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

Insights

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…

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…

Proxy Advisors and Investors Announce How They Will Use CEO Pay Ratios in 2018

The major proxy advisors and three large institutional shareholders announced that CEO pay ratios will have little to no impact on their vote recommendations and vote decisions, respectively, in 2018.

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At a recent conference hosted by CompensationStandards.com, David Kokell, Vice President of Institutional Shareholder Services (ISS), stated that CEO pay ratios will not have any impact on ISS’s analysis or vote recommendations in 2018. However, ISS will include the information…

ISS Issues Technical Document on Financial Performance Assessment

The technical document provides insight into how ISS will perform its analysis.

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Institutional Shareholder Services (ISS) for the first time will be evaluating a company’s performance relative to peer group performance against a broad spectrum of financial metrics. ISS will compare how a company’s CEO pay stacks up against the company’s relative…

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)…

SEC Issues Proposed Rule on Relationship Between Pay and Performance

Two new disclosure requirements are created for issuers under this proposed rule.

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In our Client Update of April 29, 2015, we reported on testimony provided at a hearing of the Securities and Exchange Commission (SEC) during which it approved a proposed rule that would require a public company to disclose the relationship…

Thinking Like an Activist—The Benefits of Looking at Executive Compensation Programs through a Critical Lens

Looking at your executive compensation program from an activist perspective will help you assess how likely it is your company will have to deal with activist investors.

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The significant increase in shareholder activism has many companies and compensation committees playing defense. While the specter of activist interest is generally viewed with concern, looking at your executive compensation programs from the perspective of an activist investor can focus…

ISS Provides Additional Guidance on New Voting Policy on Equity Plan Proposals

ISS has implemented new proxy voting guidelines applicable to equity plan proposals included in 2015 proxies.

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On November 6, 2014, Institutional Shareholder Services (ISS) issued final updates to its proxy voting policies that included a complete overhaul of its policies on equity plan proposals (see Meridian Client Update dated November 10, 2014). At the end of…

ISS Modifies Elements of its CEO Pay-for-Performance Test

Institutional Shareholder Services (ISS) recently announced two important modifications to its CEO pay-for-performance test.

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Institutional Shareholder Services (ISS) recently announced two important modifications to its CEO pay-for-performance test. The first modification alters ISS scoring methodology under its quantitative pay-for-performance tests that may result in slightly fewer U.S. companies showing a pay misalignment. The second…

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…

Modest Rise in Director Pay Continues at Canada’s Largest Companies

Annual analysis of outside director compensation among S&P/TSX 60 index companies found that average total compensation for directors increased by +2.1% last year.

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Meridian Compensation Partners’ annual analysis of outside director compensation among S&P/TSX 60 index companies found that average total compensation for directors increased by +2.1% last year. The proportion of total compensation delivered in equity has increased to 47%, up from…