Insights

Board Compensation, Diversity Under Scrutiny

As seen in the 3rd Quarter 2019 issue of Bank Director

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Similar to trends in other industries, banks have been simplifying their director pay programs. Slightly more than half of publicly traded banks with $1 billion to $10 billion in assets increased cash retainers instead of offering board meeting fees. Board…

Managing Executive Incentive Programs for Chemical Companies

Designing and managing effective compensation programs is challenging for chemical industry companies due to the highly cyclical and global nature of the business.

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This article offers some useful context and information for compensation committees and management teams of chemical companies to consider when designing and managing their executive pay programs. In particular, we cover key attributes of the industry and their impact on…

Institutional Shareholder Services Releases its 2019 Policy Survey Questionnaire

Institutional Shareholder Services (ISS) recently issued its 2019 policy survey questionnaire, which generally previews potential changes in ISS’s proxy voting policies.

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Through its annual policy survey, ISS seeks feedback from institutional investors, public companies, corporate directors and the consulting and legal communities on emerging trends in corporate governance, executive compensation and other matters as part of its policy formulation process. The…

Investor Group Seeking Greater Disclosure on Workplace Equity Policies

A group of 99 institutional investors are requesting “that companies increase investors’ accessibility to information related to their workplace equity policies and practices across gender, race, ethnicity, sexual orientation, and other federally protected classes.”

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Through a yet-to-be launched letter campaign, so far, a group of 99 institutional investors representing over $1.6 trillion of assets owned, advised or managed are signatories to an “Investor Statement” calling for public companies to provide enhanced disclosure on workplace…

Report on Say on Pay and Select Shareholder Proposals For the 2019 Proxy Season

Meridian Compensation Partners, LLC is pleased to provide this periodic report on key voting results for the 2019 proxy season.

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Executive Summary Specifically, this report will cover the following areas: ■ Standard & Poor’s (S&P) 500 Say on Pay (SOP) Vote Results and Analysis; ■ Russell 3000 SOP Vote Results and Analysis; and ■ Analysis of Vote Results on Select…

Use Compensation to Advance ESG Initiatives

From the July/August 2019 issue of the NACD Directorship magazine.

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Directors should take a close look at how their companies can use compensation to advance an environmental, social, and governance (ESG) strategy. A key to ESG oversight is the board’s examination of how compensation reflects and advances the company’s commitment…

2019 Say on Pay Outcomes in Oil & Gas Continue to Trail General Industry

Several oil & gas companies had a rough proxy season in 2019, with overall lukewarm shareholder support for executive pay programs in the industry.

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While many companies received kudos from investors for the addition of returns-oriented incentive metrics, others struggled to demonstrate pay-for-performance alignment or continued to make aggressive pay actions despite lackluster shareholder returns in 2018. In this posting, we take a look…

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…

Career Congratulations to Jane Romweber

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Meridian Compensation Partners LLC congratulates Jane Romweber on her recent retirement from the firm and partnership. Jane’s contributions over thirty-five years as an executive compensation and corporate governance advisor have helped build Meridian into its industry leadership position today. Many…

UPDATE: Draft Legislation Released Changing Tax Treatment of Stock Options Effective January 1, 2020

On June 17, the federal government released draft legislative language to implement the proposed changes to the taxation of stock options in Canada, as introduced in the 2019 Budget in March.

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The budget proposed to eliminate the preferential tax treatment of stock options, above an annual $200,000 face value, for large, long-established, mature firms. (See Meridian’s update here for details of the original proposal.) The highlights of the implementation language include:…

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…

Upcoming Events

Pay Ratio, Proxy Disclosure and Say on Pay: Looking Back and What’s Ahead

The pay ratio, proxy disclosure and say on pay are all intended to empower shareholders and give them the resources to ensure that the level and structure of executive pay are aligned with shareholder interests. A panel of key thought leaders and practitioners organized by The Knowledge Group including Lead Consultant Ron Rosenthal, will address several key questions about these “shareholder control” devices: Are they needed? Do they work as Congress intended? How can they be improved? September 10, 2019, Live Online Webinar

Sep10
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Equilar Board Leadership Forum

Equilar and Nasdaq are excited to offer a half-day program to help public company board members, general counsel and corporate secretaries drive success in their organizations. Investors’ emphasis on board transparency, accountability and independence is intensifying, and as a result today’s boards face a seemingly never-ending set of risks, governance decisions and strategic initiatives. The goal of the Board Leadership Forum is to empower participants to build higher performing boards through improved processes, strengthened director evaluations and recruitment efforts, and more effective shareholder engagement. September 10, 2019, San Francisco, CA

Sep10
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