights reserved. Richard Belfield and Damian Carnell, Willis Towers Watson
-
Upload
willis-towers-watson -
Category
Business
-
view
41 -
download
2
Transcript of What to do if you risk a material vote against your executive pay arrangements
NOVEMBER 2016
What to do if you risk a material vote against your
executive pay arrangements
© 2016 Willis Towers Watson. All rights reserved.
Richard Belfield and Damian Carnell, Willis Towers Watson
T R I G G E R S F O R A
M AT E R I A L V O T E
AG A I N S T
Quantum
What are the main triggers for a material vote against?
Misalignment with
wider employee
population
Complexity
Non-compliance with
regulations / guidelinesHiring / termination
treatment
Lack of business
rationale
Poor shareholder
consultation
Insufficient
transparency
Discretion
Lack of P4P
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only. 2
Putting these triggers into context...
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only. 3
Jan 2016
Aberdeen Asset
Management
65.7%
Smith and
Nephew
47%
BP
40.7%
Anglo
American
58.4%
Shire
50.5%
Ladbrokes
57.9%
Paddy Power
Betfair
59.7%
Man Group
60.4%
Jun 2016
onwards…SVG Capital
62.4%
Ophir Energy
65.7%
11% of companies
received <80% ‘vote for’
25% of companies
received <90% ‘vote for’
46%
45%
9%
36%
50%
14%
ISS - Remuneration Report
Voting outcomes – 2016Voting recommendations – 2016
IVIS – overall report
Blue / For Amber / Contentious For Red / Against
How to AVOID a material vote against
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.
Pay for
performance
Metric selection
Target calibration
Consider TSR
Telling the story
Good shareholder
consultation
Good disclosure
Discretion– explain why
clearly
Understanding your
investors
Shareholder preference
Shareholder
experience
Judging inequality
Having a policy that
clearly supports
your business
Business Rationale
Talent needs
Link to strategic
report
4
How to RESPOND if you do receive a material vote against
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.
Understanding
why
Take any
remedial action
Tell the story
effectively
Reflect
Consult
Be clear
Align
Amend
Explain
5
Three visions of the future…
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.
Theresa
May’s
Comments
P4P focusInvestor
guidelines
‘Performance is primary
consideration’
‘Consider other stakeholders’
6
‘Look to the long term’
Question: Which of these triggers concerns you most?
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only. 7
T R I G G E R S F O R A
M AT E R I A L V O T E
AG A I N S T
Quantum
Misalignment with
wider employee
population
Complexity
Non-compliance with
regulations / guidelinesHiring / termination
treatment
Lack of business
rationale
Poor shareholder
consultation
Insufficient
transparency
Discretion
Lack of P4P
Question: What aspects of remuneration do you think investors are going to focus on?
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.
Pay for
performance
Metric selection
Target calibration
Consider TSR
Telling the story
Good shareholder
consultation
Good disclosure
Discretion– explain why
clearly
Understanding your
investors
Shareholder preference
Shareholder
experience
Judging inequality
Having a policy that
clearly supports
your business
Business Rationale
Talent needs
Link to strategic
report
8
Question: What is your experience of handling a material vote against?
How did you handle it?
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.
Understanding
why
Take any
remedial action
Tell the story
effectively
Reflect
Consult
Be clear
Align
Amend
Explain
9
Question: Which of these three visions do you think will have the most impact on voting?
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.
Theresa
May’s
Comments
P4P focusInvestor
guidelines
‘Performance is primary
consideration’
‘Consider other stakeholders’
10
‘Look to the long term’
Our executive pay services – how we can help you
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only. 11
Executive Pay Matters (EPM) – sign up for your monthly updates
Executive pay philosophy and strategy
Executive pay assessments and benchmarking
Short-/Long-term incentive plan design
Shareholder consultation
Advice on benefits and pension
Transaction/M&A advise
DRR drafting
LTIP vesting, performance monitoring and IFRS calculations
Target calibration analysis - new PPM tool
Executive job levelling
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers W atson client use only. 12
Speaker details
Richard BelfieldGB Leader, Executive Compensation
Phone: +44 (0) 20 7170 2147
Damian CarnellDirector, Executive Compensation
Phone: +44 (0) 20 7170 2905
