Last week I blogged about the new burn rate commitments that RiskMetrics Group’s (RMG’s) Research Group was accepting. Thanks to a reader, I’m now able to share sample burn rate commitment language that was supported by RMG:
The Company commits to a three-year average burn rate for the years 2010, 2011 and 2012 not to exceed the higher of two percent of the Company’s weighted average common shares outstanding or the blended mean plus one standard deviation of the Company’s GICS group for 2009 and 2010. The blended mean plus one standard deviation for 2009 and 2010 is equal to X% (GICS cap of Y% in 2009 and Z% in 2010). For purposes of this burn rate calculation, each stock option award granted will count as 1.0 shares while each Full Value Award granted will count as 2.5 shares.
1. The blended mean plus one standard deviation (X) is the average of the 2009 (Y) and 2010 (Z) brun rate means plus one standard deviation for the Company’s GICS industry group per RMG’s Burn Rate Tables for 2009 and 2010.
2. The count for Full Value Awards (2.5) was established based on RMG’s currently-calculated volatility for the company (i.e., the volatility calculated by RMG for purposes of analyzing the company’s 2010 proxy proposals) and RMG’s 2010 Burn Rate multiplier table.