Insights

“Tis the Season…Are You Ready?

It’s hard to believe that another proxy season is upon us.

Posted by on

It seems like just yesterday we were trying to figure out what the CEO pay ratio would look like, how it might compare to peers and what internal unrest would be created as a result. Although companies worried about the…

ISS Issues Final Policy Updates for 2019

On Monday, November 19, 2018, Institutional Shareholder Services (ISS) issued final updates to its proxy voting policies for 2019 – the most important of which relates to board gender diversity.

Posted by on

ISS final policy updates cover four key areas: (i) board of directors, (ii) shareholders rights and defenses, (iii) capital/restructuring, and (iv) social and environmental issues. No updates specifically relate to executive compensation. Equally important, ISS chose not to issue a…

The Demise of TSR as the Primary Executive Pay Performance Measure

Reprinted from NACD Directorship November/December 2018 Issue

Posted by and on

During the past decade, the use of total shareholder return (TSR) has risen rapidly in prevalence as a performance metric in executive long-term incentive plans. Many compensation committees believed this was a direct way to align executive pay and performance.…

SEC Announces Agenda and Panelists for Roundtable on Proxy Process

The Securities and Exchange Commission (SEC) has announced the agenda and panelists for the SEC staff roundtable on proxy process to be held on November 15, 2018 in Washington, D.C.

Posted by on

As we previously reported in our Client Update dated August 9, 2018, SEC Chair Jay Clayton announced that the SEC staff would be holding roundtable discussions with investors, public companies and other market participants about whether the SEC’s proxy rules…

2018 Study of Executive Severance Arrangements Not Related to a Change in Control

Data for fiscal 2017 executive severance arrangements is derived primarily from 2018 definitive proxy statements filed by 160 major public companies (“Study Group”).

Posted by on

This is only a summary of the full 2018 Study of Executive Severance Arrangements Not Related to Change in Control. To obtain the full report, please contact Donald Kalfen. About Meridian Compensation Partners, LLC Meridian Compensation Partners, LLC (“Meridian”) is…

ISS Issues Proposed Policy Updates for 2019

Last week, Institutional Shareholder Services (ISS) issued proposed policy updates.

Posted by on

These proposed updates would modify ISS proxy voting policies for U.S.-listed companies as follows: ■ The quantitative pay-for-performance assessment1 would replace the currently used GAAP-based metrics with Economic Value Added (“EVA”) metrics, and ■ A board gender diversity policy that…

Summary of Key Results from ISS 2019 Annual Policy Survey

ISS’s recent Policy Survey previews potential changes in its 2019 proxy voting policies.

Posted by on

Each year, Institutional Shareholder Services (ISS) surveys institutional investors, public companies (“issuers”) and the consulting and legal communities on emerging corporate governance and executive compensation issues as part of its annual policy formulation process (the “Survey”). Issuers and their advisors…

Don’t Miss an Opportunity to Optimize Retirement Within Your LTI Program

As employees age, both employers and employees tend to think strategically about retirement, but their perspectives are rarely the same. 

Posted by on

Employers are generally focused on maximizing productivity and facilitating smooth transitions, while employees are generally focused on timing – not only about when will they have enough money for a comfortable retirement, but also what will they forfeit when they…

California Enacts Law Requiring Gender Diversity on Corporate Boards

On September 30, 2018, Governor Jerry Brown signed into law a first-in-the nation requirement that public companies include a minimum number of women on their boards. The law solely applies to those publicly held corporations whose principal executive offices are located in California.

Posted by on

Requirements of Gender Diversity Law The law’s requirements will be phased-in over a multi-year period, with compliance initially required by the close of the 2019 calendar year. A public company found to be in noncompliance with the gender diversity requirements…

In What Circumstances do Special Equity Grants Make Sense?

As executive compensation consultants, we often receive questions from Compensation Committee members regarding the possibility of “one-time” equity grants for senior executives. There are various important considerations when contemplating such awards.

Posted by on

Based on our experience, it is important to understand the many inputs and ensure the Committee is making informed decisions with “eyes wide open” to avoid surprises. Awards should focus on specific intended objectives. From time to time, Compensation Committees…

2018 Meridian Corporate Governance and Incentive Design Survey

For the eighth straight year, Meridian has conducted an extensive survey based on the public filings of 200 large cap companies (“Meridian 200”). This survey seeks to capture trends on a variety of executive compensation and corporate governance topics of interest to major companies today.

Posted by on

As companies review their executive compensation program designs and related corporate governance policies, current market practices and recent trends can provide competitive benchmarks that are helpful in understanding “best practices,” as well as facilitate productive boardroom discussions. Highlights of Meridian’s…

Relative TSR for Resource Companies: Does it Still Make Sense?

Similar to the U.S., Canadian institutional investors, such as the Ontario Teachers’ Pension Plan, with assets under management of ~$190 billion and an advocate for good compensation governance, have been pushing back on the use of relative TSR on the basis that this measure can reward management of “chronically underperforming” industries.

Posted by on

Relative total shareholder return (relative TSR), the most commonly used performance share unit (PSU) measure, has recently been challenged by institutional investors. Earlier this year Ontario Teachers’ Pension Plan (OTPP) released an article entitled “Is Management Compensation Rewarding the Right…

Board Governance: Preparing For Next Proxy Season

Proxy season went well for the majority of boards, says Virginia Rhodes, lead consultant at Meridian Compensation Partners.

Posted by on

Rhodes sat down with Corporate Board Member editor-in-chief Dan Bigman as part of the Board Governance Series to talk about the most recent proxy season and how boards can prepare for the next one. “Director elections have gone with very…

10 Keys to Great Compensation Committee Processes

Posted by on

Executive compensation is complex and institutional investors and proxy advisors are increasingly aggressive and prescriptive in their views of executive compensation. This makes the role of a public company compensation committee complex and demanding. It is now more important than…

Treasury Department and IRS Issue Guidance on Code Section 162(m)

The Treasury Department and Internal Revenue Service (IRS) have issued initial guidance under Notice 2018-68 (“Notice”) on the amendments to Internal Revenue Code Section 162(m) made under the Tax Cuts and Jobs Act of 2017 (“TCJA”). The Notice provides guidance on the definition of “covered employee” and the transition rule.

Posted by on

Section 162(m) Prior to TCJA Prior to its amendment under TCJA, Section 162(m) generally prohibited a public company from taking a deduction for compensation that exceeded $1 million during a taxable year that was paid to a “covered employee”. However,…

Should Companies Use Individual Performance Measures in Executive Annual Incentive Plans?

When evaluating whether including an individual performance component is appropriate, companies may want to consider some questions.

Posted by on

According to the Meridian 2017 Governance and Incentive Design Survey1, 43% of Meridian 200 companies use an individual performance component in their executive annual incentive plan, typically as a supplement to financial measures. Actual usage may be higher as the…

Institutional Shareholder Services Releases its 2019 Policy Survey Questionnaire

Institutional Shareholder Services (ISS) recently issued its 2019 policy survey questionnaire, which previews potential changes in ISS’s proxy voting policies.

Posted by on

Through its annual policy survey, ISS seeks feedback from institutional investors, public companies, corporate directors and the consulting and legal communities on emerging trends in corporate governance, executive compensation and other matters as part of its policy formulation process. The…

SEC Chair Announces Staff Review of Proxy Process

On July 30, 2018, Securities and Exchange Commission (SEC) Chair Jay Clayton announced that the SEC staff will be holding roundtable discussions with investors, public companies and other market participants about whether the SEC’s proxy rules should be refined.

Posted by on

The last time that the SEC engaged in a wholesale review of the proxy rules was in 2010, at which time the SEC issued a concept release seeking public comment on whether the U.S. proxy system as a whole operates…