Building a shared foundation for companies and shareholders
The Say on Pay era
As an early and vocal advocate of pay and performance alignment, over the past several years Farient has developed a comprehensive compensation database and analytical process to evaluate pay for performance. To support this effort, Farient Information Services (FIS) was established within Farient Advisors to develop proprietary methodologies and research on pay alignment.
Of the changes brought on by the Dodd-Frank legislation, none have had a more visible impact than Say on Pay. With a robust and tested approach to evaluating pay for performance alignment, Farient has been providing alignment research and services to both companies and shareholders. Our groundbreaking methodology led to the creation of the Farient Performance Alignment Reports (PARs), which makes identifying poor pay alignment intuitive and quick. PARs are being used by both companies and investors:
- Companies have benefitted from our rigorous assessment of pay for performance, to help them anticipate shareholder concerns with executive compensation and enhance positioning of compensation plans
- Many of the world’s largest public pension and global mutual fund investors rely on the ease of use and insights from the PARs research service as part of their compensation analysis. Investors appreciate that the Alignment reports provide an independent perspective from an expert in executive compensation. Starting in January 2014, subscribers will also have access to the Farient Forecaster™. This forward-looking analysis will help investors predict how recent program changes will impact both the magnitude of pay and its alignment with company performance and shareholder interests going forward.
Farient’s proprietary approach provides a clear, consistent and comparable analysis. The Alignment Zone shows an acceptable range of pay outcomes based on a company’s size, industry and performance. Farient’s definition of pay – Performance-Adjusted Compensation™ (PAC)– was developed specifically for pay for performance analysis, and allows for comparability across companies.
Working closely with both companies and major investors, Farient brings a unique expertise to understanding pay for performance alignment issues. We believe there is a growing convergence on pay for performance alignment, and have developed an approach to assessing alignment that provides clear and insightful analysis while also being intuitive and simple to use. Both investors and corporations have endorsed Farient’s Performance Alignment Reports as providing a valuable and needed pay for performance analysis.