C-Suite Turnover and Impact on Stock Price

In recent years, high profile C-suite departures have made headlines and created concern that stock price will be adversely affected. Some departures do seem to have a short-term effect on stock price, but is this a consistent effect and for what time frame? How much do other factors determine the stock price effect? For example, does it matter whether it is CEO or CFO turnover, whether the change was planned or not, whether there is a capable successor immediately named, or the manner in which the company/Board manages the communication of the situation?

In this issue, answers to:

■What impact does CEO/CFO turnover have on a company’s stock price?
■Why is succession planning essential risk management for Boards and CEOs?
■What is an “emergency replacement plan” for future CEO/CFO turnover?

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Current trends in director's compensation

In recent years, public expectations around the roles and responsibilities of boards of directors have grown substantially. The stewardship of corporate assets, particularly with respect to the management of risk, is a matter of concern for management, executives and directors alike. The shared responsibility between the boardroom and the executive suite means that some of the criticism around perceived issues with executive compensation and corporate governance may be aimed toward directors, whether justified or not.

In this issue:

• How has the value of directors’ compensation changed?
• What’s happening to incremental meeting fees for board and committee service?
• Are companies continuing to differentiate pay for members of specific committees (e.g., audit, compensation)?
• How are companies using equity for director compensation?

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Say on pay – A global perspective

The background story that has led to say-on-pay legislation varies by country; however, the outcomes of say on pay have followed a common path: generally greater company awareness of hot-button compensation issues and more engagement and transparent communication with shareholders. This outcome appears to be fairly consistent, despite some significant differences in how say on pay is administered in various countries.

This article describes: 

• Shareholder vote results in the US and general voting outcomes elsewhere
• Examples of differences in say-on-pay laws between selected jurisdictions
• The corporate governance landscape prior to say on pay
• Implications of say on pay worldwide

We also make explicit recommendations to improve the likelihood of favorable say-on-pay outcomes.

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Executive compensation: Five priority areas for an initial public offering

In preparing for an IPO, a review and modification of executive compensation programs should be a top agenda item. From both the compensation committee’s and management’s perspectives, it is important to ensure that compensation levels remain competitive in order to retain key staff and that governance and risk management protocols are followed to comply with regulations and avoid controversial practices.

This Perspective explores five key areas of focus for organizations that are planning to launch an IPO.

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Historic shift in executive remuneration worldwide

To help you make well informed and effective executive remuneration decisions, Mercer brings you insights on executive remuneration trends and future expectations from around the world. These valuable insights by 18 Mercer thought leaders can be accessed through our newly launched Global Executive Remuneration Trends website

Available on the website:

• Executive remuneration trends and recommendations: 16 markets
• Global perspective: Historic shift in executive remuneration worldwide
• Interview: Mercer experts around the world (podcast)
• Webcast recording: Global executive remuneration trends 2011

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Mercer survey reveals trends in executive compensation in the US and Canada

Legislative and regulatory demands related to executive compensation continue to evolve as companies strive for better alignment of executive compensation with business results -- a linkage that can be difficult to predict in the recovering economy. Compensation expert Raphael Katsman presents findings from a Mercer survey of 250 US and Canadian companies covering 2010 compensation programs and plans for 2011, including the introduction of new financial and non-financial performance measures, equity compensation and say on pay.

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(Canada) - Executive pay disclosure: Moving beyond compliance toward best practices

This article summarizes the proposed rule changes and discusses the CSA’s notice of compliance issues. It also analyzes the named executive officer (NEO) compensation disclosures in the 2010 proxy circulars of 12 major Canadian corporations – most of which the Canadian Coalition for Good Governance (CCGG) considers to have best practice disclosures – and makes recommendations for companies as they prepare their 2011 disclosures.

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(Asia) - Providing the right motivation and rewards for the economic upturn

In this issue of Perspective, we have drawn on our surveys and consulting experience to discuss the executive remuneration challenges that organizations are facing. We then provide a guide for developing effective and defensible executive remuneration programs. Organizations are currently faced with the twin-challenge of developing programs that will not only drive motivation and retain key executives but effectively deal with the risks of uneven or unexpected economic results. Boards will have to achieve under intense public scrutiny.

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(Europe) - Executive remuneration in financial services: A moving target

This Perspective reflects the major issues that emerged from the discussion, which was augmented by a snapshot survey of the actions financial services organisations had taken in response to the new regulations.

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