Engagement and education
Respondents were asked to rate how frequently members of their board get directly involved in investor engagement about the firm's executive compensation plans, using a scale where one is ‘never’ and five is ‘always’. Globally, respondents report an average frequency of 2, or ‘occasionally’. Those at mid-caps and large caps on average report the least-frequent director involvement, with a score of 1.7 each, while those at mega-caps report an average score of 3, or ‘sometimes’.
These averages highlight that, despite widespread investor interest in talking with directors, overall they have relatively infrequent involvement in such discussions. Globally, almost two thirds (65 percent) of respondents say members of their board never or only occasionally get directly involved in investor engagement about executive compensation. That figure rises to 72 percent among respondents at small caps and 83 percent among those at mid-caps. But just 8 percent of respondents at mega-caps say their directors are never involved. Half say their directors are involved sometimes, frequently or always.
More than four in 10 (45 percent) of respondents in North America say their board members are never directly involved in engagement on compensation matters. This compares with just under a quarter (23 percent) of those in Europe.
Respondents were asked how they make sure their board is informed about investor sentiment on executive compensation. Their comments include:
Summary provided in [remuneration committee] report and governance report to the board
Informing the head of the compensation committee
The [remuneration committee] chair reports to the board at each meeting. [Remuneration] is covered in annual board training
Through corporate governance roadshows
We report to the [compensation] committee and the full board on investor engagement
Corporate secretary provides updates
Engagement of outside advisers
Via board discussion
Given verbal reports
The investor relations department reports on this
Compensation consultant, benchmarking
Task of investor relations colleague
Sharing summaries of engagement and outside proxy advisory reports
Regular engagement led by the company secretary
We have external remuneration advisers and we receive feedback from our brokers and investors
Report during board meetings
External consultants
Quarterly IR report to board indicating investor questions and main themes/topics
CEO/CFO advise board
Reports by chairs of board and [compensation] committee to full board
Consult with largest shareholders
[Compensation] committee handles this
Reports to compensation committee and [remuneration committee] reports to board
Quarterly board meetings
Meetings with investors, investor surveys, external advisers
Legal and IR provide reports to the board on questions from investors regarding executive compensation
The board sees all communication from investors directed to the board members
Investor relations reports any conversations to corporate secretary. Most of the time these conversations are related to the proxy and annual meeting process
Formal reporting process through the nominating and corporate governance committee
[Remuneration committee chair] meets with investors, updates provided to board, main shareholder and proxy adviser voting policies analyzed and key relevant items raised with the committee
Annual review of executive compensation
Annual meeting and proxy advisory firms
Through our [compensation] committee chair as he participates in calls with investors regarding executive compensation
Governance updates at the board/committee meetings
Results of vote at annual meeting
