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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[.]"

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."

Very Stable Equity Incentive Plan Run Rates and Slight Decrease in Total Overhang at Most Large U.S. Companies

"According to a recent study of annual 'run rate' and 'overhang' levels among Fortune 100 companies by Meridian Compensation Partners, LLC, the annual and three-year average run rates (or share usage) for Fortune 100 companies have remained constant at 0.7%-0.8%. The median existing and total overhang at these organizations has declined slightly since 2017."

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)]