Partner Melissa Burek and Principal Michael Bonner published a report regarding their findings on long-term incentive plans, which was cited by Compensation Standards. They analyzed the long-term incentive plan performance cycles of 120 companies from 10 different industries. The companies had a median revenue of $36 billion. The report analyzes the performance cycles that ended in 2015 through 2020 for these 120 companies. Long-term incentive plans are significant because not only do they represent the largest portion of an executive’s compensation, they are also a tool used by companies to incentivize executives to achieve the company’s median and long-term financial objectives.

Compensation Standards features CAP’s memo examining a sample of 20 high-profile tech IPOs from recent years to understand equity practices leading up to going public. The memo finds, among other insights, that options are still the favorite form of equity awards – but there’s been a shift to granting more RSUs, typically with double-trigger vesting based on both years of service and going public.

Compensation Standards highlights CAP’s report on say-on-pay vote outcomes. Although support has been fairly consistent for the last 10 years, the report says this year’s say-on-pay results may depart from these prior norms. For 2021, CAP says pay-for-performance misalignment will be the main driver for ISS “against” recommendations. Say-on-Pay vote results will continue to depend on the magnitude of pay, pay practices and stock price performance.

Compensation Standards summarizes CAP’s memo on ISS’ attitude towards COVID-related pay changes. Among the key findings are that if a company made COVID-related compensation changes and received an elevated level of concern on the ISS pay for performance evaluation, the proxy advisor will likely recommend against the Say on Pay proposal, thereby significantly impacting the Say on Pay vote. To date, CAP has observed three companies that experienced sharp declines in their Say on Pay results, with one failing to receive majority support.

CAP released an in-depth memo on COVID-19 pay actions in proxies from companies with early fiscal year ends as well as a searchable COVID-related pay action tracker available on its website.

Liz Dunshee of Compensation Standards examines the role retention awards can play in bankruptcies based on CAP’s memo on bankruptcies triggered by COVID.

Liz Dunshee of Compensation Standards discusses the “CAP 120” survey, which analyzes 120 companies from ten industries. (Please note that the blog post is behind a pay wall, but the CAP 120 can be accessed here.)

Upcoming Events See All

Jul 26, 2022

What Private Company Directors Need to Know about Long-Term Incentive Compensation for Executives and Board Members

Concard, MA

Susan and Shaun will discuss how private companies can be more creative in plan design and cover how private companies effectively use real equity,…
  • Susan Schroeder
  • Shaun Bisman