The Advisors' Blog

– Broc Romanek

Here’s the teaser for this new Pay Governance memo:

Say-on-pay and shareholder advisor vote recommendations have caused a dramatic increase in the use of relative total shareholder return (TSR) as a long-term incentive (LTI) plan performance metric. Relative TSR prevalence in LTI plans has nearly doubled over the past 5 years, used by approximately 50% of companies of all sizes and industries.

This is largely due to shareholder advisors, such as Institutional Shareholder Services (ISS), using TSR as the primary metric in their relative pay-for-performance quantitative evaluations. ISS is appropriately attempting to enhance its company performance assessment model by adding 6 metrics. This new approach is clearly a response to critics, but it presents a new set of challenges.