February 11, 2014
Catalog: ISS Quickscore 2.0 Compensation Factors
– Broc Romanek, CompensationStandards.com
Over on TheCorporateCounsel.net, I have been blogging about the latest version of ISS’ corporate governance ratings project – QuickScore 2.0. In this blog, William Tysse of McGuire Woods lays out the compensation related factors:
A list of the compensation-related factors for the U.S. market is set forth below, with changes for 2014 marked by an asterisk (*):
*What is the degree of alignment between the company’s annualized Three-year pay percentile rank, relative to peers, and its Three-year annualized TSR rank, relative to peers?
*Did the most recent Say-on-Pay proposal receive shareholders’ support below the industry-index level?
What is the degree of alignment between the company’s cumulative 3-year pay percentile rank, relative to peers, and its 3-year cumulative TSR rank, relative to peers? (*informational purposes only)
What is the degree of alignment between the company’s cumulative one-year pay percentile rank, relative to peers, and its one-year cumulative TSR rank, relative to peers? (*informational purposes only)
What is the size of the CEO’s one-year total pay, as a multiple of the median total pay for company peers? (multiples greater than 2.33 get flagged)
What is the degree of alignment between the company’s TSR and change in CEO pay over the past five years? (measures below -30% get flagged)
What is the ratio of the CEO’s total compensation to the next highest paid executive?
Are any of the NEOs eligible for multiyear guaranteed bonuses?
What is the ratio of the CEO’s non-performance-based compensation (All Other Compensation) to Base Salary? (ratios greater than 75% get flagged)
Do the company’s active equity plans prohibit share recycling for options/SARS?
Do the company’s active equity plans prohibit option/ SAR repricing?
Does the company’s active equity plans prohibit option/ SAR cash buyouts?
Do the company’s active equity plans have an evergreen provision?
Do the company’s active equity plans have a liberal CIC definition?
Has the company repriced options or exchanged them for shares, options or cash without shareholder approval?
Does the company grant equity awards at an excessive rate, according to ISS policy?
Did the company disclose a claw back or malus provision?
What are the minimum vesting periods mandated in the plan documents for executives’ stock options or SARS in the equity plans adopted/amended in the last three years?
What are the minimum vesting periods mandated in the plan documents, adopted/amended in the last three years, for executives’ restricted stock?
What is the holding period for stock options (for executives)?
What is the holding period for restricted shares (for executives)?
What proportion of the salary is subject to stock ownership requirements/guidelines for the CEO? (less than 3x gets flagged)
Does the company disclose a performance measure for the short term incentive plan (for executives)?
What is the level of disclosure on performance measures for the latest active or proposed long-term incentive plan?
What’s the trigger under the change-in-control agreements?
Do equity based plans or long-term cash plans vest completely on change in control?
What is the multiple of salary plus bonus in the severance agreements for the CEO (upon a change-in-control)? (more than 3x gets flagged)
What is the basis for the change-in-control or severance payment for the CEO?
Does the company provide excise tax gross-ups for change-in-control payments?
What is the length of employment agreement with the CEO?
Has ISS’ qualitative review identified a pay-for-performance misalignment?
Has ISS identified a problematic pay practice or policy that raises concerns?