Financial Times | What Does Proxy Access Mean for Director Pay?

Greg Lau, head of our Board Advisory Practice, is featured this week in the Financial Times’ Agenda for a comprehensive article on activism, proxy access, and director compensation.

In his piece, “What Does Proxy Access Mean for Director Pay?”, senior reporter Tony Chapelle writes:

Yet activists have begun winning more board seats in less time. PricewaterhouseCoopers, the management consulting and auditing firm, found that in 2011 dissident shareholders won a total of 86 seats after proxy contests that averaged about four months. Last year, dissidents took control of 154 seats in an average of a month and a half per company. “That tells you they’re putting into play much better director candidates and they’re getting on without a proxy contest,” explains Greg Lau, who heads the board advisory practice at search firm RSR Partners. Lau expects similar negotiations for board seats as shareholders begin using or leveraging proxy access. He says that if activist shareholders nominate a good person in a proxy access process, the board might accommodate them by expanding the board, “or ask someone to retire who has long tenure and who might not have the skills needed.”

…Yet a board-backed nominee or incumbent can expect a lot more. Lau, a retired executive director of global compensation and corporate governance at General Motors, says when a board wants shareholders to elect a director who is contested, they’ll instruct management to spend money on time, travel and materials to reach out to shareholders. Likewise, the management team would also pay proxy solicitors to contact investors to explain the board’s position and why its director nominee makes sense.

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