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Drafting a Modern Equity Incentive Plan

With the 2020 proxy season approaching, many public companies are readying new or amended equity plans for shareholder approval.

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These plans are a ubiquitous feature of public companies’ compensation programs. They allow companies to grant various types of equity and equity-based awards to their non- employee directors, executives and other key employees. Although equity plans are broadly similar, companies…

Fostering Diversity in Board Pay Practices, Part Two

In this two-part series, we examine the current state of board compensation and whether it accommodates evolving governance practices.

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In recent years, we have observed a remarkable level of homogenization of compensation practices for non-employee directors, even as what is expected from board members of public companies continues to evolve and—generally speaking—expand. In our client work, we have also…

Meridian 2017 Study of Executive Change in Control Arrangements

Meridian’s 2017 Study of Executive Change-in-Control Arrangements (the “Study”) provides current information and data on change-in-control (“CIC”) severance practices of 160 major U.S. listed public companies (the “Study Group”). We also provide trends comparisons to our last two studies, conducted in 2014 and 2011, respectively.

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Study Group Characteristics and Report Scope Study Group Characteristics Each of the 160 companies in the Study Group was a component company of the Standard & Poor’s 500® Index1 (“S&P 500®”) as of December 31, 2016. In addition, the Study…

The “Trump Trade”: Will Stock Options Make a Comeback?

Read this interview with Meridian Partner Bob Romancheck from Corporate Board Member magazine.

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This interview originally appeared in Corporate Board Member magazine. Corporate Board Member spoke to Bob Romanchek, partner and consultant with Meridian Compensation Partners, about the expected use of stock options going forward. At one time, the use of stock options…

NASDAQ Updates Equity Compensation Plan FAQs

Boards now may unilaterally amend equity plans to allow maximum withholding on equity awards.

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The Nasdaq recently updated its FAQs on Equity Compensation Plans to clarify that a Nasdaq listed company may amend its equity plan to allow for share withholding up to the maximum statutory withholding amount without seeking shareholder approval. As discussed…

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…

FASB Simplifies Accounting Rules for Stock-Based Compensation

A new amendment has important implications for the tax administration of equity plans.

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The Financial Accounting Standards Board (FASB) recently amended ASC Topic 718 to simplify the accounting standards for stock-based compensation (“Amendment”). The Amendment is not a wholesale overhaul of Topic 718, but is narrowly crafted to modify several discrete areas of…

Extending the Life of Your Share Pool

Inducement grants are a way to attract talent without burning the share pool.

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Imagine your organization is just about to hire a new CEO from outside the company. The prospective CEO’s compensation offer includes a large grant of equity incentives. This grant includes two years’ worth of normal annual cycle grants and a…

Are Your Retirement Vesting Provisions Motivating the Wrong Behaviors?

Analyzing retirement vesting provisions and ensuring they incentivize the right behaviors.

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As more executives near retirement age, many banks are realizing their equity vesting provisions may be motivating unintended behaviors. Do your bank’s retirement provisions encourage executives to: Provide advance notice of retirement to facilitate planned succession? Assist in their transition?…

Proxy Tabular Disclosure

Meridian explains tabular disclosures required in proxies, with annotated examples.

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The Basics Overview In 2006, the SEC dramatically changed proxy disclosure requirements. Six required tables provide a quantitative picture of companies’ executive pay in the prior one to three years. Companies must generally disclose compensation amounts for the top five…

Accounting for Executive Compensation

What companies should know about accounting for their executive compensation packages.

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The Basics The exchange of services for equity creates an accounting expense that must be recognized in the income statement. ASC Topic 718 (formerly SFAS 123R) is the rule that governs expensing of all stock-based compensation. The expense realized is…

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…

Outside Director Compensation

Meridian explains the issues companies should consider when planning outside director compensation.

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Overall Compensation Design Non-executive members of corporate boards are generally paid for their service. The overall compensation structure typically includes an annual retainer, committee meeting fees and/or retainers, and a non-retainer equity grant. In recent years, many companies have adopted…

2015 Outside Director Compensation Trends Report

The report includes data from public Fortune 100 companies across many industry sectors.

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Meridian Compensation Partners recently published its 2015 Outside Director Compensation Trends Report, analyzing outside director compensation at Fortune 100 companies in a wide variety of industry sectors. Highlights of the report are included below and the full report summary is…

Modest Year over Year Increases in Canadian Director Pay

Even with this increase, Canadian directors are still paid less than their American counterparts on average.

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Director total compensation increased year over year, while equity held steady at just under one-half of director pay. This aligns with increases in director time commitments and expansion of the role of board members. Directors of Canadian companies continue to…

Equity Usage for Incentives Remains Stable at Most Large U.S. Companies

Annual run rates are slightly down, while the three-year average has remained constant.

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LAKE FOREST, IL—According to a recent study of annual “run rate” and “overhang” levels among Fortune 100 companies by Meridian Compensation Partners, LLC the annual run rate (or share usage) for Fortune 100 companies has declined slightly to 1.3% and…

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…