FERTILIZER giant PotashCorp (TSE, NYSE:POT) is tackling the touchy topic of executive pay with a web-based communication campaign that includes a shareholder survey, a series of videos, and pay disclosures you can easily tweet or Like on Facebook.
The Canadian company, which voluntarily adopted an annual say-on-pay vote two years ago, yesterday announced the availability of a new shareholder survey and director videos explaining the company’s pay practices. It did so in a note that was posted on its website and distributed to its Twitter account and Facebook page.
Shareholders are invited to complete the survey and provide comments on a range of compensation questions. They can link from the survey to the company’s custom designed online proxy statement and watch video vignettes of compensation committee chair John Estey and board chairman Dallas Howe.
Much of the information, including individual pay tables, can easily be shared on social networks.
Survey to provide valuable feedback
This is the second year that the Saskatchewan-based company has voluntarily given shareholders the opportunity to weigh in on the board’s pay practices through a survey and non-binding vote.
While the say-on-pay vote is the ultimate measure of shareholder satisfaction, it doesn’t give directors insight into investors’ views on specific pay practices. The survey will help directors identify potential issues and obtain feedback from shareholders through their comments.
PotashCorp’s internally developed survey explains the company’s compensation practices and philosophy in 6 sections that include direct links to more detailed information in the proxy statement. Shareholders can indicate their comfort level with the company’s practices using a 4-point scale. They also can provide comments on each topic.
Questions covered in the survey include:
- Whether compensation is meaningfully tied to long-term shareholder value;
- If stock ownership requirements for executives are appropriate;
- That the company’s practices do not encourage or reward imprudent risk taking;
- Whether the pay program allows the company to attract and retain qualified executives;
- The clarity of the company’s disclosure in its proxy statement and annual report; and,
- Whether PotashCorp is providing sufficient opportunities for shareholders to provide feedback.
In the last survey, shareholders scored PotashCorp highest for its ability to attract and retain well-qualified executives and the appropriateness of its stock ownership requirements. According to the company, the overall average score for the six questions was 2.9 on a scale of 1 (very uncomfortable) to 4 (very comfortable).
Interestingly, the survey results provide a more nuanced picture than the result of last year’s say-on-pay vote, where shareholders voted 97% in favor of the company’s compensation practices. Most survey participants were retail investors, while the stock is largely institutionally held.
“Last year’s survey was a good start and we hope to hear from more of our shareholders this year,” says Estey in an article on the company’s website. “While the rankings are an important benchmark, even greater insight comes from the commentary that our investors provide.”
Tweet this HTML proxy statement
How rare are HTML proxy statements? If you exclude HTML blobs like this, it’s exceptionally rare in North America. Last year, fewer than 5% of the North American companies we tracked bothered to produce their proxy statements in a well-designed HTML report, even though the SEC has tried to point them in that direction.
PotashCorp’s latest proxy circular allows you to drill down via a left-hand navigation menu into each section of the proxy, including to individual subsections of the Compensation Discussion & Analysis. This makes it easy for a governance analyst (who else reads these things in detail?) to bookmark specific pages like Executive Share Ownership Guidelines or Estimated Termination Payments and Benefits for future reference.
Since the report is entirely in HTML text, the same governance analyst can easily copy data from those pages into a word processing program. And if the analyst is on Twitter, there’s access to social sharing buttons on every page, and even for individual tables.
The only thing you can’t do, at least not obviously, is download or import the tables in to a spreadsheet. (There’s a separate data tool on the site that has compensation information you can export, but it’s not prominent.)
Finally, it’s worth noting that this proxy has color photographs of the directors! It’s astonishing that even though there’s no extra cost to using color on the web, almost all online proxy statements use only black and white photos of directors, if they have them. That tells you how far behind corporate governance communicators are when it comes to web communication. They’re still thinking about ink.
13 videos and a transcript
Video features prominently in PotashCorp’s pay outreach program. This is probably because video brings directors to life and can give investors a better feel the people who are charged with overseeing how management is paid.
There are 13 separate video segments, each featuring either directors Estey or Howe commenting on particular compensation or governance topics. A transcript of their comments is provided as well, which is handy if you don’t have audio capabilities or use assistive technology.
However, the videos seems similar or almost identical to what the company used last year. It’s probably unfair, but I find myself wondering if that’s the web equivalent of directors not showing up at the annual meeting.
I also think some or all of the videos should be uploaded to the company’s Facebook page and to its YouTube channel.
And the future…
For most boards what PotashCorp is doing is likely to be viewed as leading-edge or even radical. But it’s not really a big leap forward from the days when board communication was about popping the proxy in the mail. It’s still controlled and directors are not readily accessible to shareholders online.
To interact with them, you will have to go to PotashCorp’s May annual meeting in Saskatoon, a pretty place but far away from the major North American centers.
In the future, I can see directors and shareholders chatting via video or text on Facebook or Twitter, and being completely comfortable doing it. That’s just how all humans will connect, regardless of how much they’re paid.
Disclosure: I was on a team that helped PotashCorp rebuild its website more than a year ago. However, I currently have no business relationship with the company and have no plans to enter into one.