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2020 Relative TSR Prevalence and Design of S&P 500 Companies (PDF)

11 pages. "In the absence of a reliable goal-setting process, compensation committees facing pressure to demonstrate pay-for-performance may increasingly turn to relative total shareholder return (RTSR) ... RTSR requires no goal setting, is simple to adopt, provides a defensible link to shareholder value, and has historically been accepted by shareholders and proxy advisors."

A Framework for Discretion Within Executive Incentive Plans (PDF)

"[O]utstanding cycles of budget-based incentive compensation programs, both short- and long-term in nature, did not contemplate this broad economic downturn. As such, the formulaic aspect of these incentive programs in many cases is likely to pay well below target or miss threshold objectives required for any payout ... Discretion within executive incentive plans has historically been avoided or relegated to a small percentage of the total [and] has carried a negative connotation ... A framework to assist with discretion regarding 2020 results will be helpful to avoid arbitrary and confusing outcomes."

Making Sense of Monte Carlo (PDF)

13 pages. "[M]anagement teams and compensation committees ... may know that Monte Carlo simulations are used to value awards with market conditions ...  but not how it works or why values are high or low.... By understanding how simulations 'predict the future,' we can better understand the implications of compensation design decisions. [The goal of this article] is to help decision makers understand how the technique works, why the Monte Carlo values may be high (or low), and the impact of design choices on valuation outcomes."

An Overview of ISS' Equity Plan Scorecard (EPSC) Model (PDF)

9 pages. "If you are considering taking a request to shareholders for the approval of shares for an equity compensation plan and a significant number of your shareholders are influenced by the Institutional Shareholder Services (ISS) vote recommendations, you should understand how ISS evaluates equity plan proposals. This document provides an overview of ISS' EPSC model which ISS uses to evaluate equity compensation plan proposals"

IRS Issues Guidance on Section 162(m) Amendments (PDF)

"The most significant impact of the IRS Notice is that payments under the great majority of 162(m) 'umbrella' plans will not qualify for grandfathered deductibility under the TCJA.... [If] the company reserves the right to exercise negative discretion to reduce payments (which is a standard feature of 162(m) 'umbrella' plans), then the IRS Notice treats payments under the program as non-obligatory. Unless a portion of the payments under such a plan are mandated as a floor amount (which is rarely the case), the plan will not qualify for grandfathered deductibility."

What Does the CEO Pay Ratio Data Say About Pay? (PDF)

"Our analysis finds company size as measured by employee count is the primary driver of the CEO Pay Ratio; company revenue and market capitalization are secondary drivers. Deeper analysis uncovers industry trends that may provide companies additional context as they compare their CEO Pay Ratios to those of their peers. Ultimately, despite some interesting trends uncovered, analysis of the CEO Pay Ratio data provides little actionable intelligence for companies and questionable, if any, value for investors. More concerning, we find potential avenues for critics of executive pay to manipulate the data to serve their interests or constituencies."

CEO Pay Ratios in Context (PDF)

"The CEO Pay Ratios contained in this Client Briefing were calculated using the BLS median annual compensation for a U.S. worker of $43,992 for 2016. As a result, the ratios may not reflect the ratios that will be disclosed in 2018 proxy statements for [1] companies with median employee annual total compensation significantly above or below the BLS amount, and [2] companies with a large global employee workforce such that their median employee is not based in the U.S."

ISS Releases Preliminary U.S. Compensation FAQs for 2018 (PDF)

"ISS released preliminary U.S. Compensation FAQs for 2018 that cover the Quantitative Pay-for-Performance (P4P) tests and the Equity Plan Scorecard (EPSC) policy. These FAQs make some significant changes to the existing ISS policies and it appears that they will apply to shareholder meetings on and after February 1, 2018, even though they were not released as part of ISS's Policy Updates for 2018."

GOP Tax Proposal Eviscerates Current Executive Compensation Designs and Practices -- Perhaps? (PDF)

10 pages. "[C]ompanies should review their compensation -- both outstanding and to be granted -- and consider whether any changes are advisable to lessen the impact of the Tax Proposal changes. [A chart] lays out the key issues most likely to be faced by the majority of public companies if the NQDC rules are enacted, but there will be specific facts and circumstances that could warrant other potential action that companies may need to consider as well."

New Proposed Rules for Financial Institutions' Incentive Compensation (PDF)

"[F]or certain larger covered financial institutions (based on average total consolidated net assets), the re-proposed rules mandate a clawback period of up to 7 years as well as hold-backs (mandatory deferrals) of up to 60% of incentive-based compensation for up to 4 years. These provisions may eventually be viewed as appropriate for non-financial companies, as was done with TARP companies' vote on pay that ended up forming the basis for Dodd-Frank's 'say-on-pay vote.' "