Our Thoughts - CAPflash

On December 20th, Institutional Shareholder Services (“ISS”) released its white paper on “Evaluating Pay-for-Performance Alignment: ISS’ Quantitative and Qualitative Approach.” In this white paper, ISS disclosed its 2012 policy on assessing a company’s pay-for-performance relationship as well as its revised approach for selecting a peer group. [ More | Download as PDF ]

On December 14th, Institutional Investor Services (“ISS”) released a technical document on revisions to its U.S. Governance Risk Indications (“GRId”) which will be released in February 2012 (prior to the upcoming proxy season). In Q3 2012, ISS will release GRId 2.0 for other current markets (Canada, France, Germany, Netherlands, Sweden and United Kingdom); ISS will release details on these GRIds in Q2 2012. ISS will continue to tailor questions, answers and the rating systems for each market. Additionally, ISS will release GRId 2.0 in new markets in Europe and Asia-Pacific¹ in the second half of 2012. [ More | Download as PDF ]

The financial crisis of 2008, the resulting economic downturn, and an uneven recovery including significant international uncertainty have made setting meaningful multi-year performance goals difficult for many companies. One way to address this issue while still holding executives accountable for long-term company results is the use of relative performance plans, where payout of a long-term incentive (cash, shares or units) is tied to pre-determined performance levels measured against a benchmark group of companies. [ More | Download as PDF ]

The SEC has updated its schedule for implementation of the remaining executive compensation-related provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”). Importantly, the new timeline delays the SEC rule-making. As a result, we expect that these provisions will not apply during the 2012 proxy season. [ More | Download as PDF ]

On November 17th, Institutional Shareholder Services (ISS) released its final 2012 policy updates which were largely consistent with the proposed updates issued in October. The policy changes apply to shareholder meetings on or after February 1, 2012 and cover several areas that impact executive compensation. [ More | Download as PDF ]

On October 18th, Institutional Shareholder Services (ISS) announced that it was opening its comment period (deadline is October 31st) for proposed 2012 policy changes. It is considering making proposals in several areas that may have an impact on executive compensation. [ More | Download as PDF ]

On October 5, 2011 the Federal Reserve issued its report: Incentive Compensation Practices: A Report on the Horizontal Review of Practices at Large Banking Organizations. The primary purpose of the horizontal review was to guide firms in implementing the interagency guidance on incentive compensation originally issued by the Federal Reserve in 2009 and adopted by all of the federal banking agencies in June 2010. The Federal Reserve’s report provides a summary of progress made to date by the large banking organizations in implementing and complying with the guidance and highlights areas for future improvement and next steps. [ More | Download as PDF ]

Compensation Advisory Partners (“CAP”) reviewed 2011 proxy disclosures for a sample of Fortune 500 companies. Our study includes 111 companies, representing ten industry groups. The industry groups we studied include Aerospace & Defense, Automotive, Consumer Goods, Financial Services, Healthcare, Insurance, Manufacturing, Pharmaceuticals, Retail, and Technology. The companies in our study are large industry leaders, with median revenue of $27.2B and median market cap of $29.6B. This CapFlash, along with our August 10, 2011 CapFlash, continues to explore changes in executive compensation observed in our research. [ More | Download as PDF ]