Pearl Meyer & Partners

Founded in 1989, Pearl Meyer & Partners (PM&P) is an independent compensation consultancy. We serve as trusted advisor to Boards and their senior management in the areas of governance, strategy and compensation program design. Clients from the Fortune 500 to not-for-profits and emerging high-growth companies rely on us to help align rewards with their long-term business goals to create value for all stakeholders: shareholders, executives, and employees.

Our Comprehensive Approach
Today’s challenging business and regulatory environment demands a comprehensive approach to compensation planning. Our clients rely on our senior consultants to provide day-to-day direction and guidance at each stage of their consulting project from research and assessment to strategy, planning and implementation. Their complete expertise and depth of knowledge help you identify and address critical issues and evaluate your organization’s unique reward opportunities. All to ensure we are creating comprehensive compensation solutions that work.

Leaders in Executive Compensation -- And More
For nearly 20 years, PM&P has been a recognized leader in executive and Director compensation strategy and governance. We have guided the philosophy and implementation of executive reward programs at hundreds of organizations helping them link pay and performance to deliver maximum return on their compensation investment.

Our leadership in executive compensation can benefit your entire organization. Clients also call on us to provide broad-based compensation strategy and implementation and rely on our annual compensation surveys to provide a complete picture of pay and pay practices at all levels within their organization

Compensation
How Compensation Committees Can Do a Better Job
It is counterintuitive that the compensation committee’s overarching mission is neither the oversight of pay and benefit programs, nor compliance with the demands of governance and regulatory standards. Now more than ever, its mission is fulfilling the board’s pivotal responsibility: to develop a talent-rich organization by ensuring programs are in place to attract and retain a team of senior managers with the necessary ability, integrity, and drive to advance strategic priorities as part of a carefully planned succession process. In recent years, investor pressure on boards to quickly replace corporate leaders who are underperforming or face ethics questions has highlighted the need for boards to identify and foster future leadership in advance of a management crisis.

Compensation
What Every Compensation Committee Should Ask Its Consultant
Important questions often go unasked when compensation committees interview a prospective consultant.Members are likely to be attentive to important but routine issues related to a candidate’s reputation, capabilities, and expertise. Yet as committees’ functions and visibility have expanded as a result of new disclosure requirements, changing governance standards, and intense public attention to executive pay programs, so too should the expectations and standards set for their consultants.

Compensation
Dynamic Pay Modelling - A Holistic Approach to Executive Pay
Growing public scrutiny of executive compensation means that for many companies today, it’s a matter of when – and not if – they will eventually be required to defend the design and administration of executive compensation programs. Directors, human resource leaders and executives need to be able to tell a compelling story about the thinking behind decisions and outcomes, supported by evidence of a solid, far-reaching framework underlying the full complement of pay elements. Moreover, without a detailed understanding of how a confluence of individual factors in various scenarios could affect compensation levels, Boards may find themselves surprised by controversy over unexpectedly large payouts.

Compensation
Executive Pay Oversight in an Economic Crisis
Widespread turmoil in the world’s financial markets has intensified the need for compensation committees to move beyond competence to excellence in their oversight of executive pay programs. Many critics blame the design of performance incentives for encouraging senior executives to take undue risks in pursuit of windfall payouts, ultimately causing the current crisis. Proposed “reforms” range from changes in tax and accounting rules to legislation restricting how much, and in some cases how, executives may be compensated.

Compensation
Executive Compensation: Strong Governance in Uncertain Times
Conducted in collaboration with Directorship magazine, the Pearl Meyer & Partners Quick Poll, Executive Compensation: Strong Governance in Uncertain Times, examined the processes and protocols that Boards currently rely on when setting executive pay. This issue is increasingly critical given continued economic turmoil and the growing scrutiny of executive compensation, making it more imperative than ever that organizations demonstrate strong and effective governance.

Compensation
The Ever-Changing Federal Assistance Landscape
Outrage over Wall Street bonuses has prompted the Treasury Department to impose a new round of limitations on executive compensation programs at financial institutions taking government funds. Communicated in a February 4, 2009 press release issued by Treasury, the rules are subject to public comment and expected to be finalized within weeks.

Compensation
Executive Compensation: Restoring Confidence Without Sacrificing Effectiveness
In the current financial crisis, Boards of Directors must take decisive steps to restore confidence in our executive compensation system, avert the threat of suffocating government intervention and help breathe life into the economy. Executive Compensation: Restoring Confidence Without Sacrificing Effectiveness, provides specific recommendations from Pearl Meyer & Partners on how Directors can provide the most responsive and responsible leadership.

Compensation
Obama Administration Outlines Broad-Based Compensation Best Practices
The Administration’s new initiatives to reform executive compensation programs and corporate governance, announced on June 10, 2009, will have broad implications for companies even beyond those receiving federal assistance. Treasury Secretary Tim Geithner outlined five general best practice compensation principles, and also outlined legislation which would give the SEC additional authority to require that all public companies hold an annual non-binding shareholder vote on executive compensation and also adhere to stricter standards of independence for Compensation Committees.

Compensation
2009 Early 50 Filers
A wide range of companies have already disclosed significant reductions in their current executive pay programs, signaling an important shift in pay practices that will not be fully reported until next spring, according to a new analysis of 2009 proxy filings by compensation consultancy Pearl Meyer & Partners. Of the 50 companies in the study, 58% reported making changes to their executive compensation programs in response to the economic downturn and likely increased shareholder scrutiny, including several “forward looking” disclosures in which changes would be effective in 2009 and impact pay levels reported in next year’s proxy.

Compensation
House Backs Bill on Say on Pay and Compensation Committee Requirements
A major step towards mandatory Say on Pay votes at all public companies was taken on July 31, 2009, when the House of Representatives approved the Corporate and Financial Institution Compensation Fairness Act of 2009. The legislation would require an annual, non-binding advisory shareholder vote on pay, as well as heightening regulatory standards related to Compensation Committee independence at all public companies. Additional provisions, which would apply only to certain financial institutions, are intended to discourage excessive risks by imposing significant new restrictions on the use of compensation incentives. The effective dates vary for each provision but in its current form, Say on Pay would like take effect in the 2011 proxy season—a year later than proposed by Treasury in its own legislation attached to the Investor Protection Act of 2009, which was introduced in July. In this paper, Pearl Meyer & Partners summarizes key provisions of the House-approved bill.

Compensation
2009 Say On Pay Survey
Momentum continues to build in Congress to require that all public companies offer their shareholders an advisory vote on executive pay. The new 2009 Say on Pay Survey from independent compensation consultants Pearl Meyer & Partners offers an in-depth look at how 231 respondents across a range of industries are approaching this major new governance initiative.

Compensation
Compensation Planning for 2010
PM&P on Compensation Planning: Looking Ahead to Executive Pay Practices in 2010” was designed to arm executive pay decision makers with information on how others are confronting competitive and regulatory challenges in the current environment. The survey is unique in its approach to assessing how executive pay practices are changing year-over-year, and is intended to provide “forward looking” guidance rather than “backward looking” validation. While a wide variety of data sources can answer questions such as “what did executives earn in 2008?”, very few address questions along the lines of “how do companies anticipate modifying their executive annual incentive program design in 2010?” We hope that this survey helps fill the gap.

Compensation
Risk Metrics 2010 - Policy Update
Proxy advisory firm RiskMetrics Group (RMG) has issued important compensation-related updates to its voting policy that will apply to all shareholder meetings held on or after February 1, 2010. Depending on a company’s shareholder base, an RMG voting recommendation can have a meaningful impact on the outcome of items submitted to a shareholder vote.

Compensation
SEC's Holiday Gift: Final Rules for 2010 Compensation and Corporate Governance Disclosures
The SEC’s newly finalized rules for expanded disclosure of compensation and corporate governance (1) include meaningful and practical changes and clarifications to its original proposal released in July (2). The amended rules, adopted Dec. 16 by a 4-1 vote, will apply to proxies filed on or after February 28, 2010.

Compensation
Top 10 Compensation Committee Agenda Items for 2010
For most people looking at the well-known illusion below, the orange circle on the right appears to be larger than the one on the left. In fact they are exactly the same size. We begin this year’s “Top 10” report with this simple illusion to emphasize that when it comes to executive compensation, context is everything and perception is relative. The popular view of executive compensation for most of the past two decades is represented by the circles on the left side, with strong economic growth, company performance and shareholder value creation making the executive pay circle at the center appear relatively small. But on the right side, the current economic reality makes the same center circle look huge, especially in terms of the desired alignment between performance and shareholder value.

Compensation
2010 Executive Pay-for-Performance Survey
As a result of recent economic turmoil and increased scrutiny of executive compensation practices, more pointed questions are being asked by investors, legislators and the media as to whether pay and performance are truly aligned. As Management and Boards of Directors engage in such discussions, they need to agree upfront on specifically how “pay-for-performance” should be defined. The Pearl Meyer & Partners survey PM&P On Point: 2010 Executive Pay-for-Performance provides context around this important issue. It examines how a wide range of companies are approaching the selection of performance measure and goal-setting, as well as providing data and insights on related executive compensation issues.

Compensation
Federal Reserve Joins Forces with the FDIC, OCC & OTS
The Federal Reserve Board (FRB) was joined by the Federal Deposit Insurance Corporation (FDIC), Office of the Comptroller of the Currency (OCC) and Office of Thrift Supervision (OTS), (collectively the Agencies) on June 21 in issuing final guidance. The final guidance is generally consistent with the FRB’s proposal in October of 2009 governing incentive compensation for banking organizations. The Agencies’ stated purpose is to "ensure that incentive compensation arrangements at financial organizations take into account risk and are consistent with safe and sound practices" and to "assist banking organizations in designing and implementing incentive compensation arrangements and related policies and procedures that effectively consider potential risks and risk outcomes." The final guidance became effective upon publication in the Federal Register on June 25.

Compensation
Repositioning Your Pay Programs for Recovery
While the current economic climate is still unsettled, most signs point to a slow, steady rebound from the “Great Recession.” Companies are beginning to hire again and are resuming or increasing spending on merit increases, incentive/bonus payouts and equity awards after a prolonged and painful focus on managing payroll cost. That makes this an opportune time for employers to take stock of whether they are getting the best return on one of their most significant expenditures.

Governance
To Disclose or Not to Disclose: Performance Targets and the SEC
One of the most ambiguous and controversial aspects of the SEC’s expanded proxy rules is the disclosure of specific performance targets that are tied to annual and long-term incentive awards. The agency has made clear it considers such information to be key to its goal of providing investors with a better understanding of the level and structure of executive compensation programs.

Governance
The SEC's Busy Spring/Summer Agenda
The SEC’s recent flurry of activity surrounding executive pay and governance is only the beginning of what will be a year jam-packed with new guidance from the Commission, as well as the IRS, DOL and Congress. This Client Alert provides a summary and status report on the recent actions and communications on disclosure and Board governance issued by the SEC.