“Reputational Harm” Clawbacks: Shareholders Press for Board Turnover, Including Comp Committee Chair
About a year ago, I blogged about shareholders that were scrutinizing how clawback policies apply to situations of “reputational harm.” At the time, the NYC Comptroller led a group of proponents and submitted a shareholder proposal to McDonald’s in an effort to expand a clawback policy. Now, according to a recent news report, a group of investors, one being the NYC Comptroller, are pressing for board turnover – including the compensation committee chairman.
The investors are calling for resignations of McDonald’s board chair and the company’s compensation committee chair because they’re unhappy with severance paid to the company’s former CEO. The company is in the process of trying to claw back the severance, but the shareholders – who reportedly own less than 1% of the company’s outstanding shares – want accelerated board turnover.
The shareholders want action now in advance of the company’s annual meeting. Liz blogged last summer about increased scrutiny of pay decisions, especially this year. We’ll see how this plays out but for now, the saga highlights shareholder increased scrutiny of clawback policies and other pay actions, including board responses to shareholder requests for action.
-Lynn Jokela, CompensationStandards.com January 7, 2021
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