Insights

ISS Issues Final Policy Updates for 2020

On November 11, 2019, Institutional Shareholder Services (ISS) issued final updates to its proxy voting policies for 2020 and on November 21, 2019, ISS issued further guidance in its preliminary FAQs for 2020 compensation policies. The updates represent an incremental change to existing ISS policies and the implementation of phased-in policies related to non-employee director compensation and board gender diversity.

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Final Policy/Process Updates for 2020 ISS has made the following modifications to its U.S. pay-for-performance assessment for 2020: ■ Easing the quantitative concern thresholds under its initial three-part comparative quantitative analysis of CEO pay and company performance, and ■ Using…

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…

ISS Evaluation of Director Pay Could Lead to Negative Vote Recommendation on Select Board Members in 2019

Beginning this proxy season, Institutional Shareholder Services (ISS) began to examine the reasonableness of non-employee director pay. The outcome of this examination could lead ISS to issue a negative vote recommendation on incumbent directors serving on the board committee responsible for setting director pay who are standing for election in 2019.

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Under its new proxy voting policy on non-employee director compensation, ISS will generally recommend shareholders vote AGAINST members of the board committee that are responsible for approving or setting non-employee director (NED) compensation if there is a pattern (i.e., 2…

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…

ISS 2016-2017 Policy Survey Summary of Key Items

ISS’s recent Policy Survey previews potential changes in its 2017 proxy voting policies.

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

Settlement of Director Pay Lawsuit Provides Best Practices Framework

Meridian examines the terms of this recent settlement and explains how it should influence director pay practices.

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A recent settlement of a shareholder lawsuit alleging excessive compensation to non-employee directors provides a framework for best practices related to director pay. Last month, the Delaware Chancery Court approved a settlement of Calma v. Templeton, a derivative lawsuit that…

Updates to ISS & Glass Lewis Compensation & Related Policies

Policy changes have implications for both equity plan voting and director over-boarding.

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ISS has changed its methodology for assessing treasury-based incentive plans with effect in 2016. In addition, both ISS and Glass Lewis have changed their standards for director “over-boarding” with effect in 2017. Equity Plan Voting As expected, ISS is introducing…

ISS 2015-2016 Policy Survey Summary of Key Items

ISS’s recent Policy Survey previews potential changes in its 2016 proxy voting policies.

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

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…

Term Limits and Board Diversity: Developing Policies that Work

In January, 2014, the Ontario Securities Commission proposed disclosure rules that will require TSX-listed issuers in Ontario to annually disclose the combination of term limits and gender diversity

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In January, 2014, the Ontario Securities Commission (OSC) published proposed disclosure rules that will require TSX-listed issuers in Ontario to annually disclose: Any policies they have regarding the representation of women on the board (and other details respecting women on…

Prepare to Pay

U.S. Chamber of Commerce Calls out Costs of CEO Pay Ratio Disclosure

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Last month, the U.S. Chamber of Commerce released a white paper suggesting that the cost for public companies to comply with the requirements of the CEO pay ratio disclosure rule will be significantly greater than what is anticipated by the…

New Limits Will Affect Director Compensation

DSUs Require Canadian Directors to Hold Their Equity Until Retirement

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Equity is an increasingly important component of director compensation and is designed to create alignment with shareholders and deliver competitive pay. A combination of good governance practices and limitations imposed on deferred share units (DSUs) under the Canadian Income Tax…

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…