Publications

The New ISS Pay-for-Performance Methodology – A Closer Look at the Gathering Storm

Download a pdf of this article » AS THE 2017 PROXY SEASON WINDS DOWN, it is becoming evident that one of the more pressing challenges companies are likely to face in the years ahead centers on how Institutional Shareholder Services, Inc. (“ISS”) intends to evaluate the perceived correlation between a company’s performance and its senior executives’ compensation. Just as companies were becoming...Read More

With CEO Pay Ratio Effective Date Looming, There’s No Relief in Sight

As we mark the beginning of May, the January 1, 2018 effective date of the CEO pay ratio disclosure requirement is now only eight months away. Notwithstanding predictions following last November’s presidential election that this disclosure requirement would be quickly repealed, there has yet to be any action taken that would alter the looming effective date. Here’s where things stand as of May...Read More

Equity Utilization in the Bay Area Tech 120

While equity compensation is a fundamental component of most technology company compensation programs, balancing the tension between fostering an ownership culture (which serves as a direct link between pay and performance) and managing shareholder dilution can be an ongoing challenge. Further, in recent years, institutional shareholders and their advisors have tightened their scrutiny of...Read More

“Say on Pay” at the Bay Area Tech 120 – A Look at 2016

Now that 2016 has drawn to a close, it’s time once again to take a look at last year’s results for the non-binding shareholder advisory vote on the compensation of a company’s named executive officers (the so-called “Say-on-Pay Vote”) required by the Dodd-Frank Wall Street Reform and Consumer Protection Act. 2016, the sixth year of Say-on-Pay, was notable for the high number of companies that...Read More

ISS Updates Burn Rate Tables for 2017 Proxy Season

In December, Institutional Shareholder Services (“ISS”) updated its “burn rate” tables, which impact its voting recommendations on equity compensation plan proposals. In recent years, burn rate levels have fluctuated significantly, making this an increasingly important area for technology and life sciences companies to monitor. At the same time, ISS also published its annual updates to its...Read More

Software Company Peers – The Top Comparators

One of the key factors considered by compensation committees in setting executive pay is an understanding of practices within their competitive market for executive talent. Typically, this understanding is based on an analysis of a carefully-selected group of peer companies. While this compensation peer group can be (and often is) used to assess a wide range of metrics, key elements of the...Read More

Market Stock Unit Practices in the Technology Sector

While historically technology companies relied heavily on stock options to provide long-term incentives to their executives, in recent years an alternative vehicle – full-value awards with vesting tied to stock price performance – has gained broad acceptance. These awards – known as market stock units (“MSUs”) – avoid many of the perceived drawbacks of traditional stock options while, at the...Read More

Employee Stock Plan Proposals at the Tech 120

2016 was another busy year for employee stock plan proposals among the 120 largest publicly-traded technology companies primarily headquartered in the San Francisco Bay Area (the “Tech 120”). This Thoughtful Pay Alert summarizes the results of our review of the Tech 120 stock plan proposals, based on the information disclosed in the companies’ proxy statement filings with the Securities and...Read More

ISS Issues 2017 Policy Updates

Institutional Shareholder Services (“ISS”) has updated its U.S. corporate governance benchmark policy guidelines for 2017. Other than the addition of several relative financial metrics to its methodology for evaluating the link between pay and performance (see our recent Thoughtful Pay Alert, “ISS Updates ‘Pay for Performance’ Methodology” (Nov. 21, 2016), this year’s updates contain one...Read More

ISS Issues Reminder about Updating Peer Group Ahead of 2017 Proxy Season

Institutional Shareholder Services (“ISS”) is inviting companies to update their self-constructed compensation peer groups in connection with its review of their executive compensation program during the 2017 proxy season. ISS uses a company’s self-selected compensation peer group as a key input in developing the peer group that it uses to evaluate the alignment of the company’s CEO pay and...Read More

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