As we now get closer to the end of the year, the proxy statement filings are really starting to lighten up. In my experience, that’s fairly customary around the holidays. Still, a few significant filings are being made. Visa, for one, filed its definitive proxy statement last week and it always makes for interesting reading.
I first note the 11-page proxy summary. It contains a lot of useful information, including several pages on human capital management and other ESG topics. Most of the proxy statements I’ve reviewed this fall have placed their ESG discussions in the body of the proxy statement. Perhaps we’ll begin to see more instances of this information being included in the proxy summary. That would certainly be consistent with the level of interest that continues to grow in this area.
But that’s only the beginning on this subject. The company includes a multi-page discussion of ESG matters at the end of the Corporate Governance section of its proxy statement. What’s most interesting is that the discussion doesn’t just repeat what’s in the Proxy Summary. The company uses this section to take a broader look at its ESG activities, including how it manages the risks and opportunities that arise from ESG issues, provides transparency of its ESG performance and enables strong management and Board oversight of its overall ESG strategy. It also does a good job addressing the priority issues in the five areas where its focuses its ESG strategy, using a combination of narrative and graphic disclosure to report on the recent progress that it has made in each area. each informed by a materiality assessment and stakeholder engagement. It’s definitely worth checking out how the company has presented this information (at page 20).
One other area that I wanted to bring to your attention is the company’s discussion of its perquisites policies in the Compensation Discussion and Analysis. While Visa has always covered this topic in its CD&A, starting in 2012 it began to expand the discussion of companion travel on business related flights on its corporate aircraft. And it seems as if that disclosure has only gotten more detailed as the company has enhanced the transparency of its policies over the past decade. Here’s the perquisites disclosure from the latest CD&A:
We provide limited perquisites and other personal benefits to facilitate the performance of our NEOs’ management responsibilities. For instance, we maintain a company car and driver that allows for additional security, which are used by the Chairman and Chief Executive Officer for both business and personal use, as well as some business and limited personal use by other executive officers. From time to time, our NEOs also may use the Company’s tickets for sporting, cultural, or other events for personal use rather than business purposes. If an incremental cost is incurred for such use, it is included in the “All Other Compensation” column of the Summary Compensation Table for Fiscal Year 2021 if the aggregate amount paid by the Company in Fiscal Year 2021 for perquisites and personal benefits to an NEO equaled $10,000 or more.
In addition, we have a policy that allows for companion travel on business-related flights on our corporate aircraft by the Chairman and Chief Executive Officer, the President, and other key employees, as approved by the Chairman and Chief Executive Officer. It is our policy that NEOs are responsible for all income taxes related to their personal usage of the Company car or corporate aircraft, as well as travel by their companions. Additionally, no NEO may use the corporate aircraft for exclusive personal use (not related to business) except under the terms and conditions outlined in the Company’s aircraft time-sharing agreement with the Chairman and Chief Executive Officer, or under extraordinary circumstances with the advance approval of the Chairman and Chief Executive Officer. The Compensation Committee requires that Mr. Kelly use the aircraft for all business and personal travel, based on an independent third-party finding of a bona fide security concern, which recommended that Mr. Kelly use the aircraft for all travel. Related to this requirement, Mr. Kelly is required under the terms of the aircraft time-sharing agreement to reimburse Visa for personal use of the aircraft for amounts in excess of $200,000 per fiscal year. Any personal use of the aircraft in excess of this limit by our Chairman and Chief Executive Officer pursuant to the aircraft time-sharing agreement requires him to reimburse Visa an amount (as determined by the Company) equal to the lesser of: (i) the amount that would, absent reimbursement, be reportable with respect to the Chairman and Chief Executive Officer in the Summary Compensation Table (which we refer to as the SEC Cost), or (ii) the expenses of operating such flight that may be charged pursuant to Federal Aviation Regulation Section 91.501(d) as in effect from time to time (which we refer to as the FAR Expenses). The Chairman and Chief Executive Officer’s personal use of the corporate aircraft is also subject to an annual cap of $500,000, as determined by the Company using the lesser of the SEC Cost and the FAR Expenses.
While I’ve seen a few other companies get into the details of its policies, particularly as they relate to the use of corporate aircraft, Visa’s is certainly one of the more extensive examples of this level of disclosure. Often, this information is relegated to the applicable footnote to the Summary Compensation Table, but Visa has given it a much higher profile by including it in the CD&A.
-Mark Borges, CompensationStandards.com December 7, 2021
