I blogged Wednesday on the proposed settlement of the “shareholder” lawsuit against Facebook’s over its directors’ compensation, Espinoza v. Zuckerberg, et al. However, a few points on the proposed settlement warrant additional comment.

First, under the proposed settlement, Facebook agreed to amend the Compensation & Governance Committee Charter to include specific governance reforms. Should Compensation Committees at other companies consider adopting some of these reforms as “best practices”? Specifically, Facebook’s Compensation & Governance Committee will:

  1. Conduct annually a review and assessment of all compensation, including cash and equity-based compensation, paid by Facebook to the Non-Employee Directors;
  2. Engage an independent compensation consultant to advise the Compensation & Governance Committee in connection with this annual review and assessment, including with respect to (x) the amount and type of Non-Employee Director compensation to be paid for the following year and (y) comparative data deemed appropriate by such consultant; and
  3. Recommend to the Board, based on the review and assessment, whether to make, on a prospective basis, any change in the compensation payable to the Non-Employee Directors.

Many Compensation Committees already use an independent compensation consultant, i.e., one not engaged directly by the Committee, to assess their compensation packages.

Second, under the proposed settlement, Facebook would submit to a stockholders vote at the 2016 annual meeting, separate proposals for stockholder approval of (i) the 2013 grants to the Non-Employee Directors and (ii) a formal “Annual Compensation Program for Non-Employee Directors." The language in the settlement proposal does not state whether one or both of the shareholder approvals are binding. I presume so, since there are no qualifiers such as “advisory” or “non-binding.” However, inquiring minds want to know.

Finally, Facebook’s adoption of a new “Annual Compensation Program for Non-Employee Directors,” which includes a specific amount for annual equity grants and delineates the annual retainer fees for use by the Board going forward, is itself evidence of the growing trend this blog has discussed several times.