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Reuters
July 2, 2008

Lehman to pay employees more in stock

Companies typically pay out bonuses in stock to help retain employees, and to give executives an incentive to work to boost the share price, said Jannice Koors, managing director and compensation consultant at Pearl Meyer & Partners in Chicago. "It creates a stronger link between the fortunes of executives and the fortunes of shareholders," Koors said.

Directorship
June/July 2008

Has the Pendulum Swung Too Far?

Matt Stinner, managing director of the Boston office of executive compensation consulting firm Pearl Meyer & Partners, said the backlash associated with the pursuit of stock-options backdating cases, excessive executive perks, new regulations, and accounting and tax transparency mandated by the new Compensation Disclosure and Analysis are, in the main, behind us. "The pendulum has swung too far, and I expect we will see it begin to swing back," he said.

Stinner acknowledged that the use of peer groups is "extraordinarily difficult for some and easy for others. The strongest correlation is revenue, but you’ve also got to consider international complexity, market cap, growth rates, gross margins—and the more filters you add, the likelier you are to run out of companies." Stinner suggests defining peers based on relative performance: "That way, companies can come in and out of the peer group, depending on their performance relative to your own."

Crain's Detroit Business
June 30, 2008

HR must play key role in executive pay, insiders say

“The SEC doesn't always buy the confidential treatment-competitive harm argument,” said Deborah Lifshey, a Managing Director at Pearl Meyer & Partners. The unfortunate result, Lifshey said, is many companies are changing their plans so executive compensation is determined on a more subjective basis rather than solely on objective performance goals that companies have to disclose. “Companies are making it so the performance goals they set are easy to achieve, but then the committee has discretion on how it determines the rest of the executives' pay,” she says.

HR executives can help their companies determine which performance metrics to use, but it can be tricky in the new environment, Lifshey said. “Maybe there is a goal that doesn't rise to the competitive-harm standard, but the company still doesn't want to disclose it for competitive purposes,” she said. “There is going to be a tricky balance between getting the right performance measures from a business perspective and finding metrics that you want to disclose.”

Long Island Business News
June 27, 2008

Salaries down, total compensation up for area executives

Pearl Meyer & Partners, a compensation consulting firm headquartered in New York City, said boards need to be wary of post-separation pay packages that are generous to former executives – at shareholders’ expense.

“Many companies are reconsidering whether cash severance for executives is routinely necessary or even appropriate,” according to Pearl Meyers & Partners.

The Cincinnati Enquirer
June 21, 2008

Who has say on pay?

Jannice Koors, managing director for the Chicago office of compensation consulting firm Pearl Meyers & Partners, says executives should have a significant portion of pay tied up in company stock.

"Obviously for a publicly traded company the ultimate definition value of shareholder value is stock price, so it is absolutely critical some portion of the executive pay package is directly linked to creation of value for shareholders," Koors says....Still, she acknowledges there remains "a lot of noise" and lack of clarity around determining [total pay]. "Everyone wants to think that their CEO is above average, to paraphrase Garrison Keillor," says Koors. "Well, everyone can't get paid above the average without pushing the pay up everywhere. You've got to remember that the executive suite at a major publicly traded company features some of the most competitive egos you will run across, so that will always be a part of it."

Milwaukee Journal Sentinel
June 18, 2008

Exec pay parallels company earnings - Compensation found tied to performance

A recent study by compensation consultants Pearl Meyer & Partners reported that corporate compensation committees appear to be responding to concerns that executive incentives need to be more in tune with shareholder interests.

From a cross-section of 50 companies filing proxies early this year, Pearl Meyer found that 22% had provisions to take back performance-related bonuses in the later event of restated earnings. That was up from 18% in the previous year. Also, 70% had guidelines for executive stock ownership, up from 64% the year before.

Corporate Board Member
June 10, 2008

Boardroom Perspective with James V. Hughes

As part of a wide-ranging interview with TK Kerstetter, President & CEO of Corporate Board Member, Pearl Meyer & Partners Senior Managing Director Jim Hughes discussed how corporate directors can best improve their performance.

Much of the criticism leveled at compensation committee oversight is traceable to a perception of the lack of the kind of everyday processes that foster good decision-making by Directors...A second key element of good process is communicating to management, well in advance of meetings, what information the Committee needs, and when, in order to do its job....Finally, outside advisors should get involved early in the decision-making process, so they can provide guidance within a broad context of programs and suggest a change of course when needed.

Agenda
June 2, 2008

Boards Alter Performance Goals to Duck Disclosure

The study by compensation consultants Pearl Meyer & Partners showed that a little more than one quarter, or 25.8%, of the companies polled said the expanded disclosure requirements had a significant impact on how their individual and corporate performance goals were set for short-term incentives. And 26.8% said the rules affected the design of long-term incentives.

Michael Enos, managing director at Pearl Meyer & Partners says anecdotally, his firm has seen a trend toward more formulaic short-term incentive plans, ones that leave little discretion to the board, he says. On the long term side, there’s been a rise in restricted stock programs tied to performance. “Overall, comp committee members, who are elected to use their judgment, now feel they have less flexibility to tailor programs to the company’s needs,” Enos says.

Milwaukee Journal Sentinel
May 25, 2008

CEO Pay Clearer but Still Cloudy

"Unfortunately, the disclosures have expanded to many pages, a ridiculous number of pages, and it's reflective of the tremendous amount of information," said Mark Rosen, managing director for compensation advisers Pearl Meyer & Partners. "It's all there. But is it necessarily clear?"

More than 40% of public companies surveyed by Pearl Meyer said they had longer proxies than a year ago. The 124 companies surveyed determined that proxies require, on average, the reading comprehension level of a junior in college, up from a college sophomore level last year.

The Patriot Ledger
May 24, 2008

CEO Compensation Levels Off

Despite resistance to some reforms, companies are moving in the direction of more accountability, said Mike Enos, a partner with compensation consultants Pearl Meyer & Partners.

Pearl Meyer studied 50 companies that have submitted proxies for two years under the SEC’s expanded executive compensation rules. In 2007, CEOs’ average salaries increased by about 3 percent, while annual bonuses dropped because of the economic climate and declining corporate performance, Enos said.

But long-term incentives, generally in the form of equity tied to specific performance goals, increased in 2007. “We are seeing a lot more companies incorporating performance-based restricted stock awards, which aligns well with the interests of the shareholders,” Enos said.

Workforce Management
May 5, 2008

Special Report: Executive Compensation - HR's Missed Opportunity

"The SEC doesn’t always buy the confidential treatment/competitive harm argument," says Deborah Lifshey, a Managing Director at Pearl Meyer & Partners. The unfortunate result, Lifshey says, is many companies are changing their plan design so executive compensation is determined on a more subjective basis rather than solely on objective performance goals that companies have to disclose. "Companies are making it so the performance goals they set are easy to achieve, but then the committee has discretion on how it determines the rest of the executives’ pay," she says.

Companies that didn’t disclose the performance targets last year are the ones that are being targeted with no-vote campaigns, in which shareholders withhold their votes to re-elect the board members responsible for doling out the pay package. HR executives can help their companies determine which performance metrics to use, but it can be tricky in the new environment, Lifshey says. "Maybe there is a goal that doesn’t rise to the competitive-harm standard, but the company still doesn’t want to disclose it for competitive purposes," she says. "There is going to be a tricky balance between getting the right performance measures from a business perspective and finding metrics that you want to disclose."

Market News International
April 28, 2008

Reality Check:'08 US Wage Gains Intact - So Far, Say Compensation Execs

Jim Hudner, managing director of Pearl Meyer and Partners, a compensation consulting firm headquartered in New York, said early indications of 2008 salary budget increases point to a continuation of last year's 3.8%-4.2% range. "Some employers may be slightly more conservative than they might have been with payroll increases, but at this point we're not seeing anything that would suggest that it will be dramatic," Hudner said. This contrasts with the more severe response to the 2001 recession, which followed a prolonged economic boom and fierce competition for talent that produced over-hiring and over-pay, he said.

A recruiting crunch persists today, he said, fueled in part by an aging population and fewer replacement workers in the labor force. A Pearl Meyer survey of 360 companies last fall found that the "most important resource priorities" heading into 2008 were attracting and retaining top performers, Hudner said. "And that continues to be their focus even this year," he said.

The Florida Times-Union
April 27, 2008

What CEOs Make

A 2007 survey by consulting firm Pearl Meyer & Partners found that the average executive pay disclosure statement by public companies had the readability level of a college sophomore. This year's study found the pay disclosures have the average readability of a college junior. So much for the Securities and Exchange Commission's attempts to make proxy statements more readable.

"Generally speaking, executive compensation disclosures can be difficult to read even for the trained eye," said Mike Enos, managing director of Pearl Meyer, which provides compensation consulting services to corporations.

Pension & Benefits Daily
April 24, 2008

Good Plan Design and Good Optics Possible Within Principles-Based Disclosure Rules

Compensation consultant Mark J. Rosen of Pearl Meyer & Partners said some of the unintended consequences of the [SEC proxy] disclosure rules may be to force companies to a more formulaic approach to performance measures or move to a team-based incentive. On the other hand, Rosen said it is too early to tell, since surveys of early filings show some companies moving to types of plans that are more formulaic and some moving to plans that allow more discretion - the two extremes.

Investment News
April 21, 2008

Firms hit executives in wallet

In addition to a credit crisis, most financial services firms are also dealing with declining assets, more competition and fewer acquisitions. "I think unless things turn around in the next few months, we're going to see some really hard decisions relative to compensation," said Susan O'Donnell, managing director at Pearl Meyer & Partners LLC of New York, an executive-compensation consulting firm. "It will likely be low or no cash incentives, and fewer and smaller equity awards," Ms. O'Donnell said. "The industry is definitely shifting away from giveaway to performance."

When high visibility executives leave their jobs with big parting packages, it draws criticism. "If it involves large gross-ups, tax incentives, then the criticism is well deserved," Ms. O'Donnell said. "But large sums of deferred compensation is the money that the individual has already earned, and [that] they have set aside for a number of years, [is] another story."

Pension & Benefits Daily
April 11, 2008

Company Disclosure Still 'No Piece of Cake' - But Effort Is Not Likely to Affect CEO Pay

The more exacting standards that companies applied in rating their 2008 CD&As were due, in part, to SEC staff comment letters sent to 350 companies following the first year's filings, and the fact that in preparing the 2007 CD&A, companies were "working in a vacuum," said Mike Enos, managing director of Pearl Meyer & Partners in Boston.

Reuters
April 9, 2008

U.S. politicians jump into CEO pay debate

Companies are now in the process of releasing CEO pay details in spring proxy filings, and they are increasingly concerned about how the pay data are perceived, said Jannice Koors, a managing director at pay consultant Pearl Meyer & Partners. In some cases, a CEO's pay may have risen in 2007 -- even if the company's stock price was hit that year by the mortgage problems -- because of bonuses awarded based on performance over a multiyear period when company results were better.

That doesn't mean shareholders will be happy when they see the pay data, though. "There is kind of an unavoidable potential mismatch in the timing of things, and there is no amount of regulation that is going to fix that," Koors said.

Bloomberg
March 7, 2008

Congress Will Question Wall Street Executives Over Pay

“There’s a lot more scrutiny” from shareholders and the U.S. Securities and Exchange Commission, said Theodore Sharp, managing director in the Boston office of compensation consultant Pearl Meyer & Partners.

Agenda
February 25, 2008

Wide Gap in Committee Fees Fans Concern

Many boards are sensitive to the problem, says Jannice Koors, managing director with Pearl Meyer & Partners. In the past year, she says, some of her clients have pushed the pendulum back on escalating audit committee fees. As a result, a growing number of companies have eliminated meeting fees in favor of a flat retainer across the entire board. In other cases, boards have added flat committee retainers. Other companies have added a flat retainer for all board members, with a higher committee chair fee. In many cases when meeting fees are scrapped, audit committee members or chairs are awarded slightly higher retainers, but not to the degree highlighted by the NACD survey results.

St. Louis Business Journal
February 15, 2008

Charter, Bakers, A-B, Furniture Brands execs' stock option values take a dive

"A lot of companies got a huge amount of bad press the last time they [repriced executive stock options] and it carries the risk of market backlash," said Jannice Koors, managing director at New York executive compensation consulting firm Pearl Meyer & Partners. "Also, many companies subsequent to that last downturn had to put new stock options plans in place. As part of getting those plans accepted, many said they will not reprice options without shareholder approval."

Koors said she expects in a given year most companies will let options remain underwater rather than face shareholder scrutiny over the link between pay and performance. Directors might instead target individual executives that are particularly high flight risks with extra cash bonuses or restricted stock awards.

Agenda
February 12, 2008

Comp Committees Logging Long Hours on New Disclosures

“Set the tone upfront [in your proxy],” said Mark Rosen, a managing director in Pearl Meyer & Partners’ Charlotte office. “At the very beginning of your CD&A, it’s your opportunity to explain how and why you’re unique…" He also suggested that the new disclosures paint a full picture of a company’s compensation program by describing how it fits within the company’s strategy.

Bloomberg
January 30, 2008

SEC Asks Companies for More Detail on Executive Pay

Some companies are changing their executive incentive programs to abide by the SEC rules, said Deborah Lifshey, vice president at New York-based compensation consultant Pearl Meyer & Partners. Altering a business model "for the purpose of good disclosure" would defeat the SEC's goal to increase transparency and clarity, Lifshey said.

Financial Week
January 14, 2008

At MF Global, hired gun does IPO, makes exit

"Going public is a massive job, one that can often cost a company millions of dollars in fees paid to consultants and investment banks," said Matt Turner, managing director and head of the Chicago office for compensation firm Pearl Meyer & Partners. "But bringing on a hired gun for something like an IPO can often help fix and reduce those costs, and ultimately end up being in the best interest of shareholders."

Bank director magazine
first quarter 2008

Using Board Advisers Effectively

Jan Koors, a managing director at Pearl Meyer & Partners in New York...notes the elements that go into the design of an executive compensation plan entail, among other things, a detailed understanding of tax and accounting rules, legal implications, and disclosure requirements. Koors describes the level of complexity as “labyrinthine."

CFO.com
December 20, 2007

The Storm over a Corporate Pay Study

As the numbers were used in the [House Committee on Oversight and Government Reform] hearings, says David N. Swinford, president and CEO of Pearl Meyer & Partners, "they created an impression that if a consultant is involved, pay is higher. Frankly, I think that is a perception that 15 years ago had some validity. But it's a feature of the past. Many of us now work almost exclusively for boards, and we spend a lot of time helping managements understand the pay marketplace."

Financial News
December 10, 2007

Congress pushing SEC for greater disclosure to end comp firms’ incentive to inflate top pay

[I]n the late 1990s, leading auditing firms like KPMG and PricewaterhouseCoopers sold off their consulting practices, noted Joseph Rich, chairman of Pearl Meyer & Partners, a compensation consultant that works only for board clients. “The full-service firms must be having conversations about possibly selling off their executive compensation businesses,” he said.

Barron's
December 10, 2007

Buybacks That Bite Back

The researchers suspect the major culprit [why there was not a bigger reduction in dilution following stock buybacks] was heavy issuance of stock-option grants to executives and other employees and the subsequent exercise of those options. This doesn't surprise Matt Turner, managing director of compensation consultant Pearl Meyer & Partners, who notes that the period examined by S&P covered a bull market. "In general, when the market is rising, you are going to see higher executive compensation in the form of bonuses [including options] and, because the market is rising more, people exercise their stock options," says Turner.

Compliance Week
September 11, 2007

Golden Parachutes Still Open for Business

Daniel Wetzel, managing director at compensation consulting firm Pearl Meyer & Partners, says change-in-control agreements are “an area ripe for change.” He says most companies are reviewing their arrangements to make sure they comply with new Section 409A regulations, which govern deferred compensation.

“We’ll see some reduction in benefits going forward,” Wetzel says. Beyond changes to severance multiples and benefit triggers, he says some companies have established resolutions that limit severance payments to a specific amount unless they get shareholder approval. In addition, he says, “companies are reconsidering, when there’s significant value from retirement benefits or stock options, whether there is a need to have cash severance.”

Agenda Week
September 4, 2007

Why Director Pay Strikes Boardroom Nerve

“I would say every single one of my clients is talking about it,” says Mark Rosen, a managing director with Pearl Meyer & Partners. He adds that most of the boards he works with are asking for an annual analysis of director compensation among their peer companies. That’s a change from recent years, when boards would request those studies once every two or three years, he says.

Directorship
September 2007

The Most Influential Players in Corporate Governance

PM&P President David N. Swinford was named by Directorship magazine as among those individuals “driving the corporate governance agenda inside America’s boardrooms.”

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