The Seven “Deadly Sins” for Compensation Committee Agendas in 2019

November 27, 2018

With 2019’s proxy season looming, it is time to analyze what compensation committees should expect in the year ahead – and to focus their attention. The 2018 proxy season revealed three myths about expectations for investor concerns:

  • Myth #1: “The Pay Ratio Will Be the Main Event”
  • Myth #2: “The Pay for Performance Equation Has Been Solved”
  • Myth #3: “ESG Proposals Will Wane and Never Get Shareholder Support”

With these lessons in mind, compensation committees may want to be carefully attuned to what investors and proxy advisors are saying going into 2019. For the year ahead, Farient has created a crucial list of “seven deadly sins” for compensation committee agendas:

  1. Not Re-Evaluating Your Clawback Policies
  2. Focusing Only on Your Organizational Design of Today
  3. Thinking About Director Pay Disclosure the Same Way
  4. Doing a Perfunctory Review of the Compensation Committee Charter
  5. Ignoring the War for Talent
  6. Disregarding the Elephant in the Room – the Potential for a Downturn
  7. Failing to Understand Economic Value Added (EVA)


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