Check out the latest 21-minute episode of “The Pay & Proxy Podcast” – Meredith interviewed Cooley’s
Michael Bergmann and Ali Murata about navigating compensation challenges during uncertain times. This certainly has been a timely topic this year in light of geopolitical issues and more. They covered:

– Why 2025 program design and target setting generally did not factor in tariff impacts

– How companies are using their equity programs and managing dilution in 2025

– 409A traps for the unwary

– Considerations for 2025 payouts, particularly when discretionary adjustments are being considered

– “Options” for dealing with underwater options

As always, if you have a compensation-related topic you’d like to discuss on a podcast, feel free to ping Meredith at mervine@ccrcorp.com! And if you aren’t already a member of CompensationStandards.com, email info@ccrcorp.com to sign up and access this podcast and all of our archives!

– Liz Dunshee

Last week, Glass Lewis sent a client communication previewing changes to its quantitative pay-for-performance model that will be effective for the 2026 proxy season. This Cooley alert summarizes what we know so far:

The announcement signals significant revisions to the structure and scope of the Glass Lewis P4P assessments for US and Canadian companies. Most notably, Glass Lewis will replace its historical A – F letter grade system for US and Canadian companies with a new 0 – 100 numerical scorecard system, with an associated concern level. In addition, its evaluation period for key P4P tests will be lengthened from three to five years. The announcement also hinted at the introduction of new P4P assessment tools that will cover additional facets of compensation.

A brief video accompanying the announcement includes a chart illustrating the relationship between short-term incentive payouts and a company’s total shareholder return ranking over a five-year period, suggesting a potential shift toward more targeted evaluations of the link between short-term incentive outcomes and long-term value creation. However, the announcement and video otherwise provide essentially no other information about the new methodology.

The alert notes that this preview comes months before annual policy updates are typically published — which may reflect the scope of the changes. Importantly, Cooley notes that no immediate action is needed — or even possible — until further guidance, which we should see in the coming weeks.

This will undoubtedly be a big topic of conversation at our “2025 Proxy Disclosure and 22nd Annual Executive Compensation Conferences.” We’re very thankful for the continued participation of the proxy advisors at our conferences in the always popular panel “Navigating ISS & Glass Lewis,” which features a conversation moderated by Davis Polk’s Ning Chiu with representatives from both firms.

This year, our conferences are taking place on October 21 & 22 at Virgin Hotels Las Vegas with a virtual option if you are unable to attend in person. If you do plan to attend in person, be sure to arrive early enough on Monday to attend the Welcome Party Celebrating CCRcorp’s 50th Anniversary, which will take place from 4:00 pm to 7:00 pm PT on October 20.

Register today so you don’t miss out on our Early Bird Rate — it expires July 25!  Email info@ccrcorp.com or call 1.800.737.1271.

In the meantime, have a safe, happy, healthy Fourth! Our blogs will be back on Monday.

– Meredith Ervine 

Yesterday, I shared that the ISS peer group submission window for off-season meetings is opening next week. For folks not involved in this process — and often the lawyers are not — I thought I would share this Pearl Meyer blog about how these groups are constructed and why they might change year-over-year.

First, the blog says to start with basic screens using this criteria to guide initial selection.

Primary Criteria:

– Industry Alignment: Start by selecting companies within your industry or closely related sectors. Comparable market conditions and business dynamics ensure relevant comparisons.

– Company Size: Appropriate relative size is critical, but the types of measures used for comparison can vary by industry. The most common focus is revenue, but other metrics such as assets, market capitalization, enterprise value, and employee count may be just as important (and in some cases more so). Once the key metric(s) are established, an appropriate size range should be set, typically 0.5x to 3.0x depending on the metric. Striking this balance ensures meaningful comparisons without skewing results.

Secondary Criteria:

– Geographic Scope: While geography matters less for executive roles than lower-level positions, local market comparisons may still be a relevant consideration.

– Competition for Talent: Include companies that directly compete for your executive talent. In some cases, this may include companies that do not compete in the same industry.

– Business Complexity and Stage: Consider the complexity of operations and the company’s life-cycle stage—whether they’re startups, mature entities, or undergoing rapid growth or restructuring.

– Performance Stability: It’s important to look at the financial stability and performance. Otherwise, reliable benchmarks can be distorted by underperforming organizations.

– Peers of Peers: Most public companies disclose their peer groups, and reviewing them can provide valuable insights into industry practices. Looking at disclosures of direct competitors can uncover commonly referenced peers and identify companies that list your own as a peer.

But the process shouldn’t end with analytical screens. It says “personal insight and experience” needs to be the next layer to ensure that all business or talent competitors are considered for the peer group, even where they may not pass these analytical screens. Size-wise, it says to generally aim for 12 to 20 companies.

Why would a company’s peer group change in future years? The blog emphasizes that this is an ongoing process, and the group will require regular review and discussion, with changes being necessary from time to time due to M&A and shifts in the company’s market position.

– Meredith Ervine

ISS announced last week that their peer group submission window will open at 9:00 AM ET on Monday, July 7, for companies with annual meetings slated to be held between September 15 and January 31. Submissions will be accepted until 8:00 PM ET on Friday, July 18. Here’s a reminder from the announcement:

As part of ISS’ peer group construction process, on a semi-annual basis, corporations are requested to submit changes they have made to their self-selected peer groups for their next proxy disclosure. ISS considers companies’ self-selected peer groups as an important input as part of its own peer group construction methodology . . . Submissions should reflect peer companies used (or to be used) by the submitting company for pay-setting for the fiscal year ending prior to the company’s next upcoming annual meeting . . .

Companies that have made no changes to their previous proxy-disclosed executive compensation benchmarking peers, or companies that do not wish to provide this information in advance, are under no obligation to participate. For companies that do not submit any information, the proxy-disclosed peers from the company’s last proxy filing will automatically be factored into ISS’ peer group construction process.

Additional information on the ISS peer submission process, including links to ISS’ current recent peer selection methodology for the U.S. and Canada is available on the ISS website here.

We have more info on this topic in our “Peer Groups” Practice Area.

– Meredith Ervine