GovernanceMetrics International introduced pay alignment rankings for U.S, companies, allowing investors to analyze CEO pay and corporate performance, the corporate governance research and ratings firm announced today. The ranking, scaled between zero and 100%, is based on a sector-by-sector comparison of alignment between compensation and corporate performance, a GMI statement said.
The pay alignment ranking will be included in a new summary compensation report inside each GMI rating report, the statement said. The report will also include, when available, the fees paid to managements compensation consultant and to the consultant retained by the compensation committee of the board.
The level of disclosure in consultant fees was quite low, Howard Sherman, GMIs CEO, said in the statement. Only 10 of the nearly 1,500 companies with a summary compensation report disclosed the fees paid to compensation consultants.
Many shareholders view executive pay decisions as a key insight into the overall quality of corporate governance, and there is a perception in the U.S. market that too many executive remuneration plans are not tied closely enough to performance, Mr. Sherman said in the statement.