Insights

House Committee Hearing on Corporate Accountability Bills

On May 15, 2019, the U.S. House of Representatives Committee on Financial Services held a hearing to consider four draft bills that, if enacted, would impose new compensation and human capital disclosure requirements on public companies and additional regulatory oversight of corporate stock buyback programs.

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The Financial Services Committee (FSC) majority staff has developed three legislative proposals that would require public companies to make sweeping disclosures on officer and employee compensation, human capital metrics, and domestic and foreign employees. A fourth legislative proposal is a…

2019 NACD Directorship 100 Released—The Annual List of the Most Influential Leaders in Boardrooms and in Corporate Governance

Michael Powers and Jim Wolf were named to the NACD Directorship 100 list for 2019, making it the seventh consecutive year for both Partners.

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The National Association of Corporate Directors (NACD), the authority on boardroom practices representing more than 20,000 corporate board members, announced the honorees of the 2019 NACD Directorship 100™, an annual recognition of the leading corporate directors, corporate governance experts, policymakers,…

SEC Releases Rulemaking Agenda for Next Twelve Months

On May 22, 2019, the Securities and Exchange Commission (SEC) released its Spring 2019 Regulatory Flexibility Agenda (“Reg Flex Agenda”), which identifies rule-making initiatives that the SEC expects to address over the next year and beyond.

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In its latest semiannual Reg Flex Agenda, the SEC identifies the following rule-making initiatives as among those that the SEC expects to address over the next twelve months: ■ Propose rule amendments regarding the thresholds for shareholder proposals under Rule…

How Should Boards Handle Involuntary CEO Retirement?

Meridian Lead Consultant Jon Szabo spoke with Corporate Board Member in the video below about how boards can navigate the uncharted territory of involuntary retirements from CEOs and how to craft their exit packages.

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In the first quarter of 2019 alone, more than 20 CEOs of large public companies announced their resignations. This uptick in C-level departures, which included several “involuntary retirements,” has compensation committees rethinking their approaches to officer-level severance pay. CBM recently…

Why Wait for Congress (and the SEC) Before Reviewing Your 10b5-1 Plan?

With overwhelming bipartisan support, on January 28, 2019 the U.S. House of Representatives approved the “Promoting Transparent Standards for Corporate Insiders Act” which is aimed at curbing potential abuse of Securities and Exchange Commission (SEC) Rule 10b5-1 trading plans by corporate insiders.

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The bill includes six procedural restrictions for the SEC to study for consideration as potential amendments to Rule 10b5-1. The proposed restrictions prescribe a reasonable approach for administering plans based on sound governance practices. One might wonder why companies would…

EVA for E&P Companies: A Challenging Measure

In 2019, ISS introduced Economic Value Added (EVA) analysis as additional context in its evaluation of executive pay and performance prior to issuing a “say on pay” (SOP) vote recommendation.

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While initially the EVA material will be provided purely for information, it seems inevitable that ISS will continue to push to include EVA as a formal part of its pay for performance analysis. There are general concerns about ISS using…

The Revival of Excise Tax Gross-Ups?

Occidental’s proposed acquisition of Anadarko may kick off a new wave of consolidation in the oil & gas industry.

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This potential wave has generated questions about Change-in-Control (CIC) severance protections, amplified by the significant coverage of Anadarko’s last minute enhancements to its CIC severance programs (see article). The Anadarko enhancements included elevated severance benefits and the re-insertion of excise…

Illinois Proposes Law Requiring Gender and Racial Diversity on Boards of Corporations Whose Principal Executive Offices are in Illinois

Illinois is the first state in the nation to propose a law that would require publicly traded corporations to include on their boards at least one female, one African American and one Latino director. The proposed law would solely apply to those publicly traded corporations whose principal executive offices are located in Illinois.

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The Illinois House of Representatives (“House”) on March 29, 2019 passed a bill (“House bill”) that would impose gender and racial diversity requirements on boards of directors of publicly traded corporations whose principal executive offices are located in Illinois, irrespective…

Federal Court Reinstates Employee Pay Data Reporting Requirement

In an unexpected ruling, a federal court recently ordered the Trump administration to reinstate an Obama-era rule that will require employers to report pay data by employee gender, race and ethnicity.

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Absent a reversal on appeal, the court ruling means that covered employers will be required to report this pay data to the Equal Employment Opportunity Commission (EEOC) on revised Form EEO-1 by September 30, 2019. Revised EEO-1 Disclosure Requirements Currently,…

2019 Executive Compensation Trends and Developments

Meridian provides an overview of the current executive compensation and corporate governance landscape.

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In the past year, several factors have driven change in the executive compensation landscape in the U.S. Each year, Meridian identifies key developments regarding how companies respond to these ever changing conditions. (Read last year’s survey here.) In 2018, numerous factors…

Meridian Compensation Partners, LLC Expands New York City Presence with New Office Location

Meridian Compensation Partners, LLC opened a new office location in New York City at 275 Madison Avenue.

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NEW YORK CITY, NY – May 7, 2019 – Meridian Compensation Partners LLC, a leading provider of executive compensation and corporate governance consulting to over 600 major publicly traded and privately held corporations, opened a new office location in New…

Economic Value Added—New Governance Considerations

Starting this proxy season, Institutional Shareholder Services (ISS) will be disclosing in U.S. and Canadian company proxy reports Economic Value Added (EVA) metrics. These metrics will be shown for informational purposes only. However, we believe it is likely that ISS will incorporate EVA metrics into its CEO pay-for-performance analysis within the next two proxy seasons, subject to investor feedback.

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ISS’s introduction of EVA metrics is likely to foster discussion among compensation committees about the nature, merit and implication of these metrics. EVA may also be of interest among institutional investors as an additional lens to assess pay and performance…

2019 Helen Keller Achievement Awards and AFB Leadership Conference

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Meridian Compensation Partners was proud to sponsor the American Foundation for the Blind (AFB) 2019 Leadership Conference held February 27 – March 1, 2019 in Arlington, VA, which covered the most pressing and relevant topics in the field of blindness…

Market Data in Context

Benchmarking compensation is the process of comparing pay levels and incentive design practices to the “market.”

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It is a quantifiable, objective way for a compensation committee to gauge how an executive is positioned versus the market, and helps the committee to understand what competitive pay is and if compensation arrangements are adequate to attract, retain and…

How to Structure a Fair Executive Severance Agreement

From Boardroom Resources...Ryan Harvey frames the importance of a well-structured severance arrangement and outlines several best practices for today’s boards and compensation committees.

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Few things cause shareholder or media outrage like a poorly structured executive severance agreement. When a CEO is terminated for poor performance and walks away with tens of millions in severance payments, it’s understandably a hard pill for company stakeholders…

Glass Lewis Launches New Service that Provides U.S. Companies the Opportunity to Give Feedback on its Vote Recommendations

On March 14, 2019, Glass Lewis announced the launch of a new Report Feedback Statement (RFS) service, which will allow a U.S. public company to provide feedback on Glass Lewis’ analysis of the company’s proxy proposals for its annual meeting. Glass Lewis will then disseminate these comments directly to its investor clients.

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The RFS service provides an opportunity for U.S. public companies1 to express their differences of opinion with Glass Lewis’ analysis on proxy proposals (e.g., Say on Pay proposal) to be voted on at their annual meeting. Glass Lewis will then…

House Passes Bill to Curb Potential Abuses of Rule 10b5-1 Trading Plans

The U.S. House of Representatives passed a bipartisan bill that would require the Securities and Exchange Commission (SEC) to determine whether to adopt specified amendments to the rules governing 10b5-1 trading plans.

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Background SEC Rule 10b-5 prohibits securities fraud, including insider trading through the purchase or sale of securities on the basis of material non-public information. SEC Rule 10b5-1, which was adopted in 2000, allows insiders to transact in their company’s securities…