|
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. 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. 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. 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. 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. 
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 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. 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). This Client Briefing provides an overview of ISS's EPSC model which ISS uses to review equity compensation plan proposals to develop its vote recommendations for such proposals. The Client Briefing looks at the three categories of the EPSC model and indicates where companies are most likely able to impact EPSC model outputs. The Client Briefing also discusses the timing of running the EPSC model and other considerations for developing a good equity compensation plan. If your company is thinking about taking a proposal to shareholders to request more shares and ISS has significant influence on your institutional shareholders, this Client Briefing will help you understand how ISS will review your equity plan proposal and develop its vote recommendation.
Originally Published September 13, 2018 Updated February 12, 2019 to reflect ISS Policy Updates for the 2019 Proxy Season Click here to download the Client Briefing (PDF) In December 2018, ISS released two documents covering frequently asked questions (FAQs) on final U.S. Compensation Policies and U.S. Equity Compensation Plans. The FAQs on Equity Compensation Plans also contained the ISS burn rate benchmarks applicable to meetings on or after February 1, 2019. This Client Alert reviews the changes in the FAQs and includes the 2019 ISS burn rate benchmarks.
Click Here to download the Client Alert (PDF) On November 19, 2018, ISS released its policy updates for the 2019 proxy season. Then on November 21, 2018, ISS issued a set of preliminary FAQs on Compensation Policies for 2019. These policy updates and FAQs will apply to shareholder meetings on and after February 1, 2019.
This Client Alert examines the compensation-related changes to ISS policies for 2019 as well as the preliminary Compensation FAQs. Click Here to Download the PDF of this Client Alert. This Client Briefing looks at the ISS policy regarding "excessive" non-employee director (NED) compensation. In a set of FAQs, ISS indicated that historically it has considered NED compensation at the top 5% of all comparable pay to be "excessive." Under the ISS policy, which ISS first started applying in 2018, if ISS finds a recurring pattern of excessive NED compensation magnitude in two or more years without a compelling rationale, ISS may recommend against those directors responsible for approving/setting NED compensation.
The Client Briefing provides the median and 95th percentiles for the S&P 500 and Russell 3000 (excluding the S&P 500) groups, in the aggregate and by industry. Companies can use these as a rough guideline to gauge whether they run any risk under the ISS "excessive" NED compensation policy. Click here to download the Client Briefing (PDF) If your company's Say-on-Pay (SOP) vote received low support (below 70% for ISS and below 80% for Glass Lewis), your company will need to respond appropriately in next year's proxy or face even lower support and, possibly, vote recommendations against directors.
This Client Briefing looks at what the proxy advisors want to see in your next proxy if your company received low support on its SOP vote, outlines a typical response plan, and suggests ways to ensure your company is viewed as being responsive to the low SOP vote in next year's proxy. Finally, summary statistics for Russell 3000 companies from 2012—2018 are provided, which detail the average and median SOP vote support levels, a breakout of the SOP vote support levels (including the SOP failures rates), and ISS vote recommendations for and against SOP proposals. Download Client Briefing (PDF) On November 21, 2017, ISS released a set of preliminary U.S. Compensation FAQs that make some significant changes to its Quantitative Pay-for-Performance (P4P) tests and its Equity Plan Scorecard (EPSC) Policy. While several of the proposed changes are significant, they were not treated as "policy changes" and released with ISS's policy updates for 2018.
These preliminary FAQs represent only the most common questions ISS received, and the final, comprehensive FAQs could alter these FAQs and contain changes to other ISS U.S. Compensation policies. Exequity's Client Alert examines these preliminary FAQs and the changes they make to the Quantitative P4P tests and EPSC Policy. Download Client Alert (PDF) On November 16, 2017, ISS released its updated policies for 2018. The updated policies apply to shareholder meetings on and after February 1, 2018. Exequity's Client Alert examines the United States policy updates focused on compensation matters.
Download Client Alert (PDF) This Client Alert looks at the policy updates from Institutional Shareholder Services (ISS) and Class, Lewis & Co., LLC that involve compensation and directors. The Appendix of this Alert also includes the ISS 2016 Burn Rate Benchmarks.
Download Client Alert (PDF) On December 22, 2014, ISS released Frequently Asked Questions on its 2015 U.S. Equity Plan Scorecard Policy (FAQs) just in time for Christmas. Sadly, it looks like the Grinch may have gotten to the FAQs before release because some of the terms that ISS suggested were going to be covered were given short shrift by the explanations. This Client Alert analyzes the FAQs and provides commentary on potential implications.
Download Client Alert (PDF) Both Institutional Shareholder Services Inc. (ISS) and Glass, Lewis & Co., LLC (Glass Lewis) have issued their policy updates for the 2015 proxy season. This Client Alert focuses on their policy updates concerning compensation matters. ISS has introduced changes to its policy for evaluating equity plan proposals and has also revised certain thresholds used in the quantitative tests for the pay-for-performance evaluation of say-on-pay proposals. Glass Lewis provided more context regarding its say-on-pay policy and also provided more details regarding how it evaluates employee stock purchase plan proposals. This Client Alert also provides details on how companies can provide updated peer group information to Equilar so it gets utilized by Glass Lewis in its pay-for-performance evaluations.
Download Client Alert (PDF) On June 30, 2014, the U.S. Securities and Exchange Commission issued Staff Legal Bulletin No. 20 (SLB 20), which provides guidance for investment advisers concerning their proxy voting responsibilities as well as discusses the availability of exemptions from the proxy rules for proxy advisory firms, e.g., Institutional Shareholder Services, Inc. and Glass Lewis & Co., LLC. This Client Alert looks at the guidance provided by SLB 20, which does not represent a significant change from prior industry practice.
Download Client Alert (PDF) On October 16 2012, ISS issued draft 2013 Policies for comment. Comments can be submitted through October 31, 2012. The draft policies include several proposed revisions to ISS's Management Say-on-Pay proposal policy as well as several other draft policies that could impact compensation. This Client Alert sumamrizies these draft policy changes, details the questions ISS has posed for comment and shares Exequity's thoughts on these draft 2013 Policies.
Download Client Alert (PDF) |
 Categories
All
|
||
