The Conference Board Governance Center Blog


Getting Off The Wrong Executive Compensation Road

By Jon Lukomnik, Executive Director, IRRC Institute

When you are traveling down the wrong road, changing lanes doesn’t help very much. Yet that’s what we’ve been doing about executive compensation for years, as we tinker with stock options or restricted stock or add performance hurdles.

Sometimes, it’s necessary to stop, remember the destination, and recalibrate your route.

That is admittedly an overworked metaphor, but it is where we are today with executive compensation. Few, if anyone, is pleased with the direction executive compensation is taking or the road traveled to date. Investors worry that top executives are paid too much for too little in way of accomplishments. Boards fret that their judgment is constrained by the perceived need for formulaic pay to satisfy investors and proxy voting agencies. CEOs and other executives feel short-termism in their pay formulae and wonder if they can really suggest that their boards allow them to invest for the future. Read the rest of this entry »


M&A Communications Challenges Posed by Tax Inversion Deals

By Kal Goldberg, Partner, Finsbury and Charles Nathan, Senior Advisor, Finsbury

Tax inversion deals are clearly the most talked about M&A deal structure we have seen for many years. Unlike other hot-topic M&A deal structures (think LBOs or activist investor campaigns), inversions involve a highly charged political controversy in the context of the global competitiveness of corporations and their home economies. Although the recent Treasury Department rules have significantly or, in some cases, fatally crimped the economics of some previously announced inversions, many tax advantages of inversions remain. As a result, the structure retains its appeal for a number of cross-border acquisitions by U.S. companies and will likely continue to create business and political headlines in the U.S. and abroad. Read the rest of this entry »


Do Activist Investors Create Long Term Shareholder Value?

By Donna Dabney, Executive Director, Governance Center, The Conference Board

There is almost daily coverage of activists investors in the media. And while several narratives have taken hold, little has been done in the way of stepping back to look at the aggregate impact that activism is having on our economy. As Larry Fink of BlackRock noted at this week’s DealBook Conference, “We need to start focusing on wages and focusing on long term solutions instead of things like activism and other things like that that destroy jobs.” Read the rest of this entry »


Maintaining Integrity: Golden Leashes Back on the Board Table

By Donna Dabney, Executive Director, Governance Center, The Conference Board

On November 20, 2014, Dow Chemical Company entered into a settlement agreement with Third Point, a New York based hedge fund, to increase the size of its board and add two directors retained by Third Point as advisors. Dow had previously rejected Third Point’s nominees because of a “golden leash” pay plan which would entitle Third Point’s nominees to significant compensation from Third Point for their service on Dow’s board. According to proxy disclosures filed by Third Point, each of Third Point’s two nominees would receive $250,000 for agreeing to serve as a nominee, and each would receive an additional $250,000 payment if appointed as a director, which would be invested in Dow stock. In addition, each nominee would receive two additional cash payments from Third Point based on the appreciation of approximately 396,000 shares of Dow common stock following October 2, 2014. The first stock appreciation payment would be calculated in connection with the average selling price of Dow’s stock during the 30 day period prior to the third anniversary of service on the board, and the second payment on the fifth anniversary. The incentive compensation reportedly was not contingent on Third Point continuing to own Dow stock over this period. Read the rest of this entry »


Some Thoughts for Boards of Directors in 2015

By Marty Lipton, Partner, Wachtell, Lipton, Rosen & Katz, Steven A. Rosenblum, Partner, Wachtell, Lipton, Rosen & Katz, and Karessa L. Cain, Partner, Wachtell, Lipton, Rosen & Katz

The challenges that directors of public companies face in carrying out their duties continue to grow. The end goal remains the same, to oversee the successful, profitable and sustainable operations of their companies. But the pressures that confront directors, from activism and short-termism, to ongoing shifts in governance, to global risks and competition, are many. A few weeks ago we issued an updated list of key issues that boards will be expected to deal with in the coming year (accessible at this link: The Spotlight on Boards). Highlighted below are a few of the more significant issues and trends that we believe directors should bear in mind as they consider their companies’ priorities and objectives and seek to meet their companies’ goals. Read the rest of this entry »

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