Insights

SEC Adopts Final Rule Regulating Proxy Advisory Firms

On July 23, 2020, the Securities and Exchange Commission (“SEC”) by a 3 to 1 vote adopted a Final Rule that imposes a new regulatory regime on proxy advisory firms (“PAFs”).

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The SEC’s adoption of the Final Rule represents the culmination of a years’ long effort to require greater transparency and accountability of PAFs. Specifically, the Final Rule: ■ Conditions the availability of certain existing exemptions from the information and filing…

COVID-19’s Incentive Impact: While Most Companies Wait, Companies with Early FYEs are Forced to Act

We are increasingly participating in board-level discussions focused on how to ensure that management teams stay focused, engaged and properly incentivized.

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When the COVID-19 pandemic started to spread across the United States, boards of directors initially focused on ensuring the safety of their employees and customers and managing to stabilize their businesses for uncertain times ahead. Early on, many companies were…

COVID-19 and Short-Term Incentive Designs

The design for 2021 will hinge on how to best motivate executives in a dramatically altered business environment.

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Our Meridian Client Update published May 28, 2020 discussed the impact of COVID-19 on 2020 Short-Term Incentive (STI) plans and how Committees may determine appropriate payouts (if any) at year-end. Payout decisions for 2020 STI in many instances will be…

How and Why Pre-Commercial Biotech CEO Pay is Different

Part One: Tailoring Pay to the Business

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The Say-on-Pay (“SOP”) era has fostered remarkable homogenization in executive compensation program design. The two primary contributing factors are: 1. Expanded compensation disclosure requirements for publicly traded companies, increasing the transparency of competitors’ programs. 2. The heightened influence of proxy…

SEC Releases Rulemaking Agenda for Next Twelve Months

The Securities and Exchange Commission (SEC) recently released its Spring 2020 Regulatory Flexibility Agenda (“Reg Flex Agenda”), which identifies rule-making initiatives that the SEC expects to address over the next year and beyond.

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In its latest semiannual Reg Flex Agenda, the SEC identifies the following rule-making initiatives as among those that the SEC expects to address in the short-term – potentially by October 2020. ■ Revised proposed rule on mandatory recoupment (or “clawback”)…

Embrace the Use of Discretion in This New Era

Reprinted Director Advisory article in the July/August issue of NACD Directorship.

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So far in 2020, market volatility, economic uncertainty, severe business disruptions, and concerns over employee health have materially changed how leaders approach business planning. These breaks from the norm have and will continue to have an impact on compensation committees’ …

Announced Pay Reductions

Pay reductions are as of June 30, 2020

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Meridian is currently tracking announced pay reductions within the oil and gas space. The largest number of reductions to date have been announced in the oilfield services sector. We’re planning on regularly updating this list and re-posting at https://www.meridiancp.com/insights/energy/ Oilfield…

Boardroom Comp Under COVID-19

As seen in Corporate Board Member - Director pay will, of course, be transformed in the current environment. But what that means and how it plays out will vary widely. A roadmap.

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Pre-pandemic, board compensation practices had become static and homogeneous, even as the role of non-employee directors continued to expand—but that was before the pandemic launched a global economic crisis. CBM recently spoke with Jim Heim, a lead consultant with Meridian…

Long-Term Incentives: Before, During and After COVID-19

This Client Update addresses some of the LTI-related considerations as companies strategize next steps.

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In response to the constantly evolving COVID-19 pandemic, companies have announced a litany of executive compensation-related actions including layoffs, furloughs, base salary reductions and much more. For long-term incentives (“LTI”), most companies have adopted a “wait and see” approach with…

Recent SEC Action Signals Agency’s Close Scrutiny of Company Perk Disclosures

The Securities Exchange Commission (SEC) recently assessed a $900,000 fine against Argo Group International Holdings due to the company’s failure to fully disclose CEO perquisites over a five-year period. This enforcement action represents one of a series of actions on perquisite disclosures and related matters that the SEC has undertaken against public companies over the last several years.

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Generally, perquisites and personal benefits constitute a relatively small portion of a named executive officer’s total compensation. Nonetheless, perquisites and personal benefits can draw significant scrutiny by investors and the media, especially in cases of unusual or outsized perquisites. Therefore,…

Compensation Committees: What to Do With 2020 Bonus Plans?

It’s been an unprecedented year for everyone, compensation committees included.

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At the onset of COVID-19, the popular advice for adjusting annual bonus pay was to “wait and see.”  Now several weeks in, some companies have begun restructuring bonuses. What actions are they taking? In this episode, Chris Havey, Partner &…

Banking Industry Response to COVID-19

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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…

Stock Ownership Guidelines in Challenging Times

Recent stock price declines across the oil & gas industry have likely created challenges for executives and outside directors to maintain the required level of ownership.

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Stock ownership guidelines are nearly universal for both executives and directors. They help ensure alignment with shareholders by encouraging executives and outside directors to hold onto a substantial amount of company stock. They have historically not required a substantial open-market…

Predicting the Future of E&P Bonus Design

The current oil and gas market challenges are testing the efficacy of prevailing bonus plan structures among exploration and production (E&P) companies.

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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…

COVID-19 and Short-Term Incentives

Nothing will be ordinary about 2020 or 2021.

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For many companies, it is unlikely that there will be significant (if any) payouts under the executive or managerial bonus plans for 2020. Alternatively, for those that do have payouts, it is similarly unlikely that plan mechanics alone will determine…

Survey Results: Oil & Gas Workforce and Compensation Strategies

Meridian surveyed fifty-eight companies in the E&P (n=40) and Oilfield Service (n=18) sectors in April to gauge the ongoing impact of COVID-19 and low oil price/demand on companies’ workforce and 2020 compensation programs.

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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…

Executive Salary Reductions in Oil & Gas: What’s the Message?

Through 4/30 we have tracked nearly 60 energy industry companies that have announced CEO salary cuts, the most of any industry group in our COVID-19 database.

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The fact that so many energy industry companies have reported salary reductions should not be surprising; the double black swans of record production and cratering demand have driven industry stock prices further down on average (-58%) than in any other…