Insights

Illinois’ Proposed Board Diversity Law Stripped of Diversity Mandate

Earlier this month, the Illinois House of Representatives and Senate passed legislation that requires certain public companies to report diversity data and information, but excludes the requirement that these public companies’ board of directors meet racial and gender quotas (which were a part of the initial proposed legislation).

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As we previously reported in our Client Update dated May 22, 2019, the Illinois House of Representatives and Illinois Senate were both considering separate bills that would have required subject corporations’ boards of directors to include at least one female…

ISS Updates QualityScore Methodology

Institutional Shareholder Services (ISS) recently announced that it has updated its Governance QualityScore (“QualityScore”) methodology, its governance-scoring tool. The key changes to the methodology include new factors related to board and C-Suite gender diversity and the levels of shareholder support for director elections and Say on Pay proposals.

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Overview of ISS Governance QualityScore ISS applies its QualityScore methodology solely to S&P 500 and Russell 3000 companies. According to ISS, QualityScore is intended to aid institutional investors in monitoring and evaluating portfolio company governance by providing such investors insights…

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.

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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…

Two Companies Settle Director Pay Lawsuits

Recently, two biotech companies (Clovis Oncology, Inc. and OvaScience, Inc.) agreed to settle director pay lawsuits, one of which is pending court approval1. The settlements, which are remarkably broad and prescriptive, set specified director pay levels (or pay range), mandate certain proxy disclosures and require the reformed director pay policies to be submitted to a binding shareholder vote.

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Clovis Oncology, Inc. and OvaScience, Inc. were subject to substantially similar shareholder derivative lawsuits brought by the same law firm. The lawsuits alleged that non-employee directors breached their fiduciary duties to shareholders by awarding themselves “excessive” compensation under non-shareholder approved…

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”).

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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…

NYC Pension Fund Launches Campaign for Enhanced Board Diversity Disclosure

The New York City Comptroller’s Office recently announced that it launched the next phase of the Boardroom Accountablity Project, in which the Comptroller, on behalf of New York City Pension Funds, is seeking enhanced disclosure and engagement with 151 major public companies on board composition, diversity and refreshment.

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In November 2014, the Boardroom Accountability Project initiated the first phase of its campaign, in which the New York City Pension Funds petitioned for public companies to adopt proxy access. The initial campaign successfully resulted in widespread adoption of proxy…

Companies Should Consider Implementing Limits on Share Grants to Directors

Recent Delaware court decisions may usher in a new era of litigation based on equity awards to non-employee directors.

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Two Delaware court decisions are causing many companies to contemplate including in their equity plans annual share limits on grants (and possibly annual limits on cash awards) to non-employee directors. In Calma v. Templeton, the Delaware Chancery Court refused to…

Reform Affects Executives

Proposed Tax Reform Potentially Impacts Executive Compensation

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In late February, the Chairman of the House Ways and Means Committee (Dave Camp (R-MI)) released a comprehensive draft proposal to reform the Internal Revenue Code. These reforms would tax deferred compensation upon vesting and would eliminate the performance-based exception…

Changing Standards

NASDAQ Proposes to Amend Compensation Committee Independence Standards

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On November 26, 2013, The NASDAQ Stock Market LLC (“Nasdaq”) filed with the Securities and Exchange Commission (“SEC”)a proposed rule change(“proposal”)to amend its listing standards on compensation committee independence under Nasdaq Listing Rule 5605(d)(2)and interpretative guidance IM-5605-6. The Nasdaq proposed…

Looking Forward

Emerging Trends in How Banks Pay the Board

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As banks grappled with difficult financial times during and after the recession, many boards did not get pay increases for their service, despite increasing responsibilities and time commitments. That appears to be changing. Meridian Compensation Partners’ Susan O’Donnell and Daniel…

Outside Director Compensation Increasing

At the Largest Public Companies, Meridian Compensation Partners Observes Outside Director Compensation is Modestly Increasing

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Meridian Compensation Partners, a leading executive compensation and corporate governance consulting firm, has found that total compensation paid to outside directors in the Fortune 250 increased by approximately 4% over the past year. While only a modest increase of 2%…

Board Leadership at Canadian Companies

The 4 Types of Leadership Structures and What They Mean For a Firm

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Board Leadership Structures There are four types of Board leadership structures at Canadian public companies: CEO Chair—The CEO also serves as the Chair of the Board, generally for no additional compensation. This combination of roles is uncommon among large Canadian…

Pay for Performance

Multiple Approaches Boards Can Utilize To Align Pay With Performance

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Meridian Compensation Partners’ Jamie McGough breaks down pay for performance and what factors companies should be looking at when they make pay for performance decisions. Performance should be measured differently for different industries, with some putting more importance on profitability…