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    Insight Type: Key Insight

    Benchmarking in an Unusual Cycle

    By Kristin Kentra

    We expect that the typical fall benchmarking/market data process will look different for many oil & gas companies. The current commodity price and general economic environment will likely impact compensation levels across much of the industry, which will cause a few challenges when companies review survey data. ■ Industry volatility will likely impact peer group … Continued

    Banking Industry Response to COVID-19

    By Kristin Kentra

    Introduction The 2020 Coronavirus (COVID-19) pandemic represents one of the most significant global events in recent history, resulting in unprecedented impact on our country’s economy, its businesses and its people. For our financial services clients, initial priorities focused on the safety of employees and customers. At the same time, many banks were thrust into the … Continued

    Predicting the Future of E&P Bonus Design

    By Kristin Kentra

    E&P bonus plans have historically aligned with growth and investment, focusing on volume (production and reserves) and cost reduction, measures that are more controllable by management and less impacted by commodity prices than earnings-based metrics. In recent years, investors and analysts have been increasingly critical of E&P bonus payout misalignment with shareholder returns and financial … Continued

    Survey Results: Oil & Gas Workforce and Compensation Strategies

    By Kristin Kentra

    Key Takeaways In our March survey results we reported an overwhelming majority of companies focused on emergency business actions and less on compensation considerations. As of the end of April, it appears companies have taken action on their now identified workforce and compensation strategies. Outlined below are some of the key takeaways. Impact on the … Continued

    Announced Retail Executive and Outside Director Pay Reductions

    By Kristin Kentra

    Since the onset of the COVID-19 pandemic in the U.S., Meridian has monitored the unprecedented actions taken by retailers to enhance financial flexibility and offset the substantial impact to operations associated with prolonged store closures. These actions have included eliminating non-essential capital expenditures, drawing down revolving lines of credit, suspending dividends and share buybacks, eliminating … Continued

    The Impact of Recent Pay Actions on Severance Arrangements

    By Kristin Kentra

    These actions have included pay reductions, work furloughs, and layoffs. Among other matters, companies likely need to evaluate the impact of these actions on severance benefits. Multiple types of arrangements provide for cash and other benefits in the event of an employee’s or executive’s severance, including severance plans, severance guidelines, employment agreements, severance agreements, and … Continued

    Bracing for a New Disclosure Rule on Executive Pay for Performance

    By Kristin Kentra

    A new and mandatory executive pay proxy disclosure requirement is about to hit. A remnant of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, this pay-for-performance disclosure rule will become effective for most public companies shortly after the US Securities and Exchange Commission (SEC) officially posts the final rules and a related comment … Continued

    Revisiting Board Pay in a Time of Crisis

    By Kristin Kentra

    There is a clear appetite to set the right tone at the top as business leaders balance (a) keeping their workforce and customers safe and healthy with (b) navigating supply chain uncertainty and weakened demand for their products and services. The timing of this crisis—just as many calendar-year companies are planning for annual shareholder meetings … Continued

    Compensation Implications of the Current Environment

    By Kristin Kentra

    That was rough… The week of March 9, 2020 may have marked the single worst week for oil and gas stocks on record. A lot has changed, and the only thing certain is that more change will come. Here is what we feel confident of: ■ E&P companies will re-set 2020 capital programs; early announcers … Continued

    The $1 Salary: Lessons Learned

    By Kristin Kentra

    Periodically we receive requests from our clients to profile advantages, challenges, and best practices associated with administering pay programs that combine a very modest base salary with large equity grants. The $1 Salary Plan is the most extreme version of this approach, and the symbolism of such a program has proven attractive to a handful … Continued

    Ready to Expand Your Clawback Policy? Not so Fast . . .

    By Kristin Kentra

    More recently, many have stopped waiting. In public company boardrooms across the United States and abroad, there is a growing trend to expand company clawback policies beyond current regulatory requirements to include additional triggers for addressing employee misconduct through the use of their clawback rights. The focus on clawbacks is in large part a result … Continued

    How Should Environmental, Social and Governance (ESG) Performance be Reflected in Executive Compensation?

    By Kristin Kentra

    Many of the public company boards and corporate executives (very notably, 181 CEOs signing the Business Roundtable Statement avowing Stakeholder primacy1) that are eager to demonstrate this responsiveness cite compensation as an existing, meaningful and highly visible tool that is increasingly being used to reward or penalize executives for ESG performance. The reality, however, is … Continued

    Fostering Diversity in Board Pay Practices, Part Two

    By Kristin Kentra

    In recent years, we have observed a remarkable level of homogenization of compensation practices for non-employee directors, even as what is expected from board members of public companies continues to evolve and—generally speaking—expand. In our client work, we have also noted a great deal of diversity in the role that the board is expected to … Continued

    Executive Pay Outreach

    By Kristin Kentra

    Historically, a company’s communication with investors has been centred around the quarterly tion of financial business results and forward-looking guidance, along with year- end results. However, developments over the past several years have led companies to engage with major institutional investors on a more frequent and individualized basis on executive compensation matters. The case for … Continued

    Prepping Your Clawback Policy for Prime Time

    By Kristin Kentra

    In the wake of corporate scandals and high-profile executive misconduct, compensation committees are reviewing the adequacy of their clawback and forfeiture policies. Board members want to be assured they have the tools needed if they find themselves in the headlines. The original clawback provision under Sarbanes-Oxley requires only the CEO and chief financial officer (CFO) … Continued

    Fostering Diversity in Board Pay Practices, Part One

    By Kristin Kentra

    In recent years, we have observed a remarkable level of homogenization of compensation practices for non-employee directors, even as what is expected from board members of public companies continues to evolve and – generally speaking – expand. In our client work, we have also noted a great deal of diversity in the role that the board … Continued

    Why Pre-IPO Peer Groups are (or at least should be) Different

    By Kristin Kentra

    Most compensation committees review information gathered from a customized peer group of companies as part of compensation program development and relative performance reviews, and peer group construction is often a matter of significant debate. Common sense would suggest that if the goal is to understand what is competitive pay to attract and retain and motivate … Continued

    Compensation: Quiet Before the Storm?

    By Kristin Kentra

    Compensation committees fared well in the 2019 proxy season, with the vast majority of Russell 3000 companies receiving support on their compensation programs from proxy advisors and shareholders. Yet, compensation programs continue to be a hot=button issue for stakeholders, with scrutiny of incentive pay metrics, goal rigor and policy transparency only intensifying. CBM recently spoke … Continued

    Managing Executive Incentive Programs for Chemical Companies

    By Kristin Kentra

    This article offers some useful context and information for compensation committees and management teams of chemical companies to consider when designing and managing their executive pay programs. In particular, we cover key attributes of the industry and their impact on setting goals and designing incentives to help manage the impact of volatility resulting from: Commodity … Continued

    Use Compensation to Advance ESG Initiatives

    By Kristin Kentra

    Directors should take a close look at how their companies can use compensation to advance an environmental, social, and governance (ESG) strategy. A key to ESG oversight is the board’s examination of how compensation reflects and advances the company’s commitment to ESG goals. Investors and other stakeholders package a broad range of nonfinancial topics under … Continued

    EVA for E&P Companies: A Challenging Measure

    By Kristin Kentra

    While initially the EVA material will be provided purely for information, it seems inevitable that ISS will continue to push to include EVA as a formal part of its pay for performance analysis. There are general concerns about ISS using EVA – a complicated analytical framework that uses highly adjusted financial data – to make … Continued

    The Revival of Excise Tax Gross-Ups?

    By Kristin Kentra

    This potential wave has generated questions about Change-in-Control (CIC) severance protections, amplified by the significant coverage of Anadarko’s last minute enhancements to its CIC severance programs (see article). The Anadarko enhancements included elevated severance benefits and the re-insertion of excise tax gross-ups. Most companies, including Anadarko, eliminated the use of excise tax gross-ups in new … Continued

    Pay for Performance

    By Kristin Kentra

    Over the past ten years or so – since the widespread adoption of shareholder ‘say on pay’ votes on executive compensation at public companies in the US and elsewhere – arguably no single idea has animated the analysis and design of CEO compensation programmes as much as the goal of ‘paying for performance’. For a … Continued

    Market Data in Context

    By Kristin Kentra

    It is a quantifiable, objective way for a compensation committee to gauge how an executive is positioned versus the market, and helps the committee to understand what competitive pay is and if compensation arrangements are adequate to attract, retain and appropriately motivate executives. When proxy season ends, many companies will review market benchmark pay data … Continued