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June 2012 | Say on Pay Update, Linking Sustainability Performance to Executive Compensation, & Best Practices for Not-for-Profit Boards

The following are some recent Executive Compensation headlines:

– JP Morgan Said to Consider Clawing Back Bonuses After Loss;
– JP Morgan Says 91.5% of Shareholders Approve Pay Proposal;
– Real Estate Compensation Rises Along With Performance; and
– Frank Introduces a Bill to Prohibit Insurance Policies Against Insuring for Clawbacks.

And so it continues! Part Two of Say on Pay is over, but compensation is still DAILY in the limelight. This month's L-Blast has three great articles on Say on Pay results, an increasing interest in linking sustainability performance to executive compensation, and best practices for not-for-profit Boards.

All are timely and relevant to today's discussions around pay. We hope you enjoy!

Say on Pay Results
by Semler Brossy
Now 11 weeks into our Say on Pay research and with 1200+ companies having reported, we've identified 28 total companies that have failed Say on Pay — 10 more than last week. The additions are: Pitney Bowes, Hercules Offshore, Viad Corp, Community Health Systems, Phoenix Companies, CryoLife, Infinera Corporation, Palomar Medical, Simon Property Group, and Chemed Corporation. As we noted earlier this week, Hercules Offshore became the first company to fail Say on Pay in both 2011 and 2012. We delve into the context at Hercules in our 'Vote of the Week' (p. 3). This week, our report contains a new feature: Vote Results by GICS Sector (p. 5). Our early takeaway is that health care companies have received a disproportionate share of shareholder and proxy advisory opposition. Also notable…all companies in the consumer staples sector have passed Say on Pay. Only one company of 45 in the sector has received under 70% support.

There is Increasing Interest in Linking Sustainability Performance to Executive Compensation
by PR Newswire
As sustainability issues become more common in the boardroom and the volume of shareholder proposals related to those issues grows, the link between corporate sustainability performance and executive compensation is expected to become more important, according to the latest Director Notes report from The Conference Board. Interest has grown among shareholders in recent years about the inclusion of sustainability performance as part of the compensation formula, notes the report, "Linking Executive Compensation to Sustainability Performance." The growing value that shareholders are placing on long-term performance and corporate sustainability serves as an indicator for directors that nonfinancial performance may become a more prominent topic in future proxy seasons.

Key Best Practices for Not-for-Profit Boards
by Carmen Solorzano, Chris Crawford, & Brent Longnecker of Longnecker & Associates
With the recent heightened interest of executive compensation from regulators, the I.R.S., and the media, along with more stringent penalties, non-profit entities should strongly consider increasing their time and efforts toward ensuring efficacy and compliance of their compensation programs and governance. This directly correlates to ensuring corporate directors have good navigational skills on issues faced by non-profit boards today including but not limited to: strategic planning and financial oversight, understanding the need for appropriate director skillsets, and effective governance. These issues, along with others, are commonly found in the corporate sector. With many non-profit directors also sitting on private and public company boards, it is important to ensure applicable best practices from these companies are transferred to the non-profit sector. The following information provides a brief overview of important non-profit board best practices that directors should consider in today’s highly-scrutinized environment.

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