The NASPP Blog

We love a good baseball metaphor here at the NASPP, so we were very excited to receive the proposal “Going from the Minors to the Majors: Practical Advice on SEC Compensation Compliance for Smaller Public Companies” from Wendy Davis of Jones Day. For our “Meet the Speaker” interview in today’s blog entry, we talk with Wendy about her panel.

NASPP:  What is the most critical thing NASPP Conference attendees need to know about your topic?

Wendy: Proxy strategy is not one size fits all, and smaller companies–whether small reporting companies, emerging growth companies, or mature small cap companies–may have to work harder, and more creatively, to communicate their compensation message. Smaller companies face very different compensation issues than larger cap companies, including:

1. Delivering equity compensation value when stock price is less than a few dollars and the stock is thinly traded or volatile,
2. Creating meaningful cash-based performance incentives when budgets are tight, and
3. Recruiting in a talent pool that includes both pre-IPO and large cap executives.

Smaller companies must then craft an individual approach to communicating their decisions in the proxy, given the scaled down reporting rules applicable to SRCs and EGCs, the different shareholder base who will be reading the proxy, and the tests designed by proxy advisory services that don’t account for the special circumstances of small cap companies. This panel has first hand experience helping smaller public companies make the hard decisions on compensation design, understand the reporting optics of these decisions, and then effectively communicate these decisions in the proxy and in pre-meeting shareholder outreach campaigns.

NASPP:  What common mistake do companies make and how can they avoid it?

Wendy: Smaller public companies often feel compelled to use buzz words like “performance” or follow the compensation decisions or disclosure practices of other companies who are current or perhaps aspirational peers. In doing so, smaller companies lose the real message of their program and sometimes come across as talking the talk but not walking the walk. To have a meaningful proxy disclosure, the compensation team must be willing to have open, frank, fully informed discussions with management and the board, providing information beyond benchmark numbers and statistics on the frequency of a given policy or disclosure. At the time compensation decisions are made, smaller companies must consider how their decisions will be viewed not only one or two years from now but as part of a longer term trend of the direction of their executive compensation program.

NASPP:  What is the silver lining to your topic?

Wendy:  Compensation strategy is like a giant ocean liner. Rarely is it too late to avoid the iceberg ahead–but it does take time, good tools, and lots of preparation to steer the ship onto a different course.

NASPP:  Tell us three things people don’t know about you.

Wendy:

1. After law school, I drove in an 18-wheeler cab–without a trailer attached–from Seattle to Banff, and the Canadian border patrol didn’t know what to make of it.
2. I learned freestyle wrestling in college from US Olympic team members as a club sport and I can still perform a headlock-hiptoss (although I risk throwing out my back at this point).
3. I still remember, from my 9th grade final exam, and can sing a glowing rendition of “La Marseillaise” in French. But I can’t remember how to order dinner or have even a basic conversation.

About the NASPP Conference
The 21st Annual NASPP Conference will be held from September 23-26 in Washington, DC. This year’s program features 60+ sessions on today’s most timely topics in stock compensation; check out the full agenda and register today! You don’t want to miss Wendy’s session, “Going from the Minors to the Majors: Practical Advice on SEC Compensation Compliance for Smaller Public Companies.”