Shareholders push companies to change executive pay

Shareholders push companies to change executive pay

Responding to pressure from investors, a third of companies say they have changed their executive pay compensation plans, according to a new survey from the National Association of Corporate Directors (NACD) released Tuesday.


The scrutiny from shareholders follows rules the Securities and Exchange Commission (SEC) proposed last month to require companies to publicly disclose how much their top executive are making and compare those paychecks with overall company performance.

NACD’s 2014-2015 Public Company Governance Survey found that more than half of respondents, 57 percent, said their boards expanded compensation explanations in their company proxy statements as a result of shareholder feedback and 30 percent (one-third) changed their executive compensation plans outright.

From March to May 2014, NACD received 1,013 company responses. 

“Setting executive compensation may be the most important and most challenging responsibility shouldered by boards,” Barbara Hackman Franklin, chair of the Blue Ribbon Commission and NACD’s chair emerita, said in a news release. “Compensation plans communicate not only the strategic goals the company wants to achieve, but also how it wishes to accomplish them.” 

SEC’s proposed “pay for performance” rules are the agency’s latest push to address executive pay.