“The proxies we are looking now at seem like a message from a time capsule. They don’t seem to have a lot of relevance,” says Nell Minow, vice chair of ValueEdge Advisors, a corporate governance advisory firm for institutional investors. “But I am very concerned about what’s happening now.”
She’s focused on potentially “big grants and option awards when the market is low” as part of 2020 compensation packages. Companies can make the grants periodically during the year. Gains realized later are often attributable to the overall market, not the performance of the individual company, she says.
Minow thinks options should be indexed, so executives only benefit if a company’s share price outperforms its peer group or the overall market. “There is no reason they should get paid just because the whole market swings back – in other words, for a return to normal.”
Shareholders don’t get to make up their losses with new grants, she notes.