Insights

Managing Compensation Complexity

Compensation committees must strike a balance between complexity and opportunity.

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Introduction Designing and administering an effective executive compensation program can be a delicate balancing act for a public company compensation committee. Balancing attraction, retention, and motivation with fairness to shareholders, or balancing internal strategic alignment with external “best practices” are…

The Impact of COVID-19 on Executive Compensation Programs

From Bank Director's BankBEYOND 2020 Online Event - November 9-11, 2020

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Given our environment, Bank Director is combining our board member and executive events into an online experience during BankBEYOND 2020! Focusing on all of the issues directors and leaders of financial institutions must know – we dive into audit and…

ISS Issues Final Policy Updates for 2021

On November 12, 2020, Institutional Shareholder Services (ISS) issued final policy updates on selected environmental and social issues and board diversity.

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ISS has modified its proxy voting policies for U.S.-listed companies in the following respects: ■ Adoption of a revised policy on director accountability for significant risk oversight failures related to environmental and social issues (effective for meetings held on or…

Incorporating ESG Goals into Executive Compensation

From the November 11, 2020 episode of Inside America's Boardrooms hosted by TK Kerstetter

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Board conversations around ESG and corporate purpose have significantly increased in boardrooms and C-suites across the country. Growing investor and social pressures are pushing for more accepted and measurable goals, putting the onus on business leaders to incorporate new ESG…

Weighing ESG Metrics for Pay Plans

Reprinted Director Advisory feature from NACD Directorship November/December 2020 issue

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If your conscience is bothering you because your board hasn’t added environmental, social, and governance (ESG) metrics to executive incentives, that’s a good thing. It means you care about the culture and governance aspects of your company and the future…

ISS Updates Policy Guidance on COVID-19

Institutional Shareholder Services (ISS) recently issued updated guidance on the application of their proxy voting policies in light of the COVID-19 pandemic (“Updated Guidance”). The Updated Guidance provides insights into how ISS will assess 2020 pay decisions (and disclosed 2021 decisions) impacted by the COVID-19 pandemic and disclosed during the 2021 proxy season.

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The Updated Guidance is more specific than ISS’s initial COVID-19 guidance issued in April 2020 (see Meridian Client Update dated April 15, 2020). In its April 2020 guidance, ISS did not modify any of its proxy voting policies. At that…

Lessons Learned: What will be the most critical governance issues companies must address post-pandemic?

An excerpt from "Ask the Experts" as seen in C-Suite, an Equilar publication - Issue 34, Fall 2020

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As the COVID-19 pandemic continues to cause business and economic uncertainty into the foreseeable future, corporate boards and senior management teams face unprecedented challenges. Through that lens, board compensation committees need to make prudent executive pay decisions regarding annual and…

California Enacts Diversity Mandate for Public Company Boards and Reporting Mandate on Pay by Gender, Race and Ethnicity

On September 30, 2020, California Governor Gavin Newsom signed into law two landmark bills. These new laws mandate that boards of public companies headquartered in California must meet certain board diversity requirements and that California businesses with at least 100 employees must annually report salary and wage information for specific job categories segmented by race, ethnicity and sex.

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Board Diversity Mandate As we previously reported in our Client Update dated September 10, 2020, the California Assembly approved a first-in-the-nation legislation that would require public companies to include a minimum number of individuals from underrepresented communities on their boards.…

ISS and Glass Lewis Expectations for Executive Pay

Meridian Partner Tom McNeill moderated this session at Corporate Board Member's 9/16/20 Compensation Committee Summit.

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What’s on the mind of ISS and Glass Lewis coming out of the 2020 annual meeting season? During a session at Corporate Board Member’s Compensation Committee Summit, Meridian Partner Tom McNeill got their thoughts on transparency around adjustments in incentive…

Report on Say on Pay and Select Shareholder Proposals for the 2020 Proxy Season

As during prior proxy seasons, Meridian’s Governance and Regulatory Team is issuing an update on proxy voting results on Say on Pay proposals and on pay-related shareholder proposals for the current proxy season.

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Meridian Compensation Partners, LLC is pleased to provide this periodic report on the 2020 proxy season1. This report covers the following areas: ■ Say on Pay Vote Results (through October 12, 2020)― Contributing Reasons for Failed SOP Outcomes (Based on…

Determining Annual Incentive Pay in a Pandemic

As seen in the 4th Quarter 2020 issue of Bank Director

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While banks with incentive plans based on formulaic financial goals are particularly challenged, even those with more discretionary plans are asking how to evaluate and reward performance in light of the pandemic. Many compensation committees will need to assess how…

Summary of Key Results from the ISS 2020 Annual Policy Survey

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

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Each year, Institutional Shareholder Services (ISS) surveys institutional investors, public companies (“issuers”) and the consulting and legal communities on emerging corporate governance and executive compensation issues as part of its annual policy formulation process (the “Survey”). Public company “issuers” and…

How and Why Pre-Commercial Biotech CEO Pay is Different

Part Three: East Coast vs. West Coast

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In this four-part series, we examine the current state of pre-commercial biotech CEO pay, how it is tailored to the sector, and what drives differences between companies. We will explore: Part One: Tailoring Pay to the BusinessPart Two: Founders vs.…

2020 Meridian Corporate Governance and Incentive Design Survey

For the tenth straight year, Meridian Compensation Partners, LLC has conducted an extensive Survey of 200 large cap companies (“Meridian 200”) to identify trends on a variety of executive compensation and corporate governance topics. The Meridian 200 is a representation sample of the S&P 500. Discussed below are the results of the Survey.

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The Survey covers key board governance practices, compensation-related proxy disclosures, and annual and long-term incentive design practices. This information allows companies to benchmark their board governance practices, proxy disclosures and compensation program design against market practices. Highlights of Meridian’s 2020…

Biden’s Tax Proposal and Potential Impact on Executive Compensation and Stock Ownership

Democratic Party presidential nominee and former Vice President Joe Biden has proposed changes to current U.S. tax law that, if enacted, would significantly alter the status quo. The key aspects of Mr. Biden’s tax proposal would (1) reverse President Trump’s tax cuts, (2) impose Social Security taxes on wages over $400,000, (3) subject capital gains to ordinary income tax rates for high earners and (4) increase corporate tax rates. Although the tax proposal is not directly aimed at executive compensation, it could still have a meaningful effect on the design of executive compensation programs.

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Select Features of Mr. Biden’s Tax Proposal Outlined below are select features of Mr. Biden’s tax proposal. ■ Increase corporate tax rate. The corporate income tax rate would increase from 21% to 28%. ■ Roll back brackets for high earners…

LTI MIX—DOES ‘PERFORMANCE’ MATTER?

Reprinted from Corporate Board Member Magazine Q4

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PERFORMANCE does matter; but it is unclear whether performance plans work. Seventy-five percent of the S&P 500 deliver 50 percent or more of LTI (to senior executives) as “performance awards.” Considerable time, effort, and governance is dedicated to implementing these…

Which ESG Measure Should Your Company Focus On?

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If you’re considering using ESG metrics as a part of your corporate compensation formula, choosing said metrics may be tricky. You have to consider your own business practices, industry standards, and where you have a baseline to start from. Meridian…