The NASPP Blog

This week I attended the annual CEP Symposium hosted by the Certified Equity Professional Institute at Santa Clara University. This was no ordinary CEP Symposium – it was the Institute’s 10th annual event, and also celebrated the Institute’s 25th anniversary. With so many great sessions at this event, it was hard to choose some tidbits to share in today’s blog. Finally, I decided to share with you 5 things I learned from Mark Borges, who delivered this year’s keynote address (and, by no coincidence, delivered the keynote at the first CEP Symposium years ago).

1. Performance-based pay is the new “norm.” That’s probably not surprising to many of us who are in the trenches of administering these programs, but the part that caught my attention is that shareholders are also catching on to the mainstream prevalence of these awards. The bottom line: if you are not using performance-based pay (which includes awards), your shareholders are likely to say something – now or in the near term future.

2. The proxy statement has become a “communication” tool, rather than a “compliance” tool. Some of the bigger brands have caught on to this concept and are investing in magazine-like layouts, looks and feels in designing and delivering their proxies. For examples, check out this year’s proxies from General Electric and Coca-Cola.

3. Executive pay litigation isn’t over. We’ve been through a couple phases of litigation initiated by shareholder plaintiff attorneys. The first round mostly focused on failed say-on-pay votes. The second round turns to inadequate proxy disclosures – mostly around stock plan proposals. Where is the litigation moving next? The eye seems to be turning to the technical non-compliance with the qualified performance based exception under Section 162(m).

4. Say-on-pay disclosures may be headed towards inclusion of more supplemental or responsive insights. It’s not far fetched to envision a table in the proxy that reports detailed results of shareholder say-on-pay votes and a matrix to address concerns raised by shareholders.

5. Don’t forget about the impending CEO pay ratio disclosure requirements coming from the SEC. The Commission is still scheduled to adopt rules this year, with a likely effective date somewhere in 2014 and implementation in 2016. These disclosures are expected to be both informative and inflammatory.

All in all, this year’s Symposium was a great event. I remember the first one – attended by somewhere around 75 people. This year’s attendance appeared to be just over 400. Congratulations to the Santa Clara University and the CEPI on their 25th anniversary in supporting the equity compensation profession, and for another successful event!

-Jennifer