Insights

Avoiding Action on Director Pay

How boards can protect themselves against scrutiny - From C-Suite Magazine, an Equilar publication - Issue 26, Winter 2018

Posted by on

A wave of lawsuits surrounding director compensation surfaced a couple of years ago, often alleging “excessive” pay for boards of directors on a variety of grounds. Because boards set their own pay levels, there are potential legal ramifications due to…

Managing Incentive Plans in a Cyclical Business

As seen in Corporate Board Member First Quarter 2018 - Compensation is always tricky, but it’s even tougher in an up-and-down business, where markets—as much as the managers—run the show. Jim Wolf, managing partner at Meridian Compensation Partners, offers advice on getting it right.

Posted by on

There is no more contentious, complex or difficult issue for boards than setting up the right incentives for executives. With companies in cyclical businesses that may have commodity costs as a large portion of performance, the challenge gets even more…

Delaware Court Case May Have Far Reaching Effects on Director Compensation

Boards of public companies should closely examine the manner in which director compensation is determined in light of a recent decision by the influential Delaware Supreme Court regarding Investors Bancorp (“Bank”).

Posted by on

The upshot of the Delaware Supreme Court decision is whether equity plans of public companies should include prescribed annual limits on director compensation. According to the Court’s decision, the presence or absence of such limits will determine whether director compensation…

The CEO Pay Ratio: What to Expect This Proxy Season

From Boardroom Resources: Bob Romanchek, Partner at Meridian Compensation Partners LLC, explains that certain institutional investors (e.g., public pension plans) may use pay ratio results to form their activism efforts, engagement priorities, and proxy voting.

Posted by on

As the Dodd-Frank-mandated CEO pay ratio looms large this proxy season, many boards and compensation committees have already completed their calculations and are awaiting the impact. Added as a last-minute mandate to the Dodd-Frank Act in 2010, the CEO pay…

Bringing Pay for Performance Into Focus Requires the Right Lens

By Annette Leckie and Charles Grace - Reprinted from the November/December 2017 issue of NACD Directorship magazine

Posted by and on

Savvy investors understand the value of a strong management team and are willing to pay handsomely—if company performance warrants. It’s important to design executive pay to reward great performance and penalize poor performance. In our experience, most directors strive to…

Addressing Compensation Issues In M&A

As seen in the 1st Quarter 2018 issue of Bank Director

Posted by and on

Consolidation in the banking industry continues, with more than 200 bank mergers in 2017. Whether your institution is a potential buyer or seller, there are several compensation matters that will need to be addressed proactively. Change-in-Control (CIC) Protections CIC arrangements…

Sweeping Tax Reform Bill Passed by Congress

Congress has passed the most far reaching tax reform bill in over 30 years, the Tax Cuts and Jobs Act (“Tax Act”). The Tax Act will affect nearly all taxpayers (business and individuals). Corporations will be subject to a significantly reduced income tax rate of 21% and generally will be taxed solely on U.S. based income (with some exceptions). Individuals will see the elimination of many itemized deductions but higher standard deductions and slightly lower marginal tax rates.

Posted by on

Generally, the changes made to the Internal Revenue Code (“Code”) under the Tax Act are effective for taxable years beginning after December 31, 2017. The changes to the corporate income tax provisions are permanent. However, most changes to individual income…

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.

Posted by on

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.

Posted by on

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.

Posted by and on

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

Posted by on

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?"

Posted by on

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.

Posted by on

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.

Posted by on

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.

Posted by on

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.

Posted by on

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.

Posted by on

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.

Posted by on

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.

Posted by on

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.

Posted by on

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…