The Skadden Guide is in its sixth edition and continues to provide valuable insights in plain English to compensation committee members, chairs and those who guide and advise them (including CHROs). The twelve-chapter guide is focused on public companies and covers issues from compensation committee responsibilities, to SEC filings to pay plan design and tax and regulatory concerns and director pay and related litigation. Highlights of this year’s guide included:
- 2020 Trends. The Guide noted that issues such as the #MeToo movement, pay equity and ESG are top of the list of risks that compensation committee members must consider. In particular, some committees have taken steps to implement punitive policies in the event of sexual misconduct and are increasingly looking for information from management on company culture, pay equity and human capital metrics. The Guide also notes an increase in activist attention on perks such as corporate aircraft use, especially where “a company’s overall financial performance is not meeting expectations.”
- Committee Best Practices. The Guide provides an interesting overview of the roles and responsibilities of compensation committee members as well as their use of independent advisers (see Chapters 1 and 3). The Appendix offers a sample committee calendar as well.
- Executive Compensation. Several chapters of the Guide are dedicated to the committee’s role and understanding with regard to executive pay, including equity compensation, plan design, severance and change-in-control, and how the committee should think about disclosure, investor engagement and proxy advisory firm response.
Similar guides we have found helpful include the Wachtell, Lipton, Rosen & Katz annual “Compensation Committee Guide,” an excellent resource for Compensation Committee members and CHROs, and Shearman & Sterling 2020 Proxy Season Quick Reference Guide.