华信惠悦 - 公司治理与高管薪酬

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Meanwhile, Company CEOs also Have Concerns

Impact of new legislation and standards on governance and day-to-day operations
Articulating corporate strategy in shareholder terms, with more Board involvement Achievement of financial results in an uncertain environment Shortened careers—produce or else Attraction, motivation and retention of key executive talent Cash compensation vs. equity incenon, etc.


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Shareholder Objectives for Executive Compensation

Build real long-term growth in shareholder value
Competitive, performance-aligned compensation Avoid corporate future financial hardship as a result of special compensation arrangements



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The Canadian Coalition for Good Governance is Gaining Clout

Launched last year
Brainchild of Steve Jarislowsky and Claude Lamoureux Consists of Canada’s largest pension funds, mutual funds and money managers


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Meeting Shareholder Concerns with Options: Pros and Cons

Indexed options Premium-price options Performance-vested options Greater stock ownership Restricted stock units Cash long term incentive plans

Pricing relative to the market—proper use of compensation instruments
Truly independent Compensation Committees Full, truthful and straightforward disclosure of – The principles and structures of executive compensation systems (i.e., no ―boiler plate‖) – Decision-making process for current year awards

Watson Wyatt Proxy Circular Review – 272 TSX companies in 2002 – 48% had no disclosure annual incentive determination
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Stock Option Accounting Standards
Stock Options: – Absence of accounting charge has facilitated excess use of options – Equivalent cash value of a stock option to an executive is less than its economic cost to the company – A rising tide floats all boats
L:\non-client records\38897\hcg\2003\ncr100\Exec Briefing-Feb5\Governance Pres.ppt
Executive Compensation is in a State of Flux…
Institutional Investor Activism
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Meanwhile in the Courts: The Repap Case

New Chairman was a retired U.S. lawyer; no experience in Repap’s industry Summary of his contract: – A multi-million dollar ―market capitalization bonus‖ not linked to financial performance – Shares and options amounting to 13.4% of the company’s stock – Immediate pension credits of 8 years – A ―single trigger‖ change-of-control severance package worth about $27 million Ontario Trial Court Judge set aside Chairman’s compensation agreement because the directors had not spent sufficient time analyzing and discussing the contract In doing so, she set aside the ―business judgment rule‖ that normally protects directors from being second guessed

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Governance Concerns (Cont’d)

In the Boardroom: – The culture of most Boardrooms makes it easier to go along with Management’s requests than to reject or reduce them – Compensation consultants are usually not independent of management – Improper use/overuse of compensation surveys cause a ―ratcheting‖ effect in executive compensation – Many compensation committees lack the experience necessary to analyze complex proposals and to develop informed opinions, pro or con
NYSE & NASDAQ Listing Requirements
Stock Option Accounting
Executive Compensation
New U.S. Governance Legislation
Loss of Investor Confidence
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Uncertain Economy

Stock option expensing is just around the corner!
International Board is going to mandate international stock option expensing standards this year Canadian Board has announced intention to require stock option expensing before the U.S. acts U.S. Accounting Board is considering mandatory adoption Many large North American corporations (over 150) have already decided to expense options: • Boeing (first) • Coca-Cola • Canadian Banks • • • • Ford GE Inco • • • • GM Wal-Mart Sun Life BCE
Corporate Governance and Executive Compensation
Current Compensation Committee and Executive Compensation Issues
March 20, 2003 Peter Saulnier

Some of the Governance Concerns that have been Expressed:

Executive Pay: – Not linked to performance – Escalating ratio of executive compensation to the pay of other managers, workers – What is a CEO worth? – Executive loans


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Shareholder Disclosure Concerns

Canadian Securities Administrators Nov. 5, 2002 press release: – Sample of 76 publicly-traded companies – 95% had ―inadequate‖ disclosure