Exequity
  • Home
  • Advisory Services
  • Consultants
  • Newsroom
  • Careers
  • Contact

ISS's and Glass Lewis's 2021 Policy Updates

12/22/2020

 
Both ISS and Glass Lewis recently released their policy updates for 2021. Surprisingly, neither ISS's nor Glass Lewis's policy updates had any major policy changes with respect to compensation. This Client Alert details the policy updates of both ISS and Glass Lewis, even those not necessarily presented as policy updates that will nevertheless have an impact on compensation matters for the 2021 proxy season.

Click HERE to download the Client Alert in PDF.

SEC Issues Final Rules Impacting Proxy Advisors

8/4/2020

 
This Client Alert looks at the final rules impacting proxy advisors that the SEC adopted July 22, 2020. The Client Alert discusses the SEC action to codify that "solicitation" includes providing proxy vote recommendations, modifications of the anti-fraud provision to address failure of proxy advisors to disclose material information, the implications of these changes for proxy advisors, and details of the "safe harbor" proxy advisors can use to avoid having to comply with the proxy voting rules.

The final rules are effective 60 days after publication in the Federal Register. However, the final rules do not apply to proxy advisors until December 1, 2021.

Click here to download the Client Alert​ in PDF.

2020 Relative TSR Prevalence and Design of S&P 500 Companies

7/14/2020

 
​In this Client Briefing, Exequity explores the usage of relative total shareholder return (RTSR) within long-term incentive plans across S&P 500 companies. We examine overall prevalence of RTSR, differences in usage between industry sectors, and key design elements of these plans. ​ 

Key findings:
  • 60% of S&P 500 companies use RTSR (up 2% from 2019)
  • RTSR prevalence exceeds 40% for each S&P 500 sector for the first time
  • RTSR usage as a modifier increased 2% to 23% for 2020
  • 73% use a focused peer group and 27% use a broad index
  • 23% use the S&P 500 as the RTSR peer group

​Click here to download the Client Briefing in PDF.

Making Your Bonus Plan Work

5/11/2020

 
Seemingly overnight, the COVID-19 pandemic gripped the World, and many business forecasts and operating budgets were severely impacted. Before the end of the first quarter, incentive plan performance goals were suddenly deemed unattainable. While most companies are not currently considering adjusting in-cycle incentive plan performance goals, due either to concerns about external optics or a lack of sufficient context, assessing performance for the purposes of incentive plan payouts will be a deeply deliberated topic during year-end pay discussions.  We expect that for many companies, incentive plan performance assessment is likely to include the application of backward-looking discretion, informed by a comprehensive review of a variety of quantitative and qualitative factors.  This article provides an analytical approach to support the application of discretion.

Click here to download the Client Briefing in PDF

2020 Director Equity Grant Practices

5/7/2020

 
The significant stock price declines of many companies over the past few months have raised the question of whether a company’s traditional approach to impending equity awards should be revised. The first widescale evidence of companies’ responses to this dynamic is unfolding in the context of 2020 director equity awards. This Client Alert analyzes the equity grant practices of 109 S&P 500 companies holding their annual meetings between April 1, 2020 and May 1, 2020 to identify trends in director equity grant policies resulting from the market impact of COVID-19. 

Click here to download​ the Client Alert in PDF.

One Approach to Making Your 2020 Bonus Plan Work

4/13/2020

 

Do you think the effect of COVID-19 has destroyed your company’s 2020 bonus plan? Many companies are taking a “wait and see” approach to how they will ultimately evaluate the impact of the pandemic on incentive plan performance goals.  When the time is right, that assessment is likely to include the application of backward-looking discretion, informed by a comprehensive review of a variety of quantitative and qualitative factors. However, many companies will likely be uncomfortable with both the ambiguity of an undefined and arbitrary “discretionary” review process, and the well-established negative connotations associated with the exercise of discretion in setting pay. As a result, many companies will be looking for well-reasoned, easily articulated approaches to applying discretion. This Client Alert offers one example of the analytical approach that companies may consider in evaluating 2020 performance while maintaining pre-COVID-19 performance frameworks.​

Click here to download this Client Alert in PDF.

A Framework for Discretion

4/8/2020

 
The economic fallout resulting from the COVID-19 pandemic has rendered obsolete many executive incentive plans, and compensation committees are expected to apply significantly more discretion for 2020 than is typical. This Client Briefing provides a framework for the use of discretion in incentive plans.  A logical framework may help companies avoid arbitrary and confusing outcomes. 

Click here to download this Client Briefing in PDF.

COVID-19 Impact on Pay: Summary Statistics

4/2/2020

 
Picture
Last Updated: June 3, 2020

Note: Contact your Exequity Advisor for detailed information underlying these summary statistics and for special data cuts.

How COVID-19 is Impacting Pay

4/2/2020

 
While it is safe to say every economic crisis is different, it does not seem fair to compare this crisis to any other. The global impact of the COVID-19 pandemic is unprecedented in modern times. In turn, companies are responding with unprecedented actions. This Client Alert describes how the repercussions of COVID-19 are impacting pay programs, based on data gathered from public filings as of April 1, 2020. We will continue to update this data throughout the pandemic as companies respond, at https://www.exqty.com/newsroom/covid-19-impact-on-pay-summary-statistics.

Click here to download this Client Alert in PDF​

Glass Lewis' and ISS' 2020 Policy Updates

11/21/2019

 
Recently, both Glass Lewis and ISS issued their U.S. policy updates for the 2020 proxy season. None of the updates are significant in and of themselves but are likely to impact a select group of companies that have not yet acted with respect to current corporate governance best practices.

This Client Alert looks at both the Glass Lewis and ISS updates as well as ISS' preliminary compensation FAQs.

Click Here to download the Client Alert in PDF.

Trends in Relative TSR Presentation to NASPP Michigan, Including Russell 3000 Auto & Components Statistics

11/20/2019

 
Ben Burney spoke to the Michigan chapter of NASPP about trends in relative TSR. Topics covered include overall prevalence and peer group usage, among others. The presentation also included new RTSR statistics from Russell 3000 Automobile and Components companies. 

Download the presentation here.

SEC Proposed Changes to Rules Impacting Proxy Advisors and Shareholder Proposals

11/12/2019

 
On November 5, 2019, the SEC met and issued two sets of proposed changes to existing rules. One impacts proxy advisors (known in SEC-speak as "proxy voting advice businesses"), such as Institutional Shareholder Services, Inc. and Glass, Lewis & Co., and the other proposed rule impacts the requirements for shareholders to submit proposals.

This Client Alert summarizes these proposed rule changes.

Click here to download this Client Alert.

Valuing Amazon—Using Its Financials

10/23/2019

 
In this Client Update, we suggest that compensation committees and boards should have confidence in using their business judgment to identify key measures for evaluating company performance in incentive plans. Using reported earnings measures highlighted by Amazon.com, Inc., we provide a demonstration of how financial performance can be very closely tied to shareholder value creation over time. We also compare EVA (ISS’s latest preferred approach) to stock price over this same period. We find using Amazon’s reported financial performance to be a very strong gauge of shareholder value creation. If the Amazon example is any indication, compensation committees should feel comfortable in applying their own business judgment, rather than feeling the need to turn to ISS’s one-size-fits-all notion that EVA presides over all.
valuing_amazon_20191023.pdf
File Size: 249 kb
File Type: pdf
Download File

2019 Trends in Relative TSR Presentation to NASPP Chicago

10/1/2019

 
Ben Burney spoke to the Chicago chapter of NASPP about trends in relative TSR. Topics covered include overall prevalence and peer group usage, among other topics. The presentation also included summary results of a Monte Carlo simulation of the S&P 500. The graphic depicts how companies in some sectors may be expected to outperform or underperform depending on market conditions. 

Download the presentation here.

2019 Relative TSR Prevalence and Design of S&P 500 Companies

9/25/2019

 
​In this Client Briefing, Exequity explores the usage of relative total shareholder return (RTSR) within long-term incentive plans across S&P 500 companies using data from 2019 filings. We examine overall prevalence of RTSR, differences in usage between industry sectors, and key design elements of these plans. 

Click here to download the Client Briefing. 

Bouncing Back From Low Say-on-Pay Vote 2019

9/16/2019

 
This Client Briefing looks at the steps companies should consider if they had a low or failed Say-on-Pay (SOP) vote in 2019. The Client Briefing discusses SOP vote results among the Russell 3000 as well as gives examples of companies whose SOP votes failed in 2018, yet were able to secure approval above the average 90.9% support level in 2019.

Click HERE to download the PDF.

SEC Issues Guidance to Proxy and Investment Advisers

9/10/2019

 
On August 21, 2019, the Securities and Exchange Commission (SEC) issued guidance to proxy advisors regarding the applicability of the proxy rules to proxy voting advice. The SEC also issued separate guidance to investment advisers regarding their proxy voting responsibilities. Combined, this guidance likely will impact both proxy advisors and how investment advisers handle proxy voting, which, in turn, could significantly change the proxy voting landscape for public companies.

This Client Alert reviews this SEC guidance as well as some of the potential impacts.

​Click here to download this Client Alert

EVA Versus EBITDA—Industry Analysis

9/4/2019

 
In Exequity’s August 20, 2019 Client Briefing, ISS, EVA, and Economic Voodoo, we responded to contentions made by Institutional Shareholder Services (ISS) and author Bennett Stewart (ISS Senior Advisor) in the white paper EVA, not EBITDA: A Better Measure of Investment Value. ISS and Mr. Stewart identify economic value added (EVA) as a “superior” measure of “investment value” over EBITDA. Readers may recall, EVA is ISS’s latest preferred approach to performance measurement. In contrast to ISS’s analyses, which appear to have been conducted based on data as of a single point in time, we described how EBITDA was better correlated over time with stock price and total enterprise value (TEV) than EVA.

This Client Update is a follow-up to ISS, EVA, and Economic Voodoo and offers further insights into the relationship between EVA and EBITDA versus stock price and TEV. 

Read more below or click here to download a copy of this Client Update.

Read More

ISS, EVA, and Economic Voodoo

8/20/2019

 
Institutional Shareholder Services (ISS) recently introduced Economic Value Added (EVA) as its latest approach to measuring company performance.  Now a purveyor and proponent of EVA, ISS is marketing its product, including a recent publication, EVA, not EBITDA: A Better Measure of Investment Value. This Client Briefing examines ISS’s contention that EVA is a superior gauge of “investment value” to EBITDA. 

Download the Client Briefing ​here (PDF).

Download information on the EVA formula we used and companies analyzed here (PDF).

Making Sense of Monte Carlo

8/6/2019

 
When you hear the words “Monte Carlo simulation,” do you:
a)  Scream;
b)  Pack your suitcase—Mediterranean vacation! (Simulation? Nah!); or
c)  Ponder the link between 19th century botany and modern valuation techniques?
If you chose a) and would rather b), read this Client Briefing to c).

Monte Carlo simulations are often only marginally understood by decision makers—and trying to comprehend them makes some want to scream. But while Monte Carlo simulations are complicated, the way we explain them does not have to be. This Client Briefing offers a plain-English guide to Monte Carlo simulations, which are used to value market-based performance awards (e.g., relative TSR). The goal is to help companies understand the implications of design choices on valuation outcomes in a conversational manner. 

Click here to download the Client Briefing (PDF).
<<Previous

    Subscribe to Exequity's Publications

    Lists*


    Learn more about Exequity publications an thought leadership 

    Categories

    All
    162(m)
    409A
    CEO Pay
    Change In Control
    Client Alert
    Client Briefing
    Client Update
    Compensation Design
    COVID 19
    Director Compensation
    Disclosure
    Dodd Frank
    Equity Plans
    EVA
    FASB
    Glass Lewis
    Hedging
    Incentive Plan
    ISS
    Monte Carlo Simulations
    NQDC
    Pay For Performance
    Regulations
    Say On Pay
    SEC
    Speech
    Study
    Tax
    TSR

Services

Compensation Benchmarking, Program Design
Technical, Governance, Compliance

Transactions and Transitions

Company

Consultants
Newsroom
Exequity Tearsheet (PDF)

Contact

Careers
Offices

© COPYRIGHT 2020. EXEQUITY LLP. ALL RIGHTS RESERVED.
  • Home
  • Advisory Services
  • Consultants
  • Newsroom
  • Careers
  • Contact