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Meridian Compensation Partners Comment Letter to SEC Recommending Changes to Pay Versus Performance Proposed Rule (PDF)

9 pages. "[Meridian recommends these] changes to the Proposed Rule ... [1] Eliminate the required tabular disclosure in favor of a graphical disclosure depicting registrant total shareholder return (TSR) and compensation actually paid over the covered period. [2] Limit the scope of the required disclosure to a registrant's principal executive officer (PEO) and Principal Financial Officer (PFO). [3] Base the amount 'actually paid' under a stock option grant on the option's in-the-money value on the date of vesting. [4] Eliminate (or modify) the disclosure of peer group TSR."

'Compensation' for Sole Proprietors, Partners, and LLC Members -- It's Complicated

"Instead of the appropriate variation of taxable wages, 'Earned Income' is the basis for retirement plan allocations for sole proprietors, partners, and LLC members. It can be the Internal Revenue Code version of a Rubik's Cube."

2020 Meridian Corporate Governance and Incentive Design Survey

"The most prevalent performance metrics [for annual incentive plans] continue to be Operating Income, Revenue, Cash Flow and Earnings per Share (EPS).... 17% of the Meridian 200 include ESG metrics as a weighted corporate performance metric in their annual incentive plans ... 97% of Meridian 200 companies grant performance-based vehicles as part of their long-term incentive plans[.]"

Text of Notice of Pendency of Request for Exemption From the Bond/Escrow Requirement Relating to the Sale of Assets by an Employer Who Contributes to a Multiemployer Plan: Rangers Baseball Express, LLC, and Texas Rangers Baseball Partners

2 pages. "This notice advises interested persons that the [PBGC] has received a request from Rangers Baseball Express, LLC, for an exemption from the bond/escrow requirement of section 4204(a)(1)(B) of [ERISA] with respect to the Major League Baseball Players Pension Plan."

Ten Myths of Executive Compensation

"[1] The board and CEO cannot be supportive partners in designing compensation plans.... [2] More pay results in better performance.... [3] We cannot afford to hire or recruit that executive.... [4] We should constantly adjust our compensation plans.... [5] Our compensation plan should look like that of our peers.... [6] Disclosing executive compensation always will backfire.... [7] There is nobody like us, so comparisons don't work.... [8] It is too difficult to set reliable, measurable long-term goals.... [9] Employment agreements are restrictive and will tie our hands.... [10] Compensation is the only reward that matters."

Managing Compensation Complexity

"The confluence of enhanced market uncertainty in an election year with the global economic chaos wrought by the COVID-19 pandemic is forcing corporate boards to confront challenging questions about the treatment of outstanding incentive compensation arrangements. Perhaps more importantly, it might also encourage boards to rethink the structure of their long-term incentive programs going forward."

Setting CEO Compensation (PDF)

"Committees must evaluate several factors when making decisions on CEO compensation.... (1) Company Performance ... (2) Individual Performance ... (3) Alignment with Pay Decisions for Other Executives ... (4) Market Data and Expected Trends ... (5) External Messaging ... [and] (6) Internal Messaging."

Key Compensation Issues in Preparing for an IPO or SPAC Merger

"[It] is often the case that SPAC target companies do not have mature and fully market-competitive compensation structures. They depend on the SPAC to establish processes to prepare for a public company compensation structure, often an enormous challenge for young companies to achieve in the span of just a few months. The primary area of focus is often the company's equity grants in connection with the transaction and beyond, as further detailed later in this article."

Top Issues on Compensation Committee Agendas

"[1] How has the role of the compensation committee expanded? [2] What factors are involved in tying compensation to ESG goals? [3] How have 2021 say-on-pay vote results and 2020 compensation disclosures impacted decision-making?"

Preventive Care for Executive Compensation Programs

"The compensation committee should consider conducting a review of market data on program design. Doing so would inform committee members about competitive practices and how the design of the current incentive compensation programs compares to others in the market. Where variances exist between the company's approach and majority market practice, the committee should be comfortable with discussing the reasons for such variances."

Should Compensation Committees Seek CEO Input When Deciding CEO Pay?

"[T]he CEO's perspective can be useful ... The CEO should not be present when the compensation committee is making decisions about his or her compensation.... Prior to receiving any input from the CEO, the compensation committee chair, board chair, or lead independent director should set clear expectations about the process and that the committee or board will make the final pay decisions.... Directors should get the CEO's view of his or her individual and company performance."

Delaware Court Case May Have Far Reaching Effects on Director Compensation

"According to the Court's decision, the presence or absence of [prescribed annual] limits will determine whether director compensation is reviewed by Delaware courts under the business-friendly 'business judgment rule' or the more stringent 'entire fairness' standard if the compensation is challenged in a shareholder suit. Beyond the applicable legal standard of review, the Court's decision may increase the prevalence of 'strike' suits against public companies challenging director compensation." [In re Investors Bancorp, Inc. Stockholder Litigation, No. 169, 2017 (Del. Dec. 19, 2017)]

Executive Compensation in the Banking Industry

"Regulators' recently re-proposed rules under Section 956 of the Dodd Frank Act (incentive-based compensation arrangements) will undoubtedly change the structure and mix of pay for a significant number of employees at larger banks. At the same time, banks are pressured to embrace digital business models that represent new opportunities, but that also create new threats, a wider range of competitors and increased risks. With this backdrop, the industry faces increasing challenges to attract, retain and compensate talent."

Trends in Executive Compensation at the S&P/TSX 60

"The general trend for the last three years has been for modest growth in actual and target pay, although actual senior executive pay fell slightly from 2013 to 2014. Performance share units (PSUs) continue to increase as a proportion of long term incentive compensation, with a solid majority of companies using relative total shareholder return (TSR) as the performance measure in their long-term plans. However, compensation committees continue to grapple with finding appropriate peer groups and setting three year PSU targets."

Executive Compensation: Balancing Business Needs with External Pressure (PDF)

"[T]here is no shortage of advice on how to 'fix' executive compensation.... A board's compensation committee, working closely with senior management, is in the best position ... At times, actions required may deviate from what is commonly viewed as 'best practice.' In those situations, it will be necessary to provide additional explanations in the proxy (and possibly directly to shareholders).... Some of the more common areas of potential deviation from what might be considered 'best practice' include ... Defining (and Paying) for Performance ... Using Discretion ... One-Time Awards ... Appropriate Goal Setting."

Compensation Committee Responsibilities Continue to Expand

"Companies are seeking to formalize board-level oversight of ESG; human capital management (HCM); diversity, equity, and inclusion (DE&I), talent development; and succession planning. Companies are facing external pressures to address these areas and the compensation committee is usually the logical board committee to exercise this oversight. As a result, this committee's responsibilities are growing in both scope and complexity."

Tailoring Executive Compensation Plans for Your Unique Business

"Many companies exhibit compensation programs that seem to go 'against the grain' relative to both large-scale data and trends and proxy advisor preferred approaches. However, such programs may be entirely logical and effective within the context of sector-specific or company-specific challenges and opportunities."

COVID Impact on Executive Compensation

"[A] majority of companies made no substantial changes in 2020 to existing annual or long-term incentives, and 2021 design changes are anticipated to be modest. The likelihood of executive pay changes appears to vary significantly by industry[.]"

Understanding Performance Measurement in Executive Compensation

"[A] majority of companies are considering changes to their 2021 annual incentive plans ... The most common change under consideration is the flattening of the performance slope -- the relationship between the performance goals and the corresponding incentive payout."

How Should ESG Performance Be Reflected in Executive Compensation?

"[M]ost companies that have incorporated ESG into their respective executive compensation programs have done so on a mostly symbolic basis ... [T]hose companies that want to make more than just a symbolic gesture should consider taking the following fundamental steps. [1] Select a measure that is right for you ... [2] Consider how much impact ESG should have ... [3] Consider using a [plus/minus (±)] modifier so it has more impact than a symbolic carve-out ... [4] Consider using discretion ... [5] Disclosure and communication."