Insights

Senate Passes Tax Reform Bill

In the early hours of December 2, the Senate passed its own tax reform bill. While passage of the bill seemed improbable as recently as last Thursday, Senate Republicans were able to overcome objections within their own caucus with last minute tinkering to their tax proposal. Up next is the reconciliation process during which House and Senate Republicans will iron out differences between their respective tax reform bills. At this point, passage and enactment of a reconciled tax reform bill appears to be highly likely prior to year-end.

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Under the Senate bill, changes to the Internal Revenue Code (“Code”) would be effective for tax years beginning after 2017, except for the change in the corporate income tax rate would first become effective in 2019. Under the House tax…

ISS Issues 2018 Final Policy Updates and Additional Guidance on Pay-for-Performance Assessment and Equity Plan Evaluations

Institutional Shareholder Services (ISS) has issued final updates to its proxy voting policies for 2018 and significant guidance through a series of FAQs on certain U.S. compensation policies, including its methodologies for assessing pay for performance and equity plan proposals.

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Final Policy Updates for 2018 The policy updates and guidance revise ISS proxy voting policies and methodologies for U.S.-listed companies in the following areas relating to executive compensation and corporate governance: ■ ISS quantitative pay-for-performance assessment, ■ ISS Equity Plan…

Meridian Promotes Two Lead Consultants to Partner

Meridian Compensation Partners is pleased to announce that Andrew McElheran (Toronto) and Daniel Rodda (Atlanta) have been elected to join the partnership effective January 1, 2018.

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Each year candidates are rigorously evaluated based on a broad range of important criteria covering personal attributes, consulting skills, financial contributions and firm values, before being elected as a partner. Andrew helped launch Meridian in January of 2010 and has…

Five “Must Know” Aspects of the Compensation Committee Process

From Inside America's Boardrooms - The Premier Board of Directors Informational Webshow, hosted by TK Kerstetter

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Episode Summary Serving on the compensation committee has become a formidable challenge for most directors regardless of one’s background or career. Not only do compensation committees have to navigate a host of regulations and complex terminology, but over the last…

Aligning Executive Pay With Company Performance

From C-Suite: An Equilar Publication Issue 25, Fall 2017 - Ask the Experts "A Delicate Balance...What Will be the Biggest Risk for Corporate Boards Looking Forward to 2018?"

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From an executive compensation perspective, boards have an important duty to pay executives appropriately in line with the underlying performance of the company. The age-old issue of paying for performance seems more complex than ever—and more highly scrutinized! The design…

House Passes Tax Reform Bill

On November 16th, the U.S. House of Representatives passed its tax reform bill by a vote of 227 to 205.

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The tax reform bill approved by the full House does not substantively differ from the bill previously approved by the House Ways and Means Committee, as described in our Client Updates dated November 7, 2017 and November 10, 2017. Therefore,…

Senate Proposal on Tax Reform

On the heels of the House tax proposal, the Senate Republicans released their own tax reform proposal on November 9, 2017. The Senate tax proposal departs from the House Republicans’ tax proposal in several significant respects, including with regard to the effective date of the change in corporate tax rates. Generally, the Senate Republicans’ proposed changes to the Internal Revenue Code (“Code”) would be effective for tax years beginning after 2017. However, under the Senate tax proposal, the change in the corporate income tax rate would first become effective in 2019, while under the House tax proposal this change would first become effective in 2018.

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We expect further changes to be made in both the House and Senate tax proposals. Ultimately, any differences between the House and Senate proposals would need to be addressed during the reconciliation process. This Update first summarizes the Senate tax…

House Tax Bill Amendment Removes Controversial Provision on Nonqualified Deferred Compensation

The House Ways and Means Committee amended the House tax reform bill to eliminate the proposed and potentially sweeping changes to the tax treatment of nonqualified deferred compensation plans and certain equity awards.

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This means that the current tax law treatment of nonqualified deferred compensation and equity awards, such as RSUs, PSUs, SARs and nonqualified stock options, remains unchanged. However, the House tax bill changes to Section 162(m) of the Interal Revenue Code…

Meridian 2017 Study of Executive Change in Control Arrangements

Meridian’s 2017 Study of Executive Change-in-Control Arrangements (the “Study”) provides current information and data on change-in-control (“CIC”) severance practices of 160 major U.S. listed public companies (the “Study Group”). We also provide trends comparisons to our last two studies, conducted in 2014 and 2011, respectively.

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Study Group Characteristics and Report Scope Study Group Characteristics Each of the 160 companies in the Study Group was a component company of the Standard & Poor’s 500® Index1 (“S&P 500®”) as of December 31, 2016. In addition, the Study…

House Proposal on Tax Reform

On November 2, 2017, the House Republicans issued a sweeping tax reform bill that generally adheres to the themes of President Trump’s previous tax proposals, except that it includes a number of surprises involving executive compensation. Generally, the proposed changes to the Internal Revenue Code (“Code”) would be effective for tax years beginning after 2017.

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President Trump hopes to have a tax reform bill to sign by Thanksgiving. We believe that this timeframe is overly optimistic, given that the legislative process on the bill has just begun. Further, while House Republicans may be able to…

2017 Trends in Outside Director Compensation

The 2017 Outside Director Compensation Trends Report includes data from public Fortune 100 companies.

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The key highlights from Meridian’s 2017 Outside Director Compensation study among Fortune 100 companies include: In 2016, total compensation increased modestly at 1.2% Annual cash retainer values were flat for the second consecutive year, but equity values increased at approximately…

Proxy Advisors and Investors Announce How They Will Use CEO Pay Ratios in 2018

The major proxy advisors and three large institutional shareholders announced that CEO pay ratios will have little to no impact on their vote recommendations and vote decisions, respectively, in 2018.

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At a recent conference hosted by CompensationStandards.com, David Kokell, Vice President of Institutional Shareholder Services (ISS), stated that CEO pay ratios will not have any impact on ISS’s analysis or vote recommendations in 2018. However, ISS will include the information…

2017 Meridian Corporate Governance and Incentive Design Survey

For the seventh 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 facing major companies today.

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As companies review their executive compensation programs and related corporate governance policies, current market practices and recent trends can provide competitive benchmarks that are helpful in understanding current and future “best practices.” Highlights of Meridian’s 2017 Corporate Governance & Incentive…

Executive Compensation in the Banking Industry

Emerging Trends and Best Practices 2016-2017

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Introduction Bank executive compensation practices continue to evolve, as does the regulatory influence on pay programs. Eight years after the Dodd Frank Act was signed, incentive compensation rules under Section 956 of the Act remain outstanding and seem unlikely to…

Director Pay Rises 20% in Five Years, Driven by Equity Awards

REPRINTED PRESS RELEASE FROM EQUILAR

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REDWOOD CITY, CA (October 18, 2017) — Annual compensation for boards of directors at the largest U.S. public companies has risen nearly 20% over the past five years, according to a new report from Equilar, Director Pay Trends, which features…

Six Years Running – Meridian Named a “Best Small Firm to Work For”

For the sixth consecutive year, Meridian Compensation Partners was recognized in Consulting Magazine as a "Best Small Firm to Work For."

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For the sixth consecutive year, Meridian Compensation Partners was recognized in Consulting magazine’s recently released list of the “Best Small Firms to Work For” in 2017. The rankings are based on an online survey of over 10,000 consultants working for…

ISS 2017–2018 Policy Survey Summary of Key Items

ISS’s recent Policy Survey previews potential changes in its 2018 proxy voting policies.

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

President Trump Proposal on Tax Reform

President Trump’s proposed tax plan is largely similar to the plan outlined by the White House in July – large cut in corporate tax rate, reduction in individual tax rates with consolidation of tax brackets, elimination of most deductions and increase in the standard deduction.

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The White House issued President Trump’s proposal on tax reform entitled “Unified Framework for Fixing Our Broken Tax Code.” The tax proposal provides slightly more details than the one issued in July, but remains a work in progress. The President…

SEC Issues New Guidance on CEO Pay Ratio Disclosure Rule

Last Thursday, the Securities and Exchange Commission (SEC) and the Division of Corporation Finance issued new guidance on the CEO pay ratio disclosure rule. The issuance of the new guidance lays to rest any remaining hope that the SEC will delay or significantly modify the CEO pay ratio disclosure requirement.

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Public companies and practitioners who were hoping for a comprehensive set of new guidance to address many of the vexing issues underlying the pay ratio rule generally will be disappointed by the limited nature of the guidance. However, the guidance…

Despite Strong 2016 Shareholder Returns, Certain Energy Companies Struggle with Say on Pay

In 2016, the oil and gas industry generated positive returns for shareholders, but in 2017 oil and gas companies lagged general industry in Say on Pay support.

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ISS recommended against 18% of oil and gas companies vs. 12% for the entire Russell 3000, and 3% of oil and gas companies failed Say on Pay (i.e., <50% support) compared to only 1% in the Russell 3000. ISS recommended…