A Rose By Any Other Name…

A Rose By Any Other Name…

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Well, I will not talk about roses today. My horticultural skills run more towards fruit trees (my family owned an orchard while I was growing up).

Rather, I would like to discuss an issue I recently learned about that impacted one of my clients and may impact other companies too. My client has subscribed to ISS Corporate Solutions (ISS CS) services (Executive Comp Analytics, ECA) for several years now (5+). I am helping them with an equity plan proposal and they wanted to figure out what the cost to access the ISS equity plan scorecard (EPSC) model would be. I looked up their market capitalization and told them what the base ECA service would be plus the cost for the EPSC model. The client was perplexed. The numbers I cited based on current ISS CS rack rates were significantly less than what ISS CS charged it for the ECA database access.

What was going on? The client reached out to ISS CS and the person they spoke to admitted that since the company was a long-time ISS CS ECA customer, ISS CS had slowly increased its price to access ECA every year above the rack rate charge. The discrepancy for my client was to the tune of about $10,000 more than the rack rate for ECA when I got involved. The person at ISS CS that my client spoke to indicated that ISS CS commonly did this for long-term ECA customers.

Therefore, a word to the wise, if your company has been a long-term ISS CS subscriber/customer, review any renewal charges against ISS CS’ current rack rates and respond accordingly.

SEC Issues Proxy and Investment Adviser Guidance

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On August 21, 2019, the SEC issued two sets of guidance: (1) for proxy advisors, stating that the proxy rules apply to the provision of proxy voting advice, and (2) for investment advisers, regarding their proxy voting responsibilities.

This guidance could significantly change the proxy voting landscape and impact voting process at public companies. I provide my observations about these potential impacts and summaries of the SEC guidance in this Exequity Client Alert.

ISS Releases 2019 Policy Survey

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On July 22, 2019, ISS released its 2019 Benchmark Policy Survey. The survey can be accessed at:

https://www.surveymonkey.com/r/2019-ISS-Policy-Survey

The board of director and compensation-related questions include:

  • Board gender diversity, including what might constitute a mitigating factor
  • Director overboarding
  • Combined CEO/Chair role in the U.S.
  • Display of prior GAAP metrics used prior to the proposed use of EVA in ISS’ Financial Performance secondary screen as part of its quantitative pay-for-performance analysis for Say-on-Pay vote recommendations

ISS will use the responses to this policy survey in formulating its 2020 policy updates.

As You Sow Releases 2019 Annual Report on Overpaid CEOs

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As You Sow published its annual report on the Top 100 Overpaid CEOs among S&P 500 companies on February 21, 2019. As you might expect, the report details those companies who in As You Sow’s view have overpaid CEOs.

https://www.asyousow.org/report/the-100-most-overpaid-ceos-2019/

Key findings of the report:

  • Large institutional shareholders are opposing more CEO Pay packages by voting Against Say-on-Pay votes
  • The number of companies where a large number of shares were voted Against the CEO pay package has increased
  • Companies that As You Sow’s first report 5 years ago identified as Overpayers have underperformed the S&P 500

The report also includes many helpful charts and graphs looking at institutional shareholders and how they have reacted to CEO pay and their votes against CEO pay packages.