By:  Bill Treasurer
Excerpted from “Leadership Two Words at a Time”

You look uniquely familiar.  You, the one who has learned to believe in yourself, trust yourself and follow the quiet inner voice that says, “Why not me?”  You don’t think you’re “better” than other people; you’ve just learned through ups and downs, the gruel and the grind, and ordeals and adventures that you can find a way to overcome obstacles and finish the landing.  And when you do, you make improvements so you can land closer to perfect next time.  There is always more to do and better ways to do it.

You’re an achiever, someone blessed with diving discontent.  You’re never fully satisfied with where you are because you know that with creativity, ingenuity and effort, any ‘great job’ of today can be outdone tomorrow.  Yes, you like to compete, and yes, you like to win.  But winning is so much sweeter when you beat your own best, competing against yourself and topping your last big achievement.  You want others to top themselves too.  You expect more of yourself…and others.

You’re impatient, yes, but in a way that brings urgency to the task at hand, not in a way that adds to the risk or jeopardizes progress.  Your impatience is connected to your passion; you know that the pursuit of the outcomes will lift everyone’s skills and deepen their experience.  Progress turns on the engine of urgency.  You keep your foot on the throttle because it moves things forward.  You give a rip.

You’re a learner, a seeker, a curious venturer.  You’re alert, interested and engaged, and when you aren’t, you scan the landscape for something new to reenergize your brain cells.  Your learning is perpetual because you’re never done.  You want answers that are more precise, accurate, truthful and enduring.  You study, review and challenge, knowing skepticism is part of the calculation and thoughtfulness that lead to decisions and actions that are safer, sounder and more likely to succeed.

You pay attention to others who have traveled further down the road, accomplished grander things or overcome bigger obstacles.  You go out of your way to learn about the experiences and stories of those who are commonly ignored, dismissed or excluded.  You are humble enough to listen to everyone, and smart enough to heed advice coming from anyone.  You aim to use whatever advantages you have enjoyed to make the workplace more fair, just and equitable for everyone.  You use your voice to amplify the concerns of those whose voices are too often suppressed.  You treat no one as lesser.  Ever.

You haven’t had it easy.  You’ve experienced setbacks, barriers and people who weren’t on your side.  Despite that, or because of it, you strive to see and expect the best in others – even those who withhold those courtesies from you.  You’re a believer in human potential.  As much as you believe in your own abilities, you know that your game is upped by people who play an upped game, so you take the time to teach, coach and serve others.  You have little interest in going it alone, as your goals and aspirations are bigger than you could achieve all on your own.  Besides, working with fiercely independent individuals who choose to put the team’s interests above their own is more fun than flying solo.

Some of you can calculate numbers in your head.  Some of you have always been “good with people.”  Some of you have a knack for pinpointing risks.  Some of you have spatial awareness and can conceptualize what finished rooms or buildings will look like before they are built.  Some of you excel at forecasting scenarios and setting the master plan.  Though the talents may be different, all of you have proven yourself to yourself.  Many times over, whether in school, on the sports field, or in how responsibly you’ve performed your first jobs, you’ve shown up and gotten the job done.  You know you’re going to have to prove yourself to many others in the future – and you’re up to that challenge.  In fact, you relish it.

November 14, 2022 / IR Magazine
Thanks to Jean McLoughlin & Kyle Seifried

The SEC’s new pay-versus-performance rule changes will present myriad challenges – and potential opportunities – to public company management teams and boards.  Most publicly listed US companies must begin making these disclosures in their 2023 proxy statements.

This creates a major new workstream during a demanding season when calendar-year companies and their outside advisers are already frenetically busy preparing for the annual financial disclosure process, year-end performance assessment and compensation cycle and related reporting and investor communications.

Add to that the challenges and uncertainty in the macroeconomic climate, paired with the speed at which corporations are expected to adapt, and compliance with the new requirements becomes even more complex.  The mandate is just around the corner and there is much for management teams and boards to understand and consider.

Key Changes
The finalized pay-versus-performance rule changes, announced on August 25, will require most public companies to include in their upcoming proxy statement new disclosure in the form of two new tables and a narrative that sets forth how compensation paid to the CEO and other top executives tracks with a range of performance metrics, some mandated by the SEC and a few selected by the company.  Pay-versus-performance reporting in the upcoming proxy will track the standard three-year look-back for other compensation items.  But over the following two years, issuers will need to phase in five years’ worth of reporting, which is a departure from current disclosure conventions.

Some of the required information, including how to calculate ‘compensation actually paid’, will be calculated differently from before.  This will be most significant in how the value of equity awards and pensions are calculated in the newly required pay-for-performance tables.

In one of the new tables, issuers will be required to report on company performance based on several new performance metrics: company total shareholder return, relative shareholder return and company GAAP net income.  Companies will have to report on these going back three years initially and eventually five years.  In addition, they will have to select one performance criterion they view as most important in their compensation decision-making and disclose their performance based on that metric.

Who is Affected, and When?
The pay-versus-performance rule changes apply to the vast majority of US-listed companies.  Emerging growth companies, registered investment companies and foreign private issuers are exempted.  Smaller reporting companies are subject to reduced disclosure requirements.  The covered compensation information includes a company’s principal executive officer and averages of compensation for other named executive officers.

The changes are effective for upcoming proxy statements for those issuers whose fiscal years end on or after December 16, 2022 – the vast majority of companies.  Given the narrow window in which to complete the new disclosures, a group of 15 law firms and consulting firms, including Paul Weiss, recently wrote a letter to the SEC asking for a six to 12-month extension.  Preliminary indications do not suggest a delay is likely, so companies can take action to get their ducks in a row for the upcoming proxy season.

Compliance Challenges
What has caught many off-guard is the sweeping and prescriptive nature of the new rules and the speed with which companies are expected to follow them.

The mandate to make such rules dates from the Dodd-Frank Act, which included a statutory requirement that a company provide a ‘clear description’ of ‘information that shows the relationship between executive compensation actually paid and the financial performance of the issuer, taking into account any change in the value of the shares of stock and dividends of the issuer and any distribution’.  A proposed rulemaking was released seven years ago.

But after 12 years, and with no final rule forthcoming until this past August, companies are feeling a bit on the back foot, given that in many cases they have six months or less to comply.  A change like this one will demand a significant investment of time to implement accurately.

One of the biggest challenges will be coming up with data to accurately determine compensation actually paid (CAP).  Rather than showing equity award values on the grant date or at their value based on current stock prices, as required for existing disclosures, companies will have to estimate their accounting values at the end of the year (or upon vesting or forfeiture, if earlier) and compare that with the value of the grant at the start of the year.  This is an entirely new way of evaluating the value of awards, and one that is not consistent with how awards are reflected in the SEC’s required financial reporting disclosures.

The accuracy of these calculations is important to get right – and that takes time.  For example, the CAP calculation of equity awards alone could require more than 80 new valuations per year of compensation disclosure, and more than 240 calculations for the three-year table required in the first year.

The number of new calculations needed increases by many multiples for companies that have monthly or quarterly vesting.  And companies that have experienced changes in executive leadership in the past three years will see those complexities compounded.

Another issue of concern to management teams and boards is whether the new disclosures will be confusing to investors and cause them to revisit decisions made in previous years, because the new tables will require compensation decisions made in one year to be brought forward for a five-year period.

Under current reporting rules, investors’ and proxy advisory firms’ primary focus is on evaluating decisions made in the current reporting year.  But the new rules require compensation decisions made in one year to be brought forward under new calculations, which may be confusing to investors and cloud the evaluation of say-on-pay votes.

New Rules Signal and SEC Shift
In recent years we have seen a growing number of companies tie ESG to executive compensation.  But the new rules dictate that the company-selected performance metric for the tabular disclosure must be a financial metric.

Under the changes, companies are required to pick the single-most important metric they use to guide decisions on executive compensation.  That’s a difficult decision for many companies.  The SEC has indicated that it must be a financial performance metric: total shareholder return, EBITDA revenues, cash flow or the like.

The SEC’s primary focus on financial rather than ESG metrics is notable at a time when there has been significant focus by proxy advisory firms on the use of ESG metrics in setting compensation.  Companies will still be able to discuss the importance of ESG and sustainability performance metrics.  In addition to choosing the single-most important financial performance metric, companies must also include between three and seven additional performance measures they deem important.  Some of these additional factors may be non-financial indicators, such as ESG-related data.

Therefore, companies have an opening to consider whether to include SEG and sustainability data.  It may be useful to keep in mind that proxy advisory firms will likely pay close attention to the metrics the company chooses to include as well as those that are not included.

Coming Developments for Executive Compensation
Looking ahead, the SEC’s rapid rollout of the changes signals the commission’s desire to complete the remaining Dodd-Frank rulemakings.  One of the biggest remaining open issues is a proposed executive compensation clawback rule, which would mandate that executives repay certain compensation to their companies in the event of a financial restatement.  Many companies already have policies in place, but it is likely that SEC rules would be more prescriptive.  Rules on that front are likely to be next up.

Finally, the rule changes signal a willingness by the SEC to be more prescriptive in its requirements than in the recent past.  Rather than deferring to corporate filers on how to make executive compensation decisions more transparent, the new rules show a preference for a rules-based regime.

Although the rules require quick action this proxy season from management teams, boards and their outside advisers, they also present an opportunity for public companies to consider the priorities that are truly material to their business – and to use executive compensation as a tool to signal the factors they consider as important to long-term success.

Author: John M. Collard, www.StrategicMgtParters.com

By: Benchmark International
October 7, 2022

Industrial robotics is now critical across many sectors for the automation and manufacturing of many tasks, including loading, packaging, labeling, and inspection.  They are commonly used in the automobile and heavy engineering sectors and are becoming more common in many other sectors.  In the past, robots were mostly only used in the automotive and manufacturing industries, but more sectors are adopting them today  These sectors include defense, healthcare, aerospace, food & beverage, education, and electronics.  There is also an increase in demand for telesurgery and elder care, as well as bomb dispersal, monitoring, and mine detection.  There are currently around 2.7 million industrial robots in use worldwide, a number that is quickly rising.

These robots improve productivity and profitability for businesses by replacing laborious and repetitive tasks previously performed by people with automated efficiency and a high degree of accuracy.  They can also be used for a safer workplace, performing tasks in hazardous environments, vacuum chambers, and areas where there is the risk of dangers such as explosion or radiation.  Research shows that the use of robots saves companies up to around 20% in costs.  Robots are a large driving factor of the world’s newest industrial revolution, referred to as Industry 4.0.  It has been estimated that, by the year 2025, robots will displace 85 million jobs currently held by people.  But, at the same time, it’s also estimated that this change will open up 97 million jobs for workers.  Robots are often used for basic tasks in entry-level positions, which means that companies can create more high-level roles.  This is good news for younger workers, raising the level and pay at which they can enter the workplace and opening up more opportunities for creativity and management.

Surging market growth
The global robotics market was valued at $32.32 billion in 2021 and is forecast to reach $88.55 billion by 2030, growing at a compound annual growth rate (CAGR) of 12.1%.  As the manufacturing and electronics sectors continue to see strong growth, it drives growth for the industrial robotics market.  Many industrial processes are being streamlined by the use of artificial intelligence-powered robots, as well as collaborative robots, and new technologies continue to evolve rapidly.  In the last five years, the surge in global demand for industrial robots has been unmistakable.  In 2021, the global industrial robot market volume was made up of 496,000 units.  Growth is being driven in the sector by automation that helps to boost productivity, improve quality, and cut down on errors.

The COVID-19 pandemic also accelerated the growth of the robotics industry due to a worker shortage.  Robots helped many manufacturers keep up with production peaks; at the same time, they were dealing with systemic shocks.  In fact, China’s industrial robotic production increased by a record high of 29% in the first half of 2020.

Challenges to market growth include high initial investment, maintenance costs, and compatibility issues.  There are also some safety and data privacy concerns.  At the same time, increased adoption of robotics for handling semiconductors is expected to open up opportunities for the industrial robotics market in the near future.

Players in the market are expected to vie for competitive dominance through strategic alliances, mergers and acquisitions, and innovations in R&D.

A significant growing trend in the robotics industry is the increasing use of collaborative robots, or “co-bots.”  Co-bots are designed to work alongside people, and they use safety-rated sensors that allow workers to safely share the work space with them.  There is also a steady rise in the use of underwater robotics, legged mobility, machine learning, and self-driving vehicles.  the market is expected to see growing adoption of micro-electromechanical systems, cloud robotics, and next-gen tech accessories, as well as more employment opportunities and robotic advancements.

There is also increasing development of new types of robots that offer simple setup and installation.  By removing any need for any special training in coding or programming, many of the barriers that previously prevented businesses from investing in robots are being removed.

Geographical Picture
North America currently leads the global industrial robotics market, with large-scale adoption in various industries, including entertainment, education, healthcare, and especially military defense.  The U.S. Department of Defense was given $7.5 billion to spend on robotics in 2021.  In the 3rd quarter of 2021, robot orders in the United States were up 35% compared to the same period in 2020.  More than half of the orders came from non-automotive sectors, representing a large change in traditional market trends.  The average robot density in the United States is 228 units per 10,000 employees.  In 2021, more than $17 billion was poured into VC-backed robotics startups.

The world’s top three robotics communities are all located in the U.S.: Boston, Massachusetts; Pittsburgh, Pennsylvania; and Silicon Valley in California.  Pittsburgh is often referred to as the robotics capital of the world, home to more than 100 robotics companies.  Corporate and venture capital investors have put $4.3 billion into Pittsburgh robotics companies in the last five years alone.  The cities of Austin, Texas, and Denver, Colorado, are also emerging.  The country of Denmark is also making large strides in robotics.

The Asia-Pacific region is expected to see the fastest growth in market share due to the increasing  use of automation in Japan, China, and India, with China leading the market growth in this region to improve efficiency and industrial production.  Honda Motor is the largest robotics company in the world, with a revenue of $142.4 billion, employing nearly 220,000 people, and headquartered in Tokyo, Japan.