Insights

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COVID-19

The Meridian community recognizes the extraordinary challenges facing our clients, friends and others in these unprecedented times.

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First and foremost, we hope you, your families and your colleagues are staying safe and healthy during this global health crisis. We appreciate that normal business operations for many companies have been upended due to the COVID-19 pandemic, and that…

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:…

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…

Pay for Performance

From Volume 1 Chief Executive Officer Magazine...Partner Andrew McElheran and Lead Consultant Andrew Stancel explain what pay for performance should mean to corporate boards and management teams.

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Over the past ten years or so – since the widespread adoption of shareholder ‘say on pay’ votes on executive compensation at public companies in the US and elsewhere – arguably no single idea has animated the analysis and design…

Economic Value Added—New Governance Considerations

Starting this proxy season, Institutional Shareholder Services (ISS) will be disclosing in U.S. and Canadian company proxy reports Economic Value Added (EVA) metrics. These metrics will be shown for informational purposes only. However, we believe it is likely that ISS will incorporate EVA metrics into its CEO pay-for-performance analysis within the next two proxy seasons, subject to investor feedback.

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ISS’s introduction of EVA metrics is likely to foster discussion among compensation committees about the nature, merit and implication of these metrics. EVA may also be of interest among institutional investors as an additional lens to assess pay and performance…

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.

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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…

Holding Steady with Say on Pay

While Say on Pay is voluntary in Canada, many S&P/TSX 60 companies held Say on Pay votes in 2016.

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In contrast to the mandatory (but non-binding) advisory votes on executive compensation (“Say on Pay” votes) in the U.S., Say on Pay remains voluntary in Canada. Close to 80% of the S&P/TSX 60 companies have a Say on Pay vote…

Choosing the Right Performance Peer Group

Why companies are using PSU plans, and how to use them effectively.

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More and more public companies are adopting performance share unit (PSU) plans as a significant component of long-term (equity) compensation for executives.[1] The most common PSU performance metric is total shareholder return (TSR – i.e., stock price growth plus dividends)…

Trends in Executive Compensation at the S&P/TSX 60

While actual senior executive pay has fallen in the past three years, actual and target pay have grown.

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This update reviews trends in executive pay at S&P/TSX 60 companies[1]. The general trend for the last three years has been for modest growth in actual and target pay, although actual senior executive pay fell slightly from 2013 to 2014.…

Horses for Courses

How compensation committees can choose the performance metrics that are right for their business.

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Incentive plans have two primary purposes: 1) To motivate behaviour and drive performance aligned with strategy and 2) To align rewards with shareholder interests. From these two simple purposes come the most difficult work of the compensation committee and an…

Compensation Challenges of a Falling Canadian Dollar

With uncertainty in the worldwide economy and commodity prices, the Canadian dollar has fallen to a six-year low versus the U.S. dollar, affecting compensation programs for a large number of Canadian companies.

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After a long period of relative stability and near parity, the Canadian dollar has fallen to about 80 cents U.S. – a six-year low. The outlook for further movement up or down, is unclear and is tied both to the…

Measurement Challenges for Pay and Performance

As they prepare for the 2015 incentive plan cycle, committees are grappling with the challenge of choosing the right performance measures and goals for annual and long-term incentive plans.

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In this update, we discuss five pitfalls for selecting performance measures and setting goals: Basing plan design purely on prevalent market practice Ignoring business imperatives and the cost of capital Relying solely on company history to set performance targets and…

Setting Appropriate Performance Metrics and Goals

Executive pay has become more transparent, responsible, and aligned to performance than ever before.

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In an environment of significant public and media scrutiny, executive compensation’s evolution over the last decade has been dramatic and very visible. Executive pay has become more transparent, responsible, and aligned to performance than ever before. But in this Say-on-Pay…

Using Adjusted Financial Data in Incentive Plans

The key to a successful incentive design is selecting the right metrics – ideally metrics that drive shareholder value and ones that executives understand and control.

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As we move into the fall, many companies and their compensation committees will be taking a closer look at current incentive plans, ensuring they still meet company needs and properly align pay and performance. The key to a successful incentive…

Effective Governance of Executive Compensation Benchmarking

Strong Governance and Benchmarking Play an Important Role in Keeping Accountability for Executive Pay Decisions

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Benchmarking is commonly used to set and assess executive pay levels and design practices. Strong compensation governance processes and careful development and use of benchmarking data are essential for HR Committees to critically evaluate executive pay. Executive pay decisions are…