Publications

ISS Updates “Pay for Performance” Methodology

On November 8, 2016 Institutional Shareholder Services (“ISS”) announced several significant revisions to its methodology for evaluating the link between pay and performance for U.S. companies. As is well-understood, this evaluation is used by ISS to formulate the voting recommendation on companies’ shareholder advisory proposals on the compensation of their named executive officers (the...Read More

ISS Introduces “QualityScore” Corporate Governance Tool Ahead of 2017 Proxy Season

In what has become a seemingly biannual occurrence, Institutional Shareholder Services (“ISS”) has rebranded and reintroduced its global corporate governance scoring tool for institutional investors. Now known as “ISS QualityScore,” this tool was previously called “ISS QuickScore.” As you may know, QuickScore succeeded ISS’s Governance Risk Indicators (“GRId”) which was preceded by its...Read More

Many Companies Will Need to Conduct Say-on-Frequency Votes in 2017

As companies begin to prepare to draft their definitive proxy statements for the 2017 proxy season, it is important to remember that, for many companies, next year also marks the sixth anniversary of their initial shareholder advisory vote to determine the frequency with which they would conduct future shareholder advisory (non-binding) votes on the compensation of their named executive...Read More

SEC Staff Issues Guidance on CEO Pay Ratio Disclosure Rules

On October 18, 2016, the Staff of the Securities and Exchange Commission’s Division of Corporation Finance published guidance on Item 402(u) of Regulation S-K, the rule it adopted in 2015 to implement Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Section 953(b) requires public companies to disclose the relationship between the annual total compensation of...Read More

Congress Considers Legislation to Postpone Taxation of Private Company Equity Awards

On July 11th of this year, bills were introduced in the United States Senate and House of Representatives that seek to address an issue that has become a problem for many employees of privately-held companies who hold outstanding equity awards granted to them during their employment. The “Empowering Employees through Stock Ownership Act” (S. 3152, introduced by Senator Mark Warner (D-Virginia)...Read More

ISS Provides Peek at Possible Policy Updates for 2017 Proxy Season

As it does each summer, Institutional Shareholder Services (“ISS”) has published its annual policy survey soliciting input from interested parties on potential changes to its guideline policies for the 2017 proxy season. The survey is the initial step in its annual global benchmark policy formulation process. ISS will use the feedback received from the survey as one factor in determining...Read More

Director Compensation Litigation – A Mid-Year Update

Since last year’s decision in the Delaware Court of Chancery (Calma v. Templeton et al.) reaffirming the principle that director compensation may not be protected by the “business judgment” rule because directors are inherently conflicted when setting their own pay (see our Thoughtful Pay Alert, Protecting Your Director Compensation Decisions from Claims of “Excessive Pay”), much has happened...Read More

Disclosing Personal Security Arrangements

In recent years, the confluence of a growing global economy and turbulent geopolitical events has led many companies to provide extensive security arrangements for their executives. And while most organizations firmly believe that these arrangements serve a legitimate corporate purpose – ensuring the safety of their key decision-makers and their families, the SEC considers these expenditures...Read More

ISS Issues Mid-Year Reminder about Updating Compensation Peer Group

Institutional Shareholder Services (“ISS”) once again has issued its mid-year reminder inviting companies to update their self-constructed compensation peer groups for consideration as part of its review of their executive compensation program during the remainder of 2016. ISS considers a company’s self-selected compensation peer group as one of the key inputs in developing the peer group that...Read More

Revisiting Relative TSR

Over the last several years, we have witnessed a dramatic increase in the prevalence of equity awards with vesting tied to relative total shareholder return (“TSR”). Although relative TSR performance shares only emerged as an equity compensation alternative within the last decade, they are now widely used. Our own client experience as well as broader market research suggests that relative TSR...Read More

Congressional Committee Debates Proxy Advisor Reform Bill

On May 17th of this year, the House Financial Services Committee held a hearing to review three legislative proposals intended to improve the U.S. economy. Chief among these proposals was a draft bill to regulate proxy advisory firms (the “Proxy Advisory Firm Reform Act of 2016”). The two sponsors of the bill, Representative Sean Duffy (R-Wisconsin) and Representative John Carney (D-Delaware),...Read More

Disclosing Personal Aircraft Use

With this Thoughtful Disclosure Alert, we are launching a new series of articles discussing the more common disclosure questions facing technology and life sciences companies when preparing the executive compensation information to be included in their definitive proxy statements. Look for additional Thoughtful Disclosure Alerts in the weeks ahead. While the receipt of perquisites and other...Read More