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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…

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…

Trends in Compensation: Committee Chairs & Lead Directors

From Boardroom Resources...In this episode, Bob Romanchek discusses current trends in director compensation.

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Compensation trends for lead directors and committee chairs have been interesting to follow in the years after Sarbanes-Oxley. Audit committee chairs were the first to be rewarded with higher pay; compensation committee chairs quickly followed suit as issues like Say…

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…

Addressing Increased Scrutiny on Director Compensation: A Call to Action

Executive compensation has long been subject to intense scrutiny from regulators, proxy advisors and investors alike.

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Until recently, outside director compensation has not been subject to similar scrutiny primarily due to the narrow range of pay practices for directors, in both pay value and design/delivery. However, a new heightened level of scrutiny is now being applied…

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…

Hot-Button Board Compensation Issues

Corporate Board Member recently sat down with Bob Romanchek, partner with Meridian Compensation Partners to talk about board compensation.

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Board compensation is always a hot topic for directors, with outside director compensation, lead director compensation, equity grants, the actual value of outside director pay and instances where companies have been sued for excessive outside director pay all front-burner topics. In the…

Vesting Doesn’t Make Sense

From Corporate Board Member - "Board Governance Series," Second Quarter 2018

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It usually perks up the ears of most corporate directors when you say “board compensation.” What’s happened recently in this area, particularly with equity grants? If you take a step back, outside director compensation has generally been in a pretty…

Avoiding Action on Director Pay

How boards can protect themselves against scrutiny - From C-Suite Magazine, an Equilar publication - Issue 26, Winter 2018

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A wave of lawsuits surrounding director compensation surfaced a couple of years ago, often alleging “excessive” pay for boards of directors on a variety of grounds. Because boards set their own pay levels, there are potential legal ramifications due to…

ISS Issues 2018 Final Policy Updates and Additional Guidance on Pay-for-Performance Assessment and Equity Plan Evaluations

Institutional Shareholder Services (ISS) has issued final updates to its proxy voting policies for 2018 and significant guidance through a series of FAQs on certain U.S. compensation policies, including its methodologies for assessing pay for performance and equity plan proposals.

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Final Policy Updates for 2018 The policy updates and guidance revise ISS proxy voting policies and methodologies for U.S.-listed companies in the following areas relating to executive compensation and corporate governance: ■ ISS quantitative pay-for-performance assessment, ■ ISS Equity Plan…

Aligning Executive Pay With Company Performance

From C-Suite: An Equilar Publication Issue 25, Fall 2017 - Ask the Experts "A Delicate Balance...What Will be the Biggest Risk for Corporate Boards Looking Forward to 2018?"

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From an executive compensation perspective, boards have an important duty to pay executives appropriately in line with the underlying performance of the company. The age-old issue of paying for performance seems more complex than ever—and more highly scrutinized! The design…

2017 Trends in Outside Director Compensation

The 2017 Outside Director Compensation Trends Report includes data from public Fortune 100 companies.

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The key highlights from Meridian’s 2017 Outside Director Compensation study among Fortune 100 companies include: In 2016, total compensation increased modestly at 1.2% Annual cash retainer values were flat for the second consecutive year, but equity values increased at approximately…

Director Pay Rises 20% in Five Years, Driven by Equity Awards

REPRINTED PRESS RELEASE FROM EQUILAR

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REDWOOD CITY, CA (October 18, 2017) — Annual compensation for boards of directors at the largest U.S. public companies has risen nearly 20% over the past five years, according to a new report from Equilar, Director Pay Trends, which features…

ISS 2017–2018 Policy Survey Summary of Key Items

ISS’s recent Policy Survey previews potential changes in its 2018 proxy voting policies.

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

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…

Matthew Isakson on NACD’s Leading Minds of Compensation

This interactive forum was a must-attend event for proactive and inquisitive corporate directors and chief executives.

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Meridian Partner Matthew Isakson was a panelist for the NACD’s Leading Minds of Compensation – West where top compensation experts provided invaluable insight on all things executive compensation and then participated in an audience-led question and answer session. Participants had…

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 2017, making it the fifth consecutive year for both Partners.

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The National Association of Corporate Directors (NACD) announced the 2017 NACD Directorship 100, the annual list that recognizes leading corporate directors, governance experts, and other influencers who impact boardroom practices and performance. NACD identifies these outstanding directors and governance professionals…

Should Boards Reconsider the Benefits of Stock Options?

Watch Meridian Partner Jamie McGough on TK Kerstetter's Inside America's Boardrooms.

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Meridian Partner Jamie McGough joins TK Kerstetter, host of Inside America’s Boardrooms, to discuss “Should Boards Reconsider the Benefits of Stock Options?” Watch Jamie explain why the use of stock options has diminished and why he thinks companies might want to…