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Executive Compensation — News & Alerts — Insights | Meridian Compensation Partners, LLC | Executive Compensation Consulting

Insights

COVID-19 and Short-Term Incentives

Nothing will be ordinary about 2020 or 2021.

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For many companies, it is unlikely that there will be significant (if any) payouts under the executive or managerial bonus plans for 2020. Alternatively, for those that do have payouts, it is similarly unlikely that plan mechanics alone will determine…

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…

COVID-19

The Meridian family is cognizant of 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 normal business operations for many companies have been upended due to the COVID-19 pandemic. Only through the…

ISS Issues Final Policy Updates for 2020

On November 11, 2019, Institutional Shareholder Services (ISS) issued final updates to its proxy voting policies for 2020 and on November 21, 2019, ISS issued further guidance in its preliminary FAQs for 2020 compensation policies. The updates represent an incremental change to existing ISS policies and the implementation of phased-in policies related to non-employee director compensation and board gender diversity.

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Final Policy/Process Updates for 2020 ISS has made the following modifications to its U.S. pay-for-performance assessment for 2020: ■ Easing the quantitative concern thresholds under its initial three-part comparative quantitative analysis of CEO pay and company performance, and ■ Using…

Council of Institutional Investors (CII) Overhauls its Policy on Executive Compensation

On September 17, 2019, the Council of Institutional Investors (CII) announced an overhaul of its policy on executive compensation, urging public companies to reduce the complexity of their executive compensation plans and set longer service-based periods for time-based equity awards.

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CII is an influential advocacy group for institutional investors. Its membership includes a wide range of asset managers with over $35 trillion in assets under management. To advance the interests of its members and reflect changes in the corporate governance…

Summary of Key Results from ISS 2019 Annual Policy Survey

ISS’s recent Policy Survey previews potential changes in to 2020 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”). Issuers and their advisors…

2019 Federal Budget: Changes to Tax Treatment of Stock Options

One of the proposed legislative changes in the Liberal government’s 2019 Federal Budget directly affects executive compensation.

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The government has proposed to limit the preferred tax treatment for stock options. Currently options are eligible for a deduction the effect of which is to tax them at one-half the ordinary income tax rate (similar to capital gains treatment).…

Summary of Key Results from ISS 2019 Annual Policy Survey

ISS’s recent Policy Survey previews potential changes in its 2019 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”). Issuers and their advisors…

Status of Proposals to Link State and Local Corporate Taxes to CEO Pay Ratio

As we reported last March, several jurisdictions have proposed (and one has enacted) tax surcharges, higher corporate income tax rates or fees tied to a public company’s CEO pay ratio. Since then, these proposals seem to have gained little legislative traction. This Update examines whether the ongoing public disclosures of CEO pay ratios have proven to be a catalyst for legislative action and whether other jurisdictions have proposed similar taxes.

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New Proposal – California Proposes Scaled Corporate Income Tax Rate Tied to a Public Company’s “Compensation Ratio” California is the sole jurisdiction to propose linking corporate income tax to a public company’s compensation ratio since last March. Submitted to the…

ISS Guidance on Proxy Reports and Company Engagement

Institutional Shareholder Services (ISS) recently issued updated guidance related to the publication of its U.S. proxy research reports and the process for company engagements. These are timely topics for a company to consider with the 2018 Proxy Season well underway.

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Generally, ISS issues its U.S. proxy research reports between 13 and 18 calendar days prior to the shareholder meeting date during peak U.S. proxy season from April through June. At other times of the year, ISS aims to publish its…

Delaware Court Case May Have Far Reaching Effects on Director Compensation

Boards of public companies should closely examine the manner in which director compensation is determined in light of a recent decision by the influential Delaware Supreme Court regarding Investors Bancorp (“Bank”).

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The upshot of the Delaware Supreme Court decision is whether equity plans of public companies should include prescribed annual limits on director compensation. According to the Court’s decision, the presence or absence of such limits will determine whether director compensation…

Sweeping Tax Reform Bill Passed by Congress

Congress has passed the most far reaching tax reform bill in over 30 years, the Tax Cuts and Jobs Act (“Tax Act”). The Tax Act will affect nearly all taxpayers (business and individuals). Corporations will be subject to a significantly reduced income tax rate of 21% and generally will be taxed solely on U.S. based income (with some exceptions). Individuals will see the elimination of many itemized deductions but higher standard deductions and slightly lower marginal tax rates.

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Generally, the changes made to the Internal Revenue Code (“Code”) under the Tax Act are effective for taxable years beginning after December 31, 2017. The changes to the corporate income tax provisions are permanent. However, most changes to individual income…

Senate Passes Tax Reform Bill

In the early hours of December 2, the Senate passed its own tax reform bill. While passage of the bill seemed improbable as recently as last Thursday, Senate Republicans were able to overcome objections within their own caucus with last minute tinkering to their tax proposal. Up next is the reconciliation process during which House and Senate Republicans will iron out differences between their respective tax reform bills. At this point, passage and enactment of a reconciled tax reform bill appears to be highly likely prior to year-end.

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Under the Senate bill, changes to the Internal Revenue Code (“Code”) would be effective for tax years beginning after 2017, except for the change in the corporate income tax rate would first become effective in 2019. Under the House tax…

House Passes Tax Reform Bill

On November 16th, the U.S. House of Representatives passed its tax reform bill by a vote of 227 to 205.

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The tax reform bill approved by the full House does not substantively differ from the bill previously approved by the House Ways and Means Committee, as described in our Client Updates dated November 7, 2017 and November 10, 2017. Therefore,…

Senate Proposal on Tax Reform

On the heels of the House tax proposal, the Senate Republicans released their own tax reform proposal on November 9, 2017. The Senate tax proposal departs from the House Republicans’ tax proposal in several significant respects, including with regard to the effective date of the change in corporate tax rates. Generally, the Senate Republicans’ proposed changes to the Internal Revenue Code (“Code”) would be effective for tax years beginning after 2017. However, under the Senate tax proposal, the change in the corporate income tax rate would first become effective in 2019, while under the House tax proposal this change would first become effective in 2018.

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We expect further changes to be made in both the House and Senate tax proposals. Ultimately, any differences between the House and Senate proposals would need to be addressed during the reconciliation process. This Update first summarizes the Senate tax…

House Proposal on Tax Reform

On November 2, 2017, the House Republicans issued a sweeping tax reform bill that generally adheres to the themes of President Trump’s previous tax proposals, except that it includes a number of surprises involving executive compensation. Generally, the proposed changes to the Internal Revenue Code (“Code”) would be effective for tax years beginning after 2017.

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President Trump hopes to have a tax reform bill to sign by Thanksgiving. We believe that this timeframe is overly optimistic, given that the legislative process on the bill has just begun. Further, while House Republicans may be able to…

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…

SEC Official Confirms that the SEC Will Not Delay CEO Pay Ratio Disclosure

Last Friday, an official of the Securities and Exchange Commission (SEC) confirmed that the SEC will not delay the effective date of the CEO pay ratio disclosure rule and that the SEC staff will be issuing additional guidance on the rule.

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At the American Bar Association Annual Meeting, Bill Hinman, SEC Director of the Division of Corporation Finance said that the SEC would not delay the implementation of CEO pay ratio rule. In addition, Mr. Hinman stated that SEC staff would…

House Approves Financial CHOICE Act

On June 8, 2017, the U.S. House of Representative approved the Financial CHOICE Act (“CHOICE Act”), which, if approved by the Senate and signed by President Trump, would repeal and roll back significant portions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”). The House vote was 233 to 186, with one Republican opposing and not a single Democrat supporting the CHOICE Act.

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As reported in Meridian Client Update of May 12, 2017, the principal focus of the CHOICE Act is the banking provisions of Dodd-Frank and the Consumer Financial Protection Bureau. However, the CHOICE Act, if enacted, would make the following changes…

House Committee Approves Bill to Repeal Key Provisions of Dodd-Frank

On May 4, 2017, the House Financial Services Committee approved the Financial CHOICE Act (“CHOICE Act”) to repeal and roll back significant pieces of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”). The Committee voted to send the CHOICE Act to the House floor, 34-26, along party lines.

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The principal focus of the CHOICE Act is the banking provisions of Dodd-Frank and the Consumer Financial Protection Bureau. In addition, the CHOICE Act includes provisions relating to agency rulemaking requirements, judicial review of agency actions and capital formation. In…