DXC Technology Company received only 47% support on its Say-on-Pay proposal at its 2021 Annual Meeting of Stockholders. As a result, the company provided extensive disclosure in its fiscal 2022 definitive proxy statement on the vote outcome and subsequent stockholder engagement in response to the vote in its Compensation Discussion and Analysis (with this disclosure starting at page 46). From there, the company went on to disclose its discussions and feedback from stockholders this February that were unrelated to the negative Say-on-Pay vote, including the retirement terms of the CEO’s employment agreement and the company’s ESG practices. This is in addition to a letter from the Compensation Committee that addressed the committee’s actions (both immediately and for fiscal 2023) in response to what it learned from its stockholders (see page 37).
While the Say-on-Pay response is worth a quick review, what really caught my attention was the “Best Practices” table that the company included in its director compensation section. After noting that its director pay is reviewed annually and approved by the board of directors (following an analysis by the Compensation Committee’s independent consultant of the program’s framework and pay levels relative to the company’s peer group), the following table was presented:
Director Compensation Best Practices
Annual Benchmarking – Director compensation is reviewed annually relative to DXC’s peer group to ensure it is market-competitive.
Mix of Cash and Equity – The program includes an appropriate mix of annual cash compensation and equity awards.
Vesting Requirements of Annual Equity Awards – Restricted stock units granted under the Director Plan are scheduled to vest in full at the earlier of the first anniversary of the grant date, or the date of the next annual stockholders meeting.
Ownership Guidelines – Directors have an equity ownership guideline of five times their annual retainer to be achieved over a five-year period.
Anti-Hedging or Anti-Pledging of Company Stock – Our insider trading policy prohibits employees and directors from engaging in any speculative or hedging transactions in our securities. Additionally, the policy prohibits employees and directors from pledging DXC securities as collateral for a loan.
The rest of the director compensation disclosure is pretty standard — a table listing the annual directors’ fees, the Director Compensation Table itself and a table showing outstanding equity awards held by the directors at fiscal year-end. While none of the disclosure in the “Best Practices” table was unusual, it’s the first time I’ve seen this information in anything other than narrative form and covering all of these topics in one place. I’m inclined to consider using this type of table in the future to enhance transparency about director pay.
— Mark Borges, CompensationStandards.com, June 14, 2022