Gillian Tan, Columnist

Tesla Is the Exception That Proves the Rule on Board Pay

Outsize board compensation doesn't guarantee outperformance, and needs to become a feature of the past.

November 30, 2017 at 12:30 PM UTC

Gillian Tan is a senior reporter covering finance and alternative asset classes including real estate, infrastructure, private equity, private credit, venture capital and sports business. She previously wrote an opinion column for Bloomberg and was a reporter at the Wall Street Journal. She is a qualified chartered accountant.

1511217111_226259202 — Photographer: Xaume Olleros/Bloomberg

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Corporate America may soon be more mindful of director pay. That's good news for shareholders.

To date, it's a topic that's been the subject of a handful of lawsuits and one that's occasionally zeroed in on by activists. But beginning Feb. 1, proxy advisory firm Institutional Shareholder Services is introducing a policy that will draw attention to corporations whose board members are responsible for approving director compensation that is wildly higher than rivals. To draw the ire of ISS, these directors must oversee companies that pay outsize sums to the non-employee members of their boards without "compelling rationale" in consecutive years.