The Advisors' Blog

– Liz Dunshee

Recently, ISS Analytics published this summary of equity plan trends. The biggest news is that there were 40% fewer equity plan proposals from Russell 3000 companies, due to the repeal of Section 162(m) – with some companies also removing individual grant limits and other “performance-based” provisions from their plans. Here are a few other takeaways:

– Shareholder-friendly plan features are gaining traction year over year – 44% now require one-year minimum vesting, fewer companies permit liberal share recycling, 61% prohibit paying dividends on unvested equity

– Specific aspects of equity plan proposals lead to higher levels of shareholder opposition – High dilution, high burn rate, repricing provisions, and evergreen provisions are associated with higher levels of shareholder opposition to equity compensation plan proposals

– Pharma & tech companies grant the most equity – Available data indicate that the median three-year average burn rate in these industries is more than double most other industries