Q: I handle IR and corporate communications at a mid-cap company. Lately I’ve been hearing a lot about the SEC’s new compensation disclosure rules – from everyone except our legal team. It has practically locked me out while it gets our proxy ready. Should I be getting involved?
A: In general IR should be involved, given the notoriety the issue of executive pay has achieved. Your personal involvement depends on your executive level as well as IR’s standing within your company.
Letting legal take the lead is fine as long as IR is seen as a major contributor. After all, you are probably going to be the one answering questions from the Street about how your executives are compensated. I recommend that you start off by soliciting the views of investment professionals regarding upcoming disclosures and share these insights with your company’s legal team.
I also recommend that you network with your industry IR peers. Share insights with your colleagues; chances are they are facing similar issues. Don’t delve too deeply into the specifics of your company’s disclosure but focus more on what the industry executive compensation averages are and what level of detail your counterparts have disclosed to date.
You should see a trend in which compensation comes into line with the industry averages. You will also see some changes in how perks are treated to alleviate shareholder criticism and jealousy from less fortunate executives who have to pay for various items their more senior counterparts are able to expense.
Q: Many of last year’s issues – executive compensation, the backdating scandal, new disclosure rules and options valuation models – confuse me. I signed up to tell my company’s investment story, not wade through spreadsheets.Any advice on getting to grips with these issues?
A: It sounds like you are already doing the first thing I would recommend: working out which areas you do understand while seeking more information on the gaps in your knowledge before you have to provide counsel to your management team.
Good sources of information on the latest issues are publications like IR Magazine and Corporate Secretary, including their web sites and e-mail alerts. Industry organizations like the National Investor Relations Institute (Niri) and the Society of Corporate Secretaries & Governance Professionals are also great resources for information and educational events to get you up to speed on the issues.
Your company accountants, lawyers and IR consultants may also get together to offer free seminars or webcasts on the topics. A lot of this educational marketing material might be going just to your CEO, CFO or general counsel, so ask them to share it with you.
