Climbing Mount Olympus – the story of lesser peaks

There's a saying in corporate governance – and in economics – that we settle for second best because having climbed the lesser peak, it's too difficult to go down and climb a higher one. Having got to the top of a smaller mountain, the view is good enough, so we stay put. Perhaps.

The events unfolding at Olympus Corp. in Japan are nothing short of stunning. It's too early to say with any certainty whether there was any malfeasance, but what facts are certain suggest that corporate governance in the company left something to be desired. A newly installed chief executive fired after 30 years with the company but only a few weeks in post would be bad enough. The company says it was a personal and cultural mismatch. "Michael C. Woodford has largely diverted from the rest of the management team in regard to the management direction and method, and it is now causing problems for decision making by the management team," it said. That doesn't chime with the Woodford having already brandished an auditor's report on television questioning the propriety and even legality of payments to advisers totalling two-thirds of a billion dollars. Had the board hoped that a British CEO would not be willing or able to look into advisory fees amounting to a third of the value of a takeover? That the advisers in question seem to have disappeared from the Caribbean tax haven they once occupied is one of the allegations that both the Serious Fraud Office in the UK and the US Federal Bureau of Investigations will now seek to examine. A fine mess. We might even call it a Greek tragedy, if the Greeks themselves hadn't been occupying that position in the eurozone mess.

In the corporate governance world, Japan is often seen as a counterpoint to the Anglo-American way of working. Japanese governance follows a "stakeholder" approach, in which shareholders are only one of a number of constituencies the board must take into account. Rapacious capitalism of the US and UK variety is thus held at bay. The "agency problem" that dominates worries in the large capital markets is supposed to play less of a role. Perhaps.

But in this case the disclosures from the company served only to confuse the issues, as in the October 19 news release that detailed but did not clarify the fee structure. Disclosure ought to involve understanding as well as facts. Whose "agency" – whose decision and choice – was involved in selecting the agents for the acquisitions? Whose "agency" agreed the sums involved, even if, as the company's statements declare, the transactions will eventually pay off.

So, a new CEO, then a new chairman ("president" in the terminology used at Olympus), a new auditor – and a new beginning? Perhaps.

They will have a mountain to climb to win back respect for a company that makes rather nice cameras. Reputation is more than customer satisfaction.

Source documents: The Olympus news headlines page contains links to the various documents issued. The October 19 news release is a four-page pdf file. The October 27 statement is a 10-page pdf.

News Corp. 'votes against' target James, Lachlan, Bancroft, not Rupert

When the votes were finally counted the News Corp. board of directors won re-election. But if we leave aside those from the Murdoch family and close allies, the story we can read from the rest of the votes suggest that shareholders wanted to rock the boat, but not too much. Sure, a majority of the so-called "independent" shareholders votes against having James and Lachlan – Rupert Murdoch's two sons on the board – as directors. They also vented almost equal anger, though, at Natalie Bancroft, who has represented the Bancroft family since they agreed, reluctantly, to accept News Corp.'s controversial 2007 bid for Dow Jones & Co., the company they once controlled. But the octogenarian chairman and CEO saw much more modest dissent. And the shareholder resolution to split the chairman and CEO role garnered little more than 1.5 million votes, of more than 680 million cast. Read another way, barely 0.2 per cent supported the iconic mechanism of corporate governance, and only about a third of a per cent of the "independents".

What the vote seems to show is that shareholders want to protest, but they don't really want change. News Corp. has performed well by most measures. The phone-hacking scandal that led to the abrupt closure of the oldest newspaper in the stable was worth a wrist-slapping, but not worth destabilising the company. It would be a different story in a different company, especially if the family of the founder didn't have 40+ per cent of the votes in his pocket. News is different from most industries. And the ownership and voting at News Corp. isn't that different from a lot of other news companies.

Source document: The News Corp. 8-K filing gives detail of the vote.

News Corp. withstands challenge on governance

Activist investors and the proxy voting agencies teamed up for an assault on the governance structures at News Corporation, but to no avail. The octogenarian chairman and chief executive, Rupert Murdoch, won re-election to his post as a director, as did his sons, James and Lachlan. A shareholder resolution to split the roles of chairman and CEO failed. The outcome wasn't all that surprising. The Murdoch family controls about 40 per cent of the votes with a 12 per cent equity stake, thanks to differential voting rights embedded in the articles of association. Even a modest number of shares not-voted would have ensured the defence success. That News Corp. was a target this year is linked in large part to the phone-hacking scandal at one of the company's newspaper titles in the UK, the now-defunct News of the World. James Murdoch was chairman of News International at the time and he and his father had faced a public grilling in the British parliament a few months ago. The story has died down since then, but its embers burn on, not least with an appearance at the annual meeting of a shareholder-and-UK-MP, who asked the Murdochs whether they were aware of a new investigation into alleged computer-spying by the UK newspapers. The patriarch said they weren't.

The opposition: Both Institutional Shareholder Services and Glass Lewis, two of the most prominent proxy voting agencies, recommended that clients support the shareholder resolution and called on shareholders to vote against re-election of one or more of the Murdochs. The California Public Employees Retirement System, known as CalPERS, joined the protest with a pre-meeting declaration of intent, as did a number asset management firms specialised in "ethical" investing or representing charities.

Equalising voting rights: Equally far from winning support were the calls from some investors to eliminate the family's control by eliminating the preferential voting. Investors bought the shares knowing there was a governance risk, and eliminating the share might thus allow them to capture a governance premium. But it wasn't – and probably isn't – to be. As most shareholder resolutions are only advisory, it seems unlikely that this board and this management would heed what these shareholders wanted, even if they mustered a majority. That the Murdochs have created considerable shareholder value has proved enough to keep enough shareholders happy, for now. But the story isn't going away. Next year, same time, same place … ?

Source documents: You can listen to the News Corp. annual meeting through a webcast. The Reuters account of the ISS move also gives the News Corp. rebuttal. There's also a story about the Glass Lewis recommendation in AdWeek. The two firms' own website didn't have public statements about their recommendations.

Dodd-Frank governance as political football

How well does legislation do on the playing field of corporate governance? That's the question behind a little fable penned by a pair of governance scholar-consultants, to mark the anniversary of the passage of the Dodds-Frank Act in the US. They imagine trying to apply its strictures to a real-life case much on the minds of US business people, though for reasons normally associated with leisure, not business. In their brief paper, David Larcker and Brian Tayan ask us to consider the governance failures in the National Collegiate Athletic Association. In recent years, NCAA football has been rocked by a string of high-profile violations, including teams at some of the most prominent names in American college sport: the University of Southern California, Ohio State, the University of Miami and Auburn University. These are big business. The football teams generate very large surpluses that help to fund the rest of the university. The build pride among the alumni, too, who then fill the coffers with yet more funds. "In many ways, these violations were similar to the governance breakdowns at financial and other corporations leading up to the financial crisis of 2008 and 2009," the scholars write. So what if we imposed the Dodd-Frank Act on them. What would happen?

• Sport vs business: If these requirements would not work in an athletic setting, should we expect them to work in business?
• Mandatory vs voluntary: Why are the governance provisions of Dodd-Frank legally required, rather than voluntarily adopted by individual companies?
• Money vs failure: Why does Dodd-Frank place such emphasis on executive compensation and disclosure? Will its compensation requirements reduce governance failures?

We won't give the game away by recounting all of the highlights. For that, take a look at their "Closer Look" case study.

Source document: The tall tale "The NCAA Adopts 'Dodd-Frank': A Fable," by David Larcker and Brian Tayan of the Stanford Graduate School of Business, is a six-page pdf file.

UK competition inquiry target Big Four audit power

It's been coming for quite a while, but now it's official: The UK Office of Fair Trading has asked the Competition Commission to conduct an inquiry into the dominance of the Big Four accountancy firms in the market for audit services. The decision confirms a provisional decision a few months ago and put the firms under careful scrutiny. Regulatory attention to audit has been mounting as the number of audit firms has shrunk and evidence of competition for mandates has dried up. The OFT said that in 2010, the four largest firms – PricewaterhouseCoopers, KPMG, Deloitte and Ernst & Young – earned 99 per cent of audit fees paid by FTSE-100 companies. That should come as no surprise, as only one of the 100 companies uses an auditor other than the Big Four.

More interesting is the finding that between 2002 and 2010, the average annual switching rate among FTSE-100 companies was 2.3 per cent. The OFT put the word "only" in that sentence, ahead of 2.3 per cent. You might be surprised to hear it's that high. But remember a large number of non-UK companies in the FTSE-100, especially natural resource companies, are listed in London. Often facing rapid growth in size and scale, they may have found the need to change auditors to accommodate their internationalisation.

Even more interesting is the PwC alone earned 47 per cent of the FTSE-100 fees. The OFT said: "Non-Big Four audit firms can face substantial barriers to entry in terms of gaining relevant experience, establishing their reputation, overcoming switching costs and inertia, surmounting regulatory barriers and banking requirements, taking on liability risks, and raising capital to finance expansion."

These investigations take time, and the audit market is a sensitive one, so don't expect a radical decision soon. Finding a solution to the concentration of audit has been on the agenda of regulators all around the world for several years. The implosion of the firm Arthur Andersen in the aftermath of the collapse of Enron in 2001 and WorldCom in 2002 reduced competition and left other would-be rivals in the audit profession wary of trying to join the elite club. As the financial crisis took hold, a lot of people wondered whether the audit giants might now be too big to fail.

Source document: The OFT referral document is a 78-page pdf file.

Votes in on 'say-on-pay' – investors like it

Investors got their first chance to exercise the muscles they were given under the Dodd-Frank Act in the US to have a "say on pay" at the companies in which they invest. They seem to have liked the experience, but it was tiring and not very much happened. Nonetheless, they would like to do it again next year and the year after, and the year after that. The proxy voting agency Institutional Shareholder Services analysed the results of the 2010 proxy season and determined that investors signalled approval of pay plans at 92.1 per cent of the cases. They voted down proposals at just 1.6 per cent of the cases among the Russell 3000 companies, mainly as a result of concern over links to performance.

"'Say on pay' votes increased investors' workloads, but spurred greater engagement by companies and prompted some firms to make late changes to their pay practices to win support," the firm said. In more than 80 per cent of the cases, they voted to have annual votes on pay policy, rather than once every three years. Moreover, say-on-pay made life easier for directors, at least in one way. There were fewer votes against directors who sit on compensation committees. In the past, activists voted against re-electing directors as a protest over pay. Now with a direct say, their activism followed a different channel.

Source document: The ISS US post-season report is a 36-page pdf file.

European shareholder voting better if lacking drama – ISS

Shareholders in Europe voted more this proxy season than ever before, but that did not translate into radical action. Institutional Shareholder Services, the proxy voting agency owned by MSCI, calculated that the UK saw the biggest rise in participation in company annual meetings, thanks to the new Stewardship Code, which many of the largest asset managers adopted for the 2011 proxy season. Despite the turbulence in European markets in the past year, dissent from investors over management proposals was steady overall. Greater resistance to requests to authorise additional capital was offset by less concern about electing directors, discharging them of their responsibilities, or rejected proposals on mergers and acquisitions. Some highlights:

• Turnout: Participation in the UK moved above 70 per cent, the highest level in ISS's record and probably in living memory. It wasn't the best in Europe, however. That honour goes to Portugal, at 73 per cent. Greece and Ireland saw large increases, too, for reasons that may be obvious. The EU average was 62.6 per cent. Voting in Denmark was the lowest – just 37.2 per cent.
• Dissent: French companies saw the highest level of shareholder dissent about management proposals, but at 6.0 per cent it was the lowest in the four years surveyed in the report.
• Result disclosure: More companies reported the outcome of votes but that didn't stop ISS from complaining: "… given that full disclosure is now legally required in most markets surveyed, it is disappointing to record that only five markets have all companies disclosing their results in full."

Source document: The ISS European voting report is a 23-page pdf file.

Brussels wants new rules for financial trading

The European Commission has proposed a radical rethink of the rules that govern trading in securities in the 27 member states of the European Union. The Markets in Financial Instruments Directive, known as MiFID, came into force in 2007. That's ages ago, the commission seems to be saying. "In recent years, financial markets have changed enormously. New trading venues and products have come onto the scene and technological developments such as high frequency trading have altered the landscape," it noted. The lessons of the financial crisis have to be taken into account as well, and it wants to close the loophole that have seen derivatives trading on "organised trading facilities" originally intended for the underlying instruments only. Small and medium-sized companies need better access to equity capital markets. High frequency trading needs to be better regulated, and "dark pools" will get greater sunlight through increased transparency.

A new framework: The upshot is a plan of action that will no doubt get the lobbying industry whirring at full speed. The commissions said: "These proposals consist of a Directive and a Regulation and aim to make financial markets more efficient, resilient and transparent, and to strengthen the protection of investors." And a bit of interpretation is needed here for clarity: a directive gives national government discretion over how to word the new laws; a regulation doesn't. The commission said the new framework would also increase the supervisory powers of regulators and "provide clear operating rules for all trading activities". Other global financial centres were undertaking similar discussions, it noted. But that won't stop the industry from seeking out opportunities for regulatory arbitrage.

Source document: The news release has details and a link to frequently asked questions.

EU wants to close loopholes on insider trading

Insider trading has been illegal in the European Union for many years now, but variations in national law have allowed some of them to escape prosecution. The European Commission wants to change that. "Some countries' authorities lack effective sanctioning powers while in others criminal sanctions are not available for certain insider dealing and market manipulation offences," it said. "Effective sanctions can have a strong deterrent effect and reinforce the integrity of the EU’s financial markets." So it has proposed new rules that would ensure minimum criminal sanctions for insider dealing and market manipulation.

Separately, the commission said it would review the Market Abuse Directive to examine how to bolster it to take account of new technologies that expand the scope and power for market manipulation. Regulators would get stronger investigative and sanctioning powers. Small and medium-sized issuers would see their administrative burden fall, however, or so it believes.

Source documents: The news release explains a bit more of the proposal. The market abuse review has links to the existing legislation.

Belgian companies do better on code compliance

Belgian companies are getting better at complying with the code of corporate governance. The Financial Services and Markets Authority said it was "delighted" with the progress, but don't get too excited. Its study indicated that a number of the code's provisions weren't being followed, which is a matter of concern as the country brings into force a new law requiring compliance, that is on a "comply-or-explain" basis. Improvements since 2009 include:

• Risk: Some 92 per cent of companies now have and apply internal control and risk management systems. The figures were less than half two years ago.
  
• Evaluation: Information on the evaluation process is complied with by 53 per cent and applied by 66 per cent of the companies. Those are up from 30 and 36 per cent respectively in the previous study.

More companies are reporting on executive pay and setting remuneration policies, too. Some 81 per cent of companies give information of share options, up from 61 per cent.

Source document: The FSMA news release summarises the findings.

FRC wants more board diversity in update to UK governance code

Many of the voices close to the debate call it a sensible move. Others will probably think it lacks ambition. But because the UK Corporate Governance Code will now require companies to disclose what they are doing to promote more diverse boards, everyone will have easy access to data to press their arguments with the companies in the future. The Financial Reporting Council, which oversees the accounting profession as well as the code, wants listed companies to report annually on their boardroom diversity policy, including gender, and on "any measurable objectives that the board has set for implementing the policy and the progress it had made in achieving the objectives". Diversity of the board should also feature as one of the factors to be considered when companies consider board effectiveness. The requirement reinforces a provision, introduced after the last major change in the code, which came into effect in June 2010. That provision states: "The search for board candidates should be conducted, and appointments made, on merit, against objective criteria and will due regard for the benefits of diversity on the board, including gender."

The new provisions on diversity will apply to financial years beginning on or after October 1, 2012, but the FRC wants companies to start right away. The FRC will also consult on other changes on narrative reporting and company stewardship.

Baroness Hogg, chairman of the Financial Reporting Council, said the changes would reduce the risk of "groupthink" on boards. "We believe this gives a further opportunity to show that Britain’s 'comply or explain', Code-based approach can deliver a flexible and rapid response and is therefore preferable to detailed legal regulation, and we urge companies to demonstrate this as quickly as possible."

The change has been in the wind since the British government commissioned a report on board diversity – the Davies Review – last year. Lord Davies made a variety of suggestions that steered clear of quotas for women on boards, despite growing pressure in that direction that uses the Norwegian example of legislated quotas as its model. The European Commission received such recommendations in responses to its green paper on corporate governance a few months ago. That means the issue is on the legislative agenda in the European Union, but there may be time for the voluntary UK to show progress and prevent a showdown over quotas.

Source document: The FRC feedback statement is a 14-page pdf file.

ESMA wants views on 'empty voting'

Damned if you do. Damned if you don't. Voting the shares you own – or don't own – is fraught with issues. Let's look for a minute at the "old" way most companies in Europe ran their voting. If you hold the shares, you vote. It's straightforward, unambiguous, and it stinks. It was designed for old capital, before capital had markets. It was clear cut, but it assumed you rarely if ever traded shares. It suited the families who set up the companies and the financiers who provided early and long-term capital. But it made it difficult for any "modern" institutional investor to exercise voting rights, and thus entrenched the rights of certain shareholders at the cost of all the others. As capital markets developed, pressure on European Union practices led to the adoption of something like the US and UK practice of record dates. Holders of shares on a certain date – often about two weeks before the shareholders meeting – are entitled to vote. That way, active traders can draw a line under things and vote. As they buy one day, sell the next, then buy again, it didn't matter too much that some might be voting when they didn't actually own the shares and others who did might not be able to. A compromise, and not too messy. But then comes high frequency trading, stock lending, leverage short positions, and presto: you've got the problem often called "empty voting": large-scale investments where the economic interest runs counter to the shareholding.

The European Securities and Markets Authority wants to take another look at the issues and possible regulatory action to find ways to reduce some of the more perverse effects. "Discussion on empty voting is often connected to discussion on hidden ownership," it says. "Whereas empty voting relates to situations where shareholders have voting power without corresponding economic interest, hidden ownership relates to situations where investors have long economic exposure to a company without having corresponding voting power." Empty voting and hidden ownership are often each other's mirror image. It has issued a call for evidence, a consultation, that is, without a consultation paper, as a way of generating ideas about what, if anything, it might propose.

Source document: The ESMA call for evidence is an eight-page pdf file. Comments, please, by November 25.

British insurers tell boards how to be better

What makes for an effective board of directors? There are guide books galore and academic studies that seek to turn hunches into evidence. But what makes any group work well – or poorly – is a subject fraught with complexity. The Association of British Insurers has decided to have a go at publishing its first version. Not content with the Guide to Board Effectiveness issues by the UK Financial Reporting Council six months ago, the ABI thinks it worthwhile to dwell somewhat longer over three areas of board practice that don't get a lot of attention from the FRC.

A guide to the players: Before we start, let's remember who these folks are. The Financial Reporting Council is the body that oversees the accounting and audit professions in the UK. A government-funded agency, it is also custodian of the UK Corporate Governance Code. Its guidance for directors grew out of the Higgs Review in 2003, which stresses the importance of independent, non-executive directors, reworked following the financial crisis by the Institute of Chartered Secretaries and Administrators. The ABI has two roles: A trade association for insurance companies, many of which are listed on the stock exchange, and a club of institutional investors. So the ABI guide on board effectiveness comes from experience of being companies and being investors.

The ABI reckons that boards ought to pay more attention

• Diversity: and especially the number and quality of women directors,
• Succession planning: making sure there are contingency plans in place for new directors and senior managers, and
• Board evaluation: the annual appraisal of performance that has been commonplace if not quite universal in the years since the Higgs Review put them firmly on the agenda.

"These issues do not stand alone, the ABI states. "Selecting the best individuals from a diverse talent pool, planning for succession and replacement, and regularly evaluating the board to determine its effectiveness, cover the lifecycle of a board. That is why they are important."

And the meaning? On diversity, the ABI thinks companies can do more, and probably ought to set targets and do more internally to fill the pipeline, especially with women who might then be in a position to win a place on boards without the need for quotas. On succession planning, it wants boards to go beyond just identifying potential candidates for board membership and get involved in looking at the planning for the whole top end of management. On evaluation, it wants to see companies explain the methodology they use, and to use a methodology that involves external advisers more rather than less.

These aren't particularly stunning insights or even challenges to board practice. But they are a higher level of prescription in an area of conduct that has long resisted prescription only to relent later on and comply. The ABI guide does, however, give companies another thing to stand behind in a bid to stave off mandatory measure. They can wrap themselves in the voluntarism of compliance, for a while longer at least. That suits well the membership, which sits on both sides of the divide between investor and investee.

Source document: The ABI guide, entitled "Report on Board Effectiveness – Highlighting best practice: encouraging progress" is a 52-page pdf file.

How and what to pay – the ABI's view

As part of its greater public assertiveness, the Association of British Insurers has decided it's time to make noise about executive pay. But it focuses not on the level of pay as such, but rather on the processes through which companies reward top management. The ABI, a trade association representing organisations that are both companies and investors, thinks shareholders have a role to play in the process, alongside boards and board remuneration committees. Moreover, policies and pay structures could do with some fresh ideas.

• Role of shareholders: As shareholders, insurance companies generally look after the long-term interests of their beneficiaries. They don't want to micro-manage companies, but they do want remuneration practices and policies of companies they invest in to be aligned with shareholder interests.
• Role of the board and directors: Non-executive directors, particularly those serving on the remuneration committee, should oversee executive remuneration.
• Remuneration Committee: Shareholders want remuneration committees to protect and promote their interests. Pay structures should be aligned with strategy and agreed risk appetite, reward success fairly and avoid paying more than is necessary. "Remuneration Committees should look at executive remuneration in terms of the pay policy of the company as a whole, pay and conditions elsewhere in the Group, and the overall cost to shareholders," it states.
• Remuneration policies: Pay should promote value creation through transparent alignment with the agreed corporate strategy. "Excessive or undeserved remuneration undermines the efficient operation of the company, adversely affects its reputation and is not aligned with shareholder interests," it says.
• Remuneration structures: The ABI wants the board as a whole to consider the aggregate impact of employee remuneration on the finances of the company, its investment and capital needs, and dividends to shareholders. "To avoid payment for failure and promote a long-term focus, remuneration structures should contain a careful balance of fixed and variable pay," it said. "They should include a high degree of deferral and measurement of performance over the long-term." It wants claw-back clauses, too.

If this summary sounds pretty much the same as you've always heard, you would be right. There's nothing radical here, no call for a clampdown, not quantitative limits and only a few echoes of the idea of setting top pay in relation to the median level in the company. The ABI doesn't do radicalism very much. That it is doing this at all is an indication of the steam building up in society about doing something, and maybe something serious.

Source document: The ABI remuneration guide gives further details.

Readability brings success in analyst reports

What makes an investment report influential? Is it the sophisticated analysis? The trading idea? The reputation of the analyst or the firm? Is it perhaps the colour, glossy pictures with circles and arrows? According to a study by a team of US and Canadian academics, it's none of those things. What matters is how readable the document is. The researchers examined 356,463 sell-side equity analyst reports from 2002 to 2009, testing the relationship between readability and stock trading volume reactions and then analysing the determinants of variation in report readability. They found that trading volume increase with the readability of text. Moreover, the analysts deemed to be "high quality" ones are the ones who write the most readable reports.

Source document: The working paper "Ambiguous Language in Analyst Reports," by Gus de Franco and Ole-Kristian Hope at the University of Toronto, Dushyantkumar Vyas from Minnesota, and Yibin Zhou from the University of Texas, is a 41-page pdf file.

Say-on-pay gets serious response from investors in first US season

The proxy season is over in the US and the results are in. In the first year under the new rules mandated by the Dodd-Frank Act, investors have the right to a non-binding vote on the pay of the CEO and certain named executive officers, called NEOs in the new parlance. Overwhelmingly the pay arrangements this year won shareholder support. But among several thousand companies involved in the first season were a handful where investors voted against. The Council of Institutional Investors, a strong proponent of "say on pay", commissioned an analysis of those to find out what happened. The study, conducted by Farient Advisors, looked at 37 cases where pay packages fell short of majority support. It also looked at another 37 cases where "against" votes reached 40 to 50 per cent. "While 37 'failed' votes is a tiny fraction (less than 2 percent) of the 2,340 say-on-pay votes at U.S. companies in the first half of the year, the total was surprisingly large compared with the track record of say on pay in other countries and the expectations of corporate governance professionals," CII commented. So why did investors object?

Farient found that investors cast votes against executive compensation at the 37 companies for a variety of reasons, but the factors most frequently cited were:

• Discrepancies: A disconnect between pay and performance (92 per cent of the cases cited this as a reason).
• Poor process: Poor pay practices (57 per cent).
• Disclosure gaps: Poor disclosure (35 per cent).
• Disproportion: Inappropriately high level of compensation for the company’s size, industry and performance (16 per cent).

"Investors were extremely thoughtful about evaluating executive compensation for say-on-pay votes," the report concluded. Resource constraints meant that investors used proxy advisory firms' analyses a lot, but to varying degrees. They also evaluated performance and pay over multiple years, and focused on total absolute shareholder return (TSR) over one-, three- and five-year periods. Investors also focused on CEO pay, rather than the pay of other NEOs, and on the overall "reasonableness" of the level of pay.

Source document: The CII report is a 36-page pdf file.