Corporate Governance

Institutional Investors Focus on Rule 10b5-1 Plans

The media has been focusing on insider trading plans, i.e., so-called Rule 10b5-1 plans, in a number of recent articles. This has apparently grabbed the attention of institutional investors and lead the Council of Institutional Investors (CII) to submit a rule-making request to the SEC on December 28, 2012 regarding the use of such plans (available at:

Specifically, CII requests that:

  • Rule 10b5-1 plans only be permitted to be adopted during company-adopted trading windows;
  • The adoption of multiple, overlapping Rule 10b5-1 plans by companies and insiders be prohibited;
  • A mandatory delay of three or more months apply to the start of trading in a Rule 10b5-1 plan after its adoption; and,
  • Frequent modifications or cancellations of Rule 10b5-1 plans by companies and insiders not be allowed.
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New Article: Failed Say-on-Pay Votes: A Road Map to Recovery

On October 9, 2012, Bloomberg BNA’s Pension & Benefits Daily published this article by Exequity’s Ed Hauder. The article looks at companies whose say-on-pay (SOP) votes failed in 2011 and have reported their SOP votes for 2012, some of the actions these and other companies with failed SOP votes can take to turn things around, as well as the success this group of companies had with their 2012 SOP votes, and includes charts looking at 2011 and 2012 SOP votes, change in CEO total compensation, and TSR and percentile rank against companies’ GICS groups.

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Council of Institutional Investors Updates Policies

On October 5, 2012, the Council of Institutional Investors (CII) released updated corporate governance policies. The primary change in regards to executive compensation involved a tightening of the CII’s policies with respect to clawbacks. CII now calls for companies to:

  • Ensure that sufficient and appropriate mechanisms and policies are in place to recover erroneous bonus and incentive awards paid in cash, stock or any other form to current or former executive officers and to prevent the payout of such awards in the first place.
  • Establish a minimum recovery period of at least 3 years following discovery of the fraud or cause forming the basis for the recovery.

The CII’s revised Corporate Governance Policies can be found at:

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Speaking at WorldatWork Total Rewards Conference

Ed will be speaking at WorldatWork’s Total Rewards 2012 Conference this Wednesday, May 23,2012 from 9:15 to 10:30 am with Bonnie Kelly from Capital One Financial Corporation and Reid Pearson of Alliance Advisors. Their presentation is “Get to Know the Long-Lost Relatives You Never You Had: How to Get to Know Your Shareholders,” which will look at what you can do to get to know your shareholders, what they want, how they are likely to react to certain compensation-related proposals and how your team can help ensure your proposals succeed.

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