Corporate Counsel Profiler

The most comprehensive, trusted source for information on corporate counsel in North America.

Not a member

Corporate Counsel Profiler profiles 22,000+ members of the corporate counsel community. Click here to gain access to this valuable resource.

Corporate Counsel News - Trends and Developments,Towers Watson survey finds directors, investors disagree on executive pay issue

Amy Leisinger, J.D.
POSTED 2014-01-22

By Corporate directors and institutional investors agree that the U.S. executive-pay model has improved over the last several years but remain divided on certain issues, including the potential impact of say-on-pay voting and improving the pay-setting process, according to a recent survey by Towers Watson, a global professional services firm, and Alliance Advisors, a proxy solicitation firm.

EXECUTIVE PAY. Specifically, the survey found that 91 percent of directors and 97 percent of shareholders believe that the executive-pay model has maintained status quo or improved since the implementation of say-on-pay voting. However, directors and institutional investors disagree on whether performance and strategy are properly aligned, whether pay-setting processes are adequate, and whether, in general, pay levels for executives are too high. Seventy percent of the directors surveyed say that executive pay is closely linked with strategy, compared with just one in three investors. In addition, only a small number of directors find that executive pay is overly influenced by management, compared with 66 percent of investors. The survey also found that the vast majority of directors do not believe that the executive-pay model has led to excessive compensation, versus nearly three-fourths of investors disagreeing.

"Given the strong level of shareholder support for say-on-pay votes the last three years, directors firmly believe they are doing a good job of addressing executive pay issues and that revisions to the executive-pay model are generally working well. Investors, however, seem to want an even greater voice in the pay-setting process and also improved communication between companies and shareholders," said Andrew Goldstein, central division leader for executive compensation at Towers Watson.

IMPROVEMENTS TO PAY-SETTING PROCESS. The vast majority of investors surveyed believe that more frequent shareholder engagement, enhanced pay disclosure, and management restraint would enhance the pay-setting process; the directors polled disagree. However, both parties concur in the belief that the Dodd-Frank CEO pay-ratio disclosure rule will not markedly help improve the model and have concluded that more disciplined target setting and additional consideration of nonfinancial performance measures are necessary.

The survey also discovered a disparity between how corporate directors and institutional investors view the actual impact of the say-on-pay requirements. The majority of directors do not believe say-on-pay votes drive pay decisions, but nevertheless they demonstrate the alignment of executive pay and company performance. According to the survey, 35 percent of directors view say-on-pay as "a waste of time and resources."

"Directors and investors have made great strides in the say-on-pay era to enhance the executive-pay model, but more work needs to be done," said James Kroll, a director at Towers Watson who leads the company's governance advisory practice for executive compensation.


Cathy Anderson
GC Anderson Guides True Value Hardware and Its Co-Op Model
True Value Hardware
In the 1970s, Cathy Anderson acquiesced to her mother's gentle persuasion and chose law as her career path. Now, after nearly three decades as an in-house attorney, including her current position as general counsel and senior vice president for human resources at the True Value Company, she's glad she listened to Mom's advice.

Anderson steadily climbed the rungs of the corporate ladder within a few different companies, with her career following a logical course - except for one thing. Unlike many GCs, she has never worked as a private practitioner at a law firm, and that's by design. She's always just liked playing a key role in business strategy and management.

After graduating from law school at Loyola University, Chicago, Anderson went to work in the legal department at American Hospital Supply Company. A decade later she joined the NutraSweet Company, where she worked for nine years, part of that time serving as the company's deputy general counsel. She then accepted a position with Alliant Foodservice, Inc., working there for seven years as the executive vice president, general counsel and secretary. In 2003, she joined True Value, one of the nation's most well-known hardware-store companies.

Recently, Anderson spoke with the Directory of Corporate Counsel about just how her mom nudged her into law, her decision to stay in-house despite a little flirtation with private practice, the challenges she faces and the satisfaction she gets from working within True Value's co-op model of business and other topics. What follows is that excerpted interview.

Directory of Corporate Counsel: Cathy, what was it that initially attracted you to the legal profession? Why did you want to become a lawyer?

Cathy Anderson: That's going back in time. I think because my mother said I should [laughs]. When I entered college, I thought about going to medical school. But about my junior year organic chemistry came around and I could either do a lab on a Friday night or go to a party on Friday night. And, I picked the party. But I still loved the sciences and I graduated college with a degree in zoology and anthropology.

After college, I took a job in advertising. And, every day I would get a call from my mom, and she would say, "Hey, why don't you take the L-SATs? You don't have to tell anyone. Just take them." After several months of this, I finally said, "Oh, for God sakes, I'll take the L-SATs. And, I won't tell anyone." After I took them, my mom suggested that I apply to law school "just for fun." She had a bigger vision for me than I did for myself, thank goodness.

So I applied and I got in. When I graduated, I handed her my diploma and said, "This is really yours." But for her encouragement, I don't know that I would have become a lawyer. Somehow my mom knew that the legal profession would be a good fit for me. And, she was right.

After law school, I went back to the company where I had worked in advertising, a company called American Hospital Supply, as a lawyer. And, that makes me a bit of a freak of nature because I have only worked in-house.

DOCC: So, why have you always stayed in-house, and have you ever flirted with the idea of working for a private law firm?

CA: I flirted with going to a law firm during my last year of law school, as all third-year students do. I interviewed with a number of Chicago firms that had opportunities for me. But the other opportunity I had was to go back to American Hospital Supply, albeit in a different position. When I went back to interview with the company I used to work with, I found there was something captivating about it because it was about the business. I realized that if I went in-house I'd be able to enjoy the marriage of business and law. That became my passion.

I recognized that you lived with the consequences of your decisions when you're an in-house lawyer in a way that private practitioners do not. If I make a decision here, and a year from now that decision works out either well or poorly for the company, people remember who the heck made that decision.

I like the fact that you need a hearty appetite for risk taking. You do that much more in-house than in private practice, where, especially as a young associate, you are going to have your work filtered and filtered and reviewed and reviewed, as well you should. On the other hand, if you're in-house, you've got a client standing at your door asking, "Hey, can I do this?"And you can't say, "I need three days of research before I can answer that." That person is about to go into a meeting and needs to know whether or not he or she can do what they're thinking about doing. I happen to have a hearty appetite for risk.

And, I really like the business side of the practice. If I'm at a cocktail party, and someone asked me about my work, I'll tell them about the hardware business rather than the latest development in the law. And, that's more interesting to me. That's why I stay on the in-house side. Ten years ago I was talking about food service and nine years before that I was talking about NutraSweet. If people want to engage me about work, my first inclination is to talk about the business, not about the law. But, on the other hand, I love the law, too. I just know I don't belong anywhere but in-house.

DOCC: Your career has taken kind of a logical arc in terms of where you've gone and how you stepped up the in-house ladder and ultimately became a general counsel. It seems like your career track has made a lot of sense.

CA: I agree with you. I did take a natural functional path. When I was at NutraSweet, I was asked if I would run their new business development area, something I was very interested in. But then I sort of chickened out. I'm a big talker about having profit and loss responsibility, and how that makes people grow. Yet, when the opportunity was presented with me, I said, "No, I love the law." I didn't want to give it up, and I knew I couldn't do both.

A similar circumstance has presented itself recently, not here at True Value. I received a call from a search firm and was asked if I wanted to head the HR department at a company that will remain nameless. I told him I probably was not interested, but that I wanted to hear more about it. I asked, if I took the job, if I would also be the GC. And he said I would not. I said, "Oh, never mind."

DOCC: Since you've been at true value, what has been one of the biggest challenges you've faced and what has been most rewarding for you?

CA: On the challenge side, I guess it's the frustration with the co-op model. We don't own our stores. The co-op comprises 4800 independent retailers, so we don't control them. We can't tell them what to do, and we're limited in the ways that we can assist them. Most big retailers own all their stores and so they can provide, and in fact they're obligated to provide, those stores with legal services. With our business model, we can't. So we're not their lawyers. That being said, I try to find ways to help them while staying on the right side of the canon of ethics. I can't just walk into any True Value store and tell the entrepreneur, "Hey, I'm a lawyer. Can I help you?" So, my frustration comes with not being able to help more.

DOCC: Do these independent store owners come to you often for help?

CA: No, they don't formally because they know that my team can't represent them. What we can do for them is to try to figure out ways to help them and then put on educational courses for them at our markets, which are buying and networking opportunities among our vendors and our retailers. We hold two markets a year and we have online learning. So we don't help them by answering specific employment problems, but we can offer them guidelines about how to recruit, what an application should look like, what laws you should be looking into without us providing specific advice.

DOCC: I could see were that would be frustrating. So what do you find rewarding, Cathy?

CA: There are two things, I think. While there are frustrations in working with a network of independent entrepreneurs, that's also the upside. It's very satisfying to know, somehow, in some small way, that I am contributing to the success of this network of independent entrepreneurs. These are small business owners who are the backbone of America. They are, collectively, representative of where most hiring is done, where most shopping is done, where most money is exchanged. These are people who are attempting to live the American dream. They own their own business. They employ their family members. They serve their community. It just feels good to be a part of all that. So, I work for a company that helps all these little guys.

One of the other things I feel very good about is the way that I think True Value, as an employer, nurtures its legal team. We permit and also encourage our lawyers to use career-building and growth opportunities to develop business acumen and leadership skills, as well as legal skills. Not every place does that. A lot of organizations say, "You're lawyers. Just be lawyers."

I want all four of the attorneys who work on my team to have opportunities to work on business matters separate from just business matters with legal problems.

DOCC: So, Cathy, what's keeping you busy these days? Do you have any litigation that you're working on?

CA: Fortunately, and I knock on wood as I say this, we have significantly reduced our litigation. When I first joined the company, there was a boatload of very complex litigation. One by one by one we have been resolving that.

I think what's driving me now is finding additional ways to help the retailers, to help my lawyers get closer to the retailers, but also to be thinking about retailing in general. Where are we as an organization going to be five or 10 years from now? That is, how can we help make sure that our independent owners stay financially successful?

If you remember back when you were growing up, you probably recall that there were many independent pharmacies, and you might also have had independent butchers or bankers. I grew up on the North Shore of Chicago, and there were a lot of independent businesses around. Well, most of those businesses are gone. What I need to focus on, as does the rest of the management team here, is how to make sure that the independent hardware store is not gone five or 10 years from now, the way other independent businesses are. We need to make sure the big boxes won't gobble us up and make us extinct.

So my focus is to help our retailers reduce costs, stay in compliance, be aware of regulatory issues - anyway that I can serve the co-op and the co-op can serve our retailers, sign me up for that.

DOCC: What's one of the current regulatory issues that you need to help educate your retailers about?

CA: Well, the state of California has lots of regulatory issues relating to pesticides with many, many items. Some of the things you wouldn't consider a pesticide, the state of California characterizes as such. And, our retailers need to know which products they sell fall under this classification.

There are different regulations in states and in cities and in counties that we need to have our vendors make us aware of and then we need to make the retailers aware of. For example, retailers in the city of Chicago need to know when they can and cannot sell spray paint. In some communities you could probably walk into a hardware store and buy spray paint anytime you want. In the city of Chicago, not so much. Somebody has to tell the retailers that. Yes, it is up to them to keep up on that. But to the extent that we can help provide them with information, we will.

There are some regulations that require consumers to fill out paperwork before they can buy a product. And, sometimes, it's hard when you're an independent retailer and someone comes into your store and they want to buy drain cleaner, and they have to say, "We'd love to sell you the drain cleaner. Could you please fill out this six-page form? "The consumer is aggravated at the retailer but it's not the retailer's fault.

DOCC: To shift gears here, I'd like to ask you about your relationship with outside counsel. What do you look for when you retain outside counsel?

CA: First of all, I look for a lawyer rather than a law firm. I recognize that certain firms have certain reputations. But for me it's always been about the lawyer and not the firm. Indeed, over the course of my career, I have followed lawyers from firm to firm, as they have moved. I'm looking for a lawyer to partner with me almost for life. I'm not saying it's monogamy but I want someone who really wants to understand my business and my business needs, not just my legal needs. Some of the best lawyers I know provide unbelievable business advice, not just legal advice. They offer a really insightful perspective on business.

For me, responsiveness is the single most important attribute. I don't care how smart you are, or how well you can sort through complex issues. If you don't return my call or my e-mail, I'm not going to retain you. So the lawyers with whom I'm most loyal are the ones who persuade me that I am a value to them by returning my calls. It's really important to me.

In terms of billing, I have seen law firms get really cute. I do not mind paying fair value for services. I get that it's expensive to run a law firm. I object mightily to being gouged. A firm or lawyer can take advantage of me once. I will never quibble over a bill. I won't say, "What? You spent 15 hours doing this complaint?" I will pay it and I just won't use that firm again. It's as simple as that. You treat me fairly and I'll treat you fairly.

Maybe what law firms don't understand as well as they should - maybe they do - is that every general counsel is part of multiple networks. There are both the formal networks and the informal ones. And, we are always asking each other for advice [about what firms to hire, among other things]. I am not influenced by any glossy marketing brochures from law firms. I am influenced when I reach out to colleagues, some of whom I've known for 25 years, and they give me the names of attorneys who they respect and think would be a good fit for me. I ask for referrals, and I get reliable responses back. That influences me greatly.

-- Steven T. Taylor

Quick Poll

What is the most pressing issue facing your organization in 2013?

Employee retention
Alternative fee arrangements
Utilizing technology in a more efficient manner

Why Subscribe?

Law Firms
Expand your firm's business by connecting with corporate counsel or preparing for law firm RFPs.
Law Schools
Connect with alumni and decision makers, or search attorneys by practice area.
Legal Recruiters
Monitor career movement and identify candidates with lists of inside counsel.
Corporate Counsel
Connect with peers and get a view into other corporate legal departments.