Proxy Statements That Mention ERI Data
The Compensation Committee frequently engages independent compensation consultants to assist it in the compensation process for the Named Executive Officers. The consultants are retained by and report to the Compensation Committee. The consultants provide expertise and information about competitive trends in the employment marketplace, including established and emerging compensation practices at other similarly situated companies. The consultants also provide survey data and assist in assembling relevant comparison groups for various purposes and establishing benchmarks for base salary, benefits, perquisites and incentives based on a number of factors. During fiscal year 2015, the Compensation Committee of the Board of Directors engaged Arthur Warren Associates, a compensation consultant, to advise the Compensation Committee on executive officer and director compensation. During fiscal 2015, Arthur Warren Associates also assisted the Compensation Committee in the review of base salary, short-term incentives, long term phantom and equity incentive plan design trends, particularly among the Bank’s peer group, as determined through industry surveys and published proxy statements. The Compensation Committee also used the consultant’s assistance in setting parameters for incentive awards consistent with peer group awards in the Bank’s competitive market place. The Compensation Committee also relied on other survey sources including FinPro Custom Peer Group Survey Data, Pearl Meyer & Partners 2014 New York Bankers Association Banking Compensation Survey, Pearl Meyer & Partners 2014 Northeast Bankers Survey, and <b>Economic Research Institute (ERI)</b> Survey.
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For fiscal year 2015 executive officer compensation planning, the Committee reviewed a comprehensive executive compensation study performed by Buck Consulting in conjunction with the due diligence completed for the spin-off. In addition, several furniture industry competitors’ proxy statements (specifically Steelcase Inc., Herman Miller, Inc., Knoll, Inc., and HNI Corporation) were reviewed and analyzed. These two resources, the Buck Consulting study and the information from the review of other comparable public furniture companies, were used to determine the target compensation for each executive officer. A final validation was done by utilizing Salary Survey Data from <b>ERI (Economic Research Institute)</b> for executive positions in the United States, for the furniture manufacturing industry and company revenue of $550 million to determine that the total compensation was reasonable and competitive in view of this information.<br />
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To help establish competitive compensation levels, the Compensation Committee examined executive compensation survey data, both base salaries and total cash compensation, from <b>Economic Research Institute (“ERI”)</b>. The survey data was tailored to include only those U.S. public companies in the “Instrument Manufacturing” segment with revenues between $20 -- $50 million per year. The ERI survey included 90 public companies in the data set used to establish compensation statistics. This included companies that produced both medical devices and general electronic instruments, along with consumable supplies. The data was further adjusted for the geographic location of each NEO. The data from this analysis was used by the Compensation Committee as one factor in determining compensation levels for base salary and total compensation.<br />
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In developing compensation levels for the named executive officers for the year ended December 31, 2014, the compensation committee utilized the services of Arthur Warren Associates, an independent compensation advisory firm. Arthur Warren Associates assisted the compensation committee in the review of base salary and incentive compensation for 2014, particularly among Blue Hills Bancorp’s peer group, as determined through industry surveys and published proxy statements. The compensation committee also relied on other survey sources including Pearl Meyer & Partners 2014 Massachusetts Bankers Association Banking Compensation Survey, Pearl Meyer & Partners 2014 Northeast Bankers Survey, and <b>ERI Economic Research Institute</b> Survey.<br />
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The Committee also considers compensation data from Salary.com and <b>Economic Research Institute</b>, which takes into consideration company size, geography, base salary and variable cash compensation, but excludes equity incentive compensation information.
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The published surveys consisted of the following: Economic Research Institute</b>, <i>2014 ERI Executive Compensation Assessor; Towers Watson, 2013/2014 Top Manager Compensation; Mercer, 2014 US General Benchmark Survey; Kenexa 2014 <i>CompAnalyst; and WorldatWork, 2013/2014 Total Salary Increase Budget Survey
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In addition to advice provided by Keating the Compensation Committee utilized the following materials, along with other resources and tools, to render compensation decisions for 2014: (i) surveys and reports of executive compensation paid by other public companies with characteristics similar to ours and (ii) professionally published surveys from Towers Watson, WTPF Compensation Survey, Direct Selling Association Management Compensation & Benefits Survey, <b>Economic Research Institute</b> Salary Assessor, and HRA-NCA. These materials and other resources help to provide us with solid benchmarks for each component of our executive compensation package as well as a general understanding of best practices of companies in our industry who are competing for with us for top talent.
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Management periodically obtains survey data of comparably situated companies from <b>Economic Research Institute ("ERI")</b> to guide it in its recommendations of compensation decisions. The specific parameters defined for ERI typically are job titles, company revenue size, company SIC code and geographic location. Based upon these inputs, ERI supplies base salaries, incentive and total compensation information for comparable positions. Where comparable positions do not exist, further analysis is necessary to determine appropriate comparable compensation parameters. Thus, because it is our current practice to have both an Executive Chairman and a President and Chief Executive Officer, the starting point for our consideration of the compensation for these two positions is determined by combining the ERI data for the position of "Outside Chairman" and the position of "Inside Chairman and Chief Executive Officer" and adjusting for the additional activities and responsibilities of our Executive Chairman. The key data obtained from ERI that the Committee uses are the ranges of fixed compensation (base salaries), variable compensation, and total compensation, as well as the mean of each range. This data is then compared to the actual compensation of each executive officer for the prior year and the average actual compensation for the past five years.
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The Compensation Committee, with the assistance of the compensation consultant, reviewed the companies comprising the Custom Peer Group in order to maintain its appropriateness for the competitive pay analysis. These companies were generally selected since they are all companies in the energy and energy services industry and, the majority relatively similar annual revenues and market capitalization. The Compensation Committee believes the Custom Peer Group reflects our current competitors for employee talent and that it provides an appropriate peer set for the purposes of evaluating our pay practices and the Chief Executive Officer's pay levels. The published compensation surveys consisted of the following:Economic Research Institute, 2013 ERI Executive Compensation Assessor Tower Watson, 2013/2014 Top Management Compensation Mercer, Inc., 2013 US General Benchmark Kenexa, 2013 CompAnalyst Benchmark Survey Longnecker & Associates, 2013 Long-term Incentive SurveyWorldatWork, 2013/2014 Total Salary Increase Budget Survey
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The Compensation Consultant compiled compensation data for the 2014 Peer Group from a variety of sources, including proxy statements and other publicly filed documents. It also compiled published survey compensation data from multiple sources, including the <b>Economic Research Institute</b>, Mercer and Towers Watson. The compensation of our executive officers and the Company's total shareholder returns for purposes of determining awards of performance stock units was then compared with this 2014 Peer Group and survey data.
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The Compensation Committee also relied on other survey sources including Pearl Meyer & Partners 2014 Massachusetts Bankers Association Banking Compensation Survey, Pearl Meyer & Partners 2014 Northeast Bankers Survey, and the <b>ERI Economic Research Institute</b> Survey.
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The determination of the Company’s executive officers’ compensation is solely within the purview of the Compensation Committee. In determining and assessing the appropriateness of the compensation for all executive officers, the Compensation Committee solicits and considers the self-assessment of each executive as to his or her performance against pre-established goals and objectives, as well as the executive’s involvement in the day to day operations of the relevant business unit. The independent compensation consultant from the Burke Group supplied benchmark data from two third party surveys for Compensation Committee review: the Towers Watson Top Management Compensation Report and the <b>Economic Research Institute</b> Executive Compensation Assessor. These third party compensation surveys were utilized by the Compensation Committee to evaluate the compensation levels of chief executive officers at companies of similar size and geographic location within the high technology sector. In addition, the Compensation Committee also used survey data from Western Management Group Government Contractors Survey to benchmark compensation for Mr. Lynch and other PAR Government executives.
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During 2014, the Compensation Committee engaged the services of Arthur Warren Associates, an independent compensation advisory firm specializing in community bank compensation plans. Arthur Warren Associates assisted the Compensation Committee in the review of Salisbury’s short term incentive program and Salisbury’s long term equity incentive plan. Arthur Warren Associates also assisted the Compensation Committee in the review of equity incentive plan design trends, particularly among Salisbury’s peer group (as identified below), as determined through industry surveys and published proxy statements. The Compensation Committee also relied on other survey sources including Pearl Meyer & Partners 2014 New York Bankers Association Banking Compensation Survey, Pearl Meyer & Partners 2014 Northeast Bankers Survey, and <b>ERI Economic Research Institute</b> Survey.
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Survey data as reviewed by our third party consultants from various sources also were utilized, including the following: Economic Research Institute</span>, 2014 Executive Compensation Assessor; Towers Watson 2013/2014 Top Management Compensation; Mercer, Inc 2013 US General Benchmark Survey; Kenexa 2014 CompAnalyst; World at Work 2013/2014 Total Salary Increase Budget Survey; IPAS, Global Technology Survey
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In addition to peer group data, the CRI market study also utilized data from the following six (6) published salary surveys:Benchmark Database Executive; William M. Mercer Comp Analyst;</i> Salary.com/Kenexa for Professionals CSR Top Management Compensation;</i> Towers Watson Executive Compensation — National Executive & Senior Management Compensation Survey CompData Executive Salary Assessor<sup>© Economic Research Institute (ERI)
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To ensure that our compensation policies and practices are competitive with our peers, the Committee analyzes market data regarding base salary, cash bonus awards, equity incentive awards and other benefits paid by companies the Compensation Committee considers the Company’s primary peer group. The Compensation Committee relies on our Vice President of Human Resources and external research to identify the individual companies which make up this group. In identifying the peer group of surveyed companies, our Vice President of Human Resources utilizes the <b>Economic Research Institute</b>, an industry and region specific compensation database, to assemble market data on publicly traded companies having similar industrial characteristics and revenues to that of the Company. The gathered data is then reviewed by our Chief Executive Officer and our Vice President of Human Resources with respect to each of the executive officer positions and adjusted for the scope of responsibilities within the Company as compared to equivalent responsibilities of positions within companies included in the survey data.
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With respect to other non-executive senior management employees and other management employees, the Company uses the results of the <b>Economic Research Institute’s</b> industry- and region-specific compensation database, and generally sets annual base salaries at plus or minus 25% of the midpoint, depending on an assessment of the individual’s sustained performance and the location of his or her position.
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Warren also relied on other survey sources including FDIC data as of June 30, 2014, Pearl Meyer & Partners 2013 New York Bankers Association Banking Compensation Survey, 2013 Northeast Bankers Survey, and the <b>ERI Economic Research Institute</b> Survey.
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For 2014, we also subscribed to an on-line compensation service available through the <b>Economic Research Institute (“ERI”)</b>. <b>ERI</b> compiles a robust database on job competencies, cost-of-living increases and executive compensation surveys. These three databases are used to help gauge the competitiveness of our 2014 salaries and executive compensation practices.
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During 2013, L&A compiled compensation data from the peer group using proxy statements and other publicly filed documents. L&A also provided published survey compensation data from multiple sources, including the following surveys: <b>Economic Research Institute</b>, Mercer, Inc., Kenexa and Towers Watson. For each survey, L&A adjusted the data to appropriately reflect companies of a similar size to the Company.
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During 2014, all elements of executive base and incentive compensation were found to be within a competitive range when analyzed with respect to the named executive officers and all other officers. Compensation decisions were guided, in part, by review of the peer group data and in part by reference to industry survey data provided for the Upstream Oil and Natural Gas Support Activities industrial sector, on a nationwide basis by the <b>Economic Research Institute (ERI)</b>, as well as additional published data for validation purposes (the peer group and industry survey data collectively referred to herein as the “market data”). In addition, the members of the Compensation Committee are familiar with competitive compensation programs based on their experiences owning and/or managing other companies and sitting on other private and public companies’ boards of directors.
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ERI = Economic Research Institute</b>'s 2013 "Salary Assessor" for energy companies and company divisions of comparable revenue size; Mercer = 2013 Mercer Survey of companies of $1.0 to $3.0 billion in revenues; and ECI = 2013 ECI Survey of energy companies and company divisions of $750,000 to $1.5 billion in revenues. Mercer and ECI data aged by 3.8% on an annual basis to be current as of 12/31/13 based on 2013/2014 World at Work Salary Budget Survey and other related surveys or energy-components of larger surveys. Adjusted by +15% to reflect added responsibility for HR, Risk Management and Training/Development in addition to General Counsel position.
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Longnecker also reviewed survey data as a reference point to compare the compensation of our executives to those of a broad range of companies. The following published surveys utilized by Longnecker were: Economic Research Institute</b>, <i>2014 ERI Executive Compensation Assessor; Mercer, Inc., 22014 US General Benchmark Survey; Towers Watson <i>22013/2014 Top Management Compensation; Kenexa,2 2014 Compensation Survey;Longnecker & Associates, 22013 Long-Term Incentive Survey; and WorldatWork, <i>22014/2015 Total Salary Increase Budget Survey
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Our executive compensation programs seek to attract and retain highly competent executive management who will build long-term economic value for the Company. Our general compensation philosophy for our executives is that our executives’ cash compensation should generally be at levels that are reasonably comparable to those paid at comparable companies, and that our executives’ opportunities for more significant compensation should be tied closely to our performance. Although, as discussed below (see “—Elements of Compensation—Why We Pay these Elements of Compensation”), the information the Compensation Committee reviewed in setting 2014 salaries and approving the 2014 Bonus Plan showed that the proposed salaries and estimated bonuses for the Named Executive Officers were substantially below the median cash compensation as shown by the data the Committee reviewed from the <b>Economic Research Institute</b> for comparable positions, our executives recommended the salaries and the 2014 Bonus Plan, and the Compensation Committee accepted their recommendations. We strive to maintain an egalitarian compensation structure among our senior management team, as we believe that paying our Named Executive Officers holding the same or similar titles the same annual compensation package (except for our Chief Executive Officer, who during 2014, at his request, was paid substantially less than the other Named Executive Officers) promotes an environment of teamwork that benefits the Company. We also try to foster an environment in which management leads by example. In addition to our executives’ recommendations of the 2014 salaries and of the 2014 Bonus Plan, our Chief Executive Officer refused to accept any salary at all from 2002 until 2011, and refused to accept more than $100,000 annually from 2011 through 2015. Further, he has never accepted a cash bonus. Our annual bonus pool plans are designed to pay for performance. See “Elements of Compensation-2014 Bonus Plan,” and “Executive Compensation Action Taken After Year-End,” below.
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Market competitive pay for each NEO was determined by evaluating base salaries and target incentive awards from our peer group when available along with reviewing external third party survey information from Mercer and TowersWatson for energy companies of similar size to us, the TowersWatson Liquid Pipeline Roundtable Survey, <b>Economic Research Institute</b> Survey and the Longnecker & Associates LTI Survey.
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