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Target and performance linked compensation in DEF 14s


scorpioncapital
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I've been looking at several DEF 14s and it has made for some fascinating reading. Specifically, I've been looking at what boards set as their targets for performance-linked compensation such as special bonuses, options, and RSUs.

For example, one thing can be seen is that for companies where return on equity or growth in bv/share is the primary performance target, compensation varies wildly for the same or sub-par performance. Some have targets set at 11% return on bv, others have 15%, some have payouts that are significant even below target. Some businesses are simple, others complex. I'm thinking why not choose the least amount of compensation for the highest target? Does anyone know if the annual targets are a moving target or are fixed? Clearly if you move the target each year based on a compensation advisory board or firm, you're changing the benchmark and it seems unfair. Other DEF 14s actually have no targets and they say, we compensate at our discretion. Some of these boards have compensated far more than those that had a target and some far less. In short, do companies believe their industry dictates compensation, or their own personal circumstances? Some for example, will compensate for a large acquisition, even though that is subjective whether it creates value.

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