The Advisors' Blog

– Liz Dunshee

Even though ISS has delayed till next year its voting policy on excessive director pay, this blog from Pearl Meyer’s Terry Newth is a reminder that, since the policy looks at two years’ of pay, this year’s compensation will still factor in when the policy is implemented. Terry predicts the range of director pay will narrow in the long-term, and we may see more voluntary “say-on-director-pay” votes. He also summarizes the final ISS policy:

– ISS will analyze director compensation in order to identify companies that “consistently” (defined as two or more years in a row) compensate directors at the top 2-3% of all comparable directors. (Note: this is a slightly more limited range than the top 5% previously outlined)

– The nature of the director’s role, specifically non-executive chairs and lead directors, will be taken into consideration in the comparisons

– The frame of reference for comparing directors will be the same two-digit GICS code within the same industry grouping

– The possible index groupings are S&P 500, combined S&P 400 and S&P 600, remainder of the Russell 3000 Index, and the Russell 3000-Extended

– Companies that are identified in this screening process and do not provide a compelling rationale for their pay positioning are subject to potential withhold vote recommendations. The negative vote recommendations will be aimed at the directors that approve the compensation arrangements