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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…

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:…

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).…

Is it time for longer-term performance awards?

A variety of factors has escalated short-termism, including proliferation of technology and Wall Street’s relentless demand (and apparent rewards) for short-term profits.

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Short-termism: Acknowledging a Trend In his 2016 annual letter to CEOs, Larry Fink wrote: “I have written to the CEOs of leading companies urging resistance to the powerful forces of short-termism afflicting corporate behavior. Reducing these pressures and working instead…

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,…

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…

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…

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…

Compensation Specialists Advise on IPOs and Spins

As an initial public offering (IPO) nears for a private company or an operating division of a public company, compensation planning must include preparing for the executive compensation transition issues the company must undertake after the offering

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From the July/August 2016 issue of NACD Directorship Visit NACDonline.org As one of the largest independent advisory firms, Meridian Compensation Partners is uniquely positioned to guide committees through pivotal events such as IPOs, spins, or separations where a company is…

Stock Option Fundamentals

What you need to know about stock options in the executive compensation context.

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Description A stock option is a right to purchase employer stock at a fixed price (e.g., an “exercise price”) during a specified period of time. Key Features Exercise Price The exercise price generally is equal to the underlying stock’s fair…

Fundamentals of Long-Term Incentives

Pros and cons of the three most common categories of long-term incentives.

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Long-term incentives (“LTI”) are forms of variable (“at risk”) compensation based on the achievement of longer-term performance and objectives. Primary objectives are to: Align executive interests with shareholders and align executive pay with company performance and strategy. Balance annual incentives…

Stock Ownership Guidelines

What factors to consider when designing stock ownership guidelines.

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The Basics What are stock ownership guidelines? A stock ownership guideline is a policy created by the compensation or governance committee which establishes the level of stock ownership that is expected for the executives or outside directors of a company.…

SEC Issues Proposed Rule on Relationship Between Pay and Performance

The new rule would require more disclosure of compensation "actually paid" to CEOs.

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On April 29, 2015, the Securities and Exchange Commission (SEC) approved (by a 3 to 2 vote) a proposed rule that would require a public company to disclose the relationship between executive compensation actually paid and the financial performance of…

IRS and Treasury Department Issue Final Regulations on Section 162(m)

The ruling has implications for the use of stock options in equity compensation plans.

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On March 31, 2015, the Internal Revenue Service and Treasury Department issued final amended regulations under Section 162(m) of the Internal Revenue Code (the “Code”) to clarify that (1) stock plans must provide per-employee limits for stock options and stock…

The Line Between Ownership and Compensation

Cheniere Energy’s recent challenges offer interesting lessons in understanding the differences between “ownership” and “compensation”.

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Cheniere Energy’s recent challenges offer interesting lessons in understanding the differences between “ownership” and “compensation”. Cheniere has faced notable public challenges to its executive compensation program, including the withdrawal of an incentive plan proposal to shareholders and failed Say on…

Coca-Cola Announces Equity Stewardship Guidelines

Announcement is part of Coke’s rollout of its “Equity Stewardship Guidelines” which will govern the Company’s equity grant practices.

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In response to shareholder concerns over the potential dilutive impact of its 2014 Equity Plan, the Coca-Cola Company took the unusual step of announcing that it will use “substantially fewer shares for long-term equity awards” by “significantly reducing the use…

Responding to Pressure

How Regulators are Changing Bank Incentive Pay

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The Federal Reserve’s influence on incentive practices at the largest banks is cascading to regional banks. Although the final Dodd-Frank Act regulations have not been released, many banks are adjusting their incentive programs to respond to regulatory pressure. A Meridian…