Carol Bowie es Directora de Americas Research en Institutional Shareholder Services Inc. (ISS). 1. ¿Cuál es la base para el nuevo enfoque del cuadro de mando ISS8217 para evaluar las propuestas de compensación de capital? La nueva política permitirá una consideración más matizada de los programas de incentivos de capital, que son críticos para motivar y alinear los intereses de Empleados clave con accionistas, pero que también alimentan la parte de los leones de la paga de los ejecutivos y puede ser costoso sin proporcionar beneficios superiores a los accionistas. Mientras que la mayoría de las propuestas de planes pasan, tienden a obtener una oposición más amplia y más profunda que, por ejemplo, las propuestas de pago directo (por ejemplo, sólo 60 de las propuestas del plan de equidad Russell 3000 obtuvieron el apoyo de 90 o más votos emitidos en la temporada proxy de 2014 versus Casi 80 de las propuestas sobre el pago que recibieron ese nivel de apoyo). Los patrones de votación indican que la mayoría de los inversionistas están completamente satisfechos con muchos planes. ISS8217 nueva política se basa en varios años de retroalimentación de los clientes, así como emisores que indican que, si bien es importante un costo estimado de la oferta para los accionistas, otros factores justifican cierta consideración en las decisiones de votación sobre las propuestas de equidad. Por ejemplo, la mayoría de los inversionistas participantes en la encuesta ISS8217 de 2011-2012 indicaron que factores tales como bajas tasas de quemadura promedio, doble desviación del cambio en el control, duración razonable del plan y requisitos robustos de adquisición deberían ser algo o mucho Considerado en las evaluaciones de la propuesta de equidad, y la mayoría de los participantes en el emisor también favorecieron la consideración de la duración razonable del plan y las bajas tasas de quemadura relativa, así como el desempeño a largo plazo del TSR. En la encuesta sobre políticas de la ISS de 2013-2014, el 75 por ciento de los encuestados indicaron que las condiciones de desempeño en los premios deberían ser muy significativas al considerar los factores en un enfoque holístico de la evaluación del plan de equidad. Más del 50 por ciento mencionó otras características, como los requisitos mínimos de concesión de derechos y la autoridad de reprecificación como muy importantes, 8221, mientras que una mayoría también citó el costo del plan y las tasas de quemaduras como importantes. Tanto los emisores como los inversores que presentaron observaciones durante el período de consulta sobre la política de la ISS8217 2014 también expresaron su apoyo a un enfoque 8220scorecard8221 propuesto para la evaluación. Y los participantes en ISS8217 2014 Compensation Roundtable expresaron un apoyo similar, citando la duración estimada del plan como un factor importante y también de acuerdo en que los modelos de puntuación por separado para empresas de diferentes tamaños sería apropiado. Durante el desarrollo del nuevo modelo, ISS llevó a cabo un análisis de regresión para identificar factores con correlación mensurable con el rendimiento de rendimiento a largo plazo de los accionistas a largo plazo, algunos factores, incluyendo la tasa de combustión y la autoridad de revisión, mostraron asociación significativa con el desempeño en el tiempo. Por último, ISS llevó a cabo amplias pruebas de back-testing de prototipos de scorecards para varios grupos de índice, lo que guió el desarrollo de cuatro modelos que reflejan una combinación de todos los anteriores de entrada, retroalimentación y pruebas. Estos modelos no están diseñados ni tienen la intención de cambiar la combinación general de las recomendaciones del ISS, aunque la recomendación de voto para un plan en particular puede diferir de los que estaban bajo la política previa en algunos casos. 2. Cómo funciona el nuevo plan de evaluación del plan de equidad ISS8217 (EPSC) El EPSC considera una serie de factores positivos y negativos, en lugar de una serie de pruebas 8220pass / fail8221, para evaluar propuestas de planes de incentivos de equidad. La nueva política (vigente para las juntas de accionistas a partir del 1 de febrero de 2017) también continuará dando lugar a recomendaciones negativas para propuestas de planes que presenten ciertas características atroces (como la autorización para reevaluar las opciones sobre acciones sin la aprobación de los accionistas). En general, sin embargo, el total de EPSC de una compañía considerando el plan propuesto y ciertas prácticas de concesión relativas a los factores aplicables determinará si una recomendación 8220For8221 o 8220Against8221 está garantizada. 3. ¿Cómo se diferencian los modelos de EPSC? El siguiente cuadro resume el pilar (y los puntajes aplicables) para cada modelo. Puntajes máximos por el modelo EPSC y los pilares 4. ¿Cuántos puntos EPSC se requieren para recibir una recomendación positiva? Una puntuación de 53 o más (de un total de 100 puntos posibles) generalmente da como resultado una recomendación positiva para la propuesta (sin factores sobresalientes) . 5. Qué tipos de propuestas de compensación de patrimonio serán evaluadas bajo la política de EPSC Las propuestas relacionadas con los siguientes tipos de propuestas de incentivos basadas en acciones serán evaluadas bajo la política de EPSC: Aprobar Plan de Opción de Compra de Acciones Plan de Derechos de Reconocimiento de Acciones (Liquidación de Acciones) Otros tipos de propuestas de compensación basadas en acciones se seguirán evaluando según lo estipulado en la política de Equity de ISS8217 Y otros planes de incentivos. 6. ¿Cómo se tratan los planes de los directores que no son empleados cuando otro plan de equidad está en la boleta electoral? El modelo EPSC no se usará para los planes independientes de directores no empleados que están en la boleta electoral (aunque recibirán un costo estándar (SVT))) Las características de un plan independiente de directores no empleados solo afectarán ese plan, lo mismo que en nuestra actual evaluación caso por caso de esos planes. Cuando una propuesta enumerada en la FAQ 5 está en la papeleta, las acciones disponibles para la donación bajo un plan director no empleado serán incorporadas en la evaluación del costo del plan de la política de EPSC. 7. ¿Cómo se evaluarán las propuestas de planes de equidad en las compañías de IPO recientes Las compañías que han IPO8217d o han salido de la bancarrota dentro de los tres años fiscales anteriores pueden ser evaluadas bajo un modelo EPSC que incluye menos factores. Como en nuestra política anterior, ni la tasa de combustión ni los factores de duración se aplican a las compañías que tienen menos de tres años de datos de subvención divulgados. 8. ¿Qué factores se consideran en la EPSC y por qué los factores EPSC se clasifican en tres categorías (8220pillars8221) en cada modelo de EPSC: Costo del plan. Este pilar considera el costo potencial de la transferencia de capital de los accionistas a los empleados, lo cual es una consideración clave para los inversores que desean que el capital sea utilizado de la manera más eficiente posible para motivar y recompensar a los empleados. La EPSC considera el costo potencial total de los planes de equidad de la compañía en relación con los pares de la industria / capitalización de mercado, medido por Transferencia de Valor para el Accionista (SVT). SVT representa el costo estimado de las acciones emitidas bajo los planes de incentivos de acciones de una compañía, diferenciando entre acciones de valor total y opciones sobre acciones cuando sea aplicable. El modelo SVT propietario de ISS8217 determina los puntos de referencia SVT (expresados como un porcentaje de la capitalización de mercado de la compañía) basándose en ecuaciones de regresión que toman en cuenta el indicador de mercado de una empresa, la industria y los indicadores de desempeño con la correlación más fuerte con el desempeño TSR de la industria. La EPSC mide una SVT de la compañía en relación con dos cálculos de referencia que consideran: (1) las nuevas acciones solicitadas más las acciones restantes para futuras donaciones, más las subvenciones pendientes no desembolsadas / no ejercidas y (2) solo las nuevas acciones solicitadas más las acciones restantes para futuras subvenciones. La segunda medida reduce el impacto del exceso de subvención en la evaluación general de los costos, reconociendo que el exceso de subvenciones es un costo descontado y cargado de gastos y también puede reflejar un desempeño positivo a largo plazo de la acción, largos períodos de concesión de subvenciones y / Rendimiento de las existencias. Características del plan. Con base en la retroalimentación del inversor y del mercado, los siguientes factores que se examinan nuevamente para el año 2017 pueden tener un impacto negativo en los resultados de EPSC: Reconocimiento automático de adjudicación por un cambio de control que puede proporcionar una compensación extraordinaria incluso cuando otras opciones O la asunción de las subvenciones existentes) puede estar disponible Amplia facultad de adquisición discrecional que puede resultar en 8220pago por fracaso8221 u otros escenarios contrarios a una filosofía de pago por desempeño Reciclaje de acciones Liberal en varios tipos de premios, lo que oscurece la transparencia sobre el uso de acciones y el costo total del plan Y Ausencia de un período de adquisición mínimo requerido (por lo menos un año) para las donaciones hechas bajo el plan, lo cual puede resultar en premios sin retención o incentivos de desempeño. Prácticas de subvención. Los siguientes factores pueden tener un impacto positivo en los resultados de EPSC, dependiendo del tamaño y las circunstancias de la empresa: La tasa de combustión promedio de 3 años de la empresa en relación con su industria y Índice de pares esta medida de la subvención media 8220flow8221 proporciona un cheque adicional en el costo del plan por SVT (que mide el costo en un punto en el tiempo). La EPSC compara la tasa de quemado de una empresa con respecto a su índice e industria (agrupaciones GICS para SampP 500, Russell 3000 (ex-SampP 500) y no Russell 3000). El horario (s) de adquisición bajo las más recientes subvenciones de capital de CEO8217s durante los tres años previos a los períodos de inversión que incentivan la retención a largo plazo son beneficiosos. La duración estimada del plan8217s. Sobre la base de la suma de las acciones restantes disponibles y de las nuevas acciones solicitadas, dividido por el promedio anual de 3 años de las acciones de tasa de combustión, dado que las circunstancias de una empresa pueden cambiar con el tiempo, los accionistas pueden preferir que las empresas limiten las solicitudes de acciones a un monto estimado necesario No más de cinco a seis años. La proporción de las subvenciones / premios de capital más recientes de CEO8217 sujetas a condiciones de desempeño dado que los precios de las acciones pueden ser influenciados significativamente por las tendencias del mercado, lo que hace que una proporción sustancial de ejecutivos Cap, empresas maduras. Una política de recuperación que incluye las políticas de recuperación de las subvenciones de capital se considera como una mitigación potencialmente excesiva de la asunción de riesgos que ciertas compensaciones pueden incentivar, incluidas las subvenciones de capital de gran tamaño. Los incentivos basados en acciones se deben intentar alinear los intereses de la administración y los accionistas y aumentar el valor a largo plazo, lo cual puede verse socavado si los ejecutivos pueden disponer inmediatamente de la totalidad o la mayoría de las acciones recibidas. 9. ¿Son los factores binarios? ¿Se ponderan igualmente? Los factores EPSC no están igualmente ponderados. A cada factor se le asigna un número máximo de puntos potenciales, los cuales pueden variar según el modelo. Algunos son binarios, pero otros pueden generar puntos parciales. Para todos los modelos, el total de puntos máximos que pueden acumularse es de 100. La puntuación de aprobación es de 53 en todos los casos, es decir, ligeramente más de la mitad de las puntuaciones máximas potenciales de los factores. El gráfico siguiente resume la base de puntuación para cada factor. Factores de EPSC Sistema de asignación de puntos del amplificador Programas Facultad 038 Becarios mayores Lucian Bebchuk Alon Brav Robert Charles Clark John Coates Alma Cohen Stephen M. Davis Allen Ferrell Jesse Fried Oliver Hart Ben W. Heineman, Jr. Scott Hirst Howell Jackson Robert J. Jackson, Jr. Wei Jiang Reinier Kraakman Robert Pozen Mark Ramseyer Mark Roe Robert Sitkoff Holger Spamann Guhan Subramanio Programa de Gobierno Corporativo Asesoría Consejo William Ackman Peter Atkins Joseph Bachelder John Bader Allison Bennington Richard Marca Daniel Burch Richard Climán Jesse Cohn Joan Conley Isaac Corri Arthur Crozier John Finley Stephen Fraidin Byron Georgiou Jason M. Halper Carl Icahn Jack B. Jacobs Lazo de Paula David Millstone Theodore Mirvis Toby Myerson Morton Pierce Barry Rosenstein Paul Rowe Marc Treviño Adam Weinstein Daniel Wolf Harvard Foro de la Facultad de Derecho sobre Gobierno Corporativo y Regulación Financiera Todos los derechos de autor y marcas registradas en el contenido de este Son propiedad de sus respectivos propietarios. Otros aspectos 2016 El Presidente y los Compañeros del Colegio de Harvard.2013 Política de Compensación Integral de los EE. UU. Preguntas Frecuentes Actualizado: 8 de marzo de 2013 Resumen de la Póliza de Ejecutivos de los Estados Unidos Generalmente reflejan el mismo número de la remuneración total del oficial ejecutivo nombrado como se revela en una declaración de la compañía 8217s. Sin embargo, si se han revelado seis o más oficiales ejecutivos nombrados8217, sólo cinco estarán representados en la sección. La orden será el CEO, segundo, tercero, cuarto y quinto ejecutivo más alto pagado por la compensación total. Los ejecutivos actuales serán seleccionados primero, seguidos por los ejecutivos terminados. Se incluirá a los ejecutivos que terminen después del final del último año fiscal, ya que fueron ejecutivos dentro del último año fiscal completo. Un CEO de company8217s ha dimitido y hay un nuevo CEO en su lugar. Qué CEO se muestra en el informe Nuestro informe generalmente muestra al CEO en la oficina en el último día del año fiscal. Cómo se calcula la Compensación Total CalculadaCompensación Total Bono Salario Base No Equidad Plan de Incentivos Compensación Premios de Opción de Compra de Acciones (basados en los valores de la fecha de la concesión total, según lo calculado por ISS) Cambio en el Valor de la Pensión y los Beneficios de la Compensación Diferida No Cualificada. El cálculo coincidirá generalmente con la Tabla de Compensación Resumen, con la excepción del valor de la opción de compra de acciones y / o las recompensas de acciones, que se describen más adelante. Premios de acciones 8211 Valor de la fecha de la subvención, generalmente como se indica en la Tabla de premios de las subvenciones basadas en el plan para cualquier premio de acciones, incluidos los premios otorgados por el tiempo y las acciones de rendimiento. Si el valor de las recompensas de acciones es mayor en el valor razonable de Resumen de Compensación que el de la fecha de concesión que se muestra en la tabla de Subvenciones de Premios Basados en el Plan, ISS tomará generalmente el valor más alto en nuestro reporte. Si los premios bursátiles revelados en la tabla de Subvenciones otorgadas con base en el plan reflejan el año fiscal actual y no el año fiscal anterior, ISS no incluirá el valor en nuestro reporte. De acuerdo con los requerimientos de revelación de la SEC, los valores de los Premios de la Subvención basada en el plan deberían reflejar las recompensas de acciones realizadas en el último año fiscal. Si no se informa el valor de la fecha de concesión, se calculará el número de unidades / acciones objetivo multiplicado por el precio de cierre de la acción en la fecha de concesión. El valor de los premios de acciones generalmente debe coincidir tanto para la Tabla de Compensación Resumen como para las Subvenciones de la Tabla de Premios Basados en el Plan. Opción Premios 8211 Fecha de concesión Valor actual de las opciones utilizando el modelo de fijación de precios de opción de Black-Scholes, calculado por ISS (véase 5). ¿Cómo se calcula el valor actual de todas las pensiones acumuladas en el cuadro de Tally Sheet de CEO? Esta cifra representa los montos revelados como el valor actual de los beneficios para todos los planes de pensiones (incluyendo calificados y no calificados) , Según se indica en el cuadro de Beneficios de Pensiones de la declaración de representación. Esta cifra representa la suma de todos los valores de compensación diferidos, tanto de los planes calificados como los no calificados, según se describe en la tabla de Compensación Diferida No Calificada. Cómo se calculan los pagos de terminación potenciales en la tabla de hoja de cálculo del CEO Los valores para una terminación involuntaria sin causa y un cambio en la terminación relacionada con el control se proporcionan como se revela en el cuadro de cambio de control y / Datos Rentabilidad total de los accionistas e ingresos Cuando ISS obtiene un retorno total anual de los accionistas de una empresa 8217s, un rendimiento total de los accionistas de 3 años y los ingresos ISS obtiene todos los datos financieros del Perfil de Compensación de Standard amp Poor8217s Research Insight. ¿Cómo investiga Insight Research el rendimiento total de los accionistas de un año? El rendimiento total de los accionistas para un año es la tasa de rendimiento anualizada que refleja la plusvalía de los precios más dividendos (basado en la reinversión al final del mes del pago del dividendo) El efecto multiplicador de los dividendos pagados sobre los dividendos reinvertidos durante un período de un año. Cómo se calcula la rentabilidad total anual de los accionistas de la Research Insight La rentabilidad total de los accionistas a tres años es la tasa de rendimiento anualizada que refleja la plusvalía de los precios más la reinversión de los dividendos (como se describió anteriormente) y el efecto compuesto de los dividendos pagados sobre los dividendos reinvertidos Durante un período de tres años. Cómo Research Insight calcula los ingresos de las empresas Los ingresos son las ventas brutas (la cantidad de facturación real a los clientes para las ventas regulares completadas durante el período) reducidas por descuentos en efectivo, descuentos comerciales y ventas devueltas y asignaciones por las que se otorga crédito a los clientes. Cómo se calcula Ingreso neto de la empresa (Pérdida) La utilidad o pérdida neta es reportada por una compañía después de que se hayan deducido los gastos y las pérdidas de todos los ingresos y ganancias para el período fiscal, incluyendo los rubros extraordinarios y las operaciones discontinuadas. ¿Por qué el CEO paga como porcentaje de los ingresos de una compañía que muestra NA? (No aplicable) Si los ingresos de una compañía son cero, el CEO paga como porcentaje de los ingresos de una compañía será NA. ¿Por qué el CEO paga como porcentaje de los ingresos netos de la compañía mostrando que si el ingreso neto de una empresa es cero o negativo, el pago del CEO como porcentaje del ingreso neto de una compañía será NA. Evaluación de la gestión de Say on Pay (MSOP) Qué es ISS8217 Política de evaluación de compensación ejecutiva La política de evaluación de compensación ejecutiva consta de tres secciones: Pago por desempeño, Prácticas salariales problemáticas y Comunicación y capacidad de respuesta del Directorio. Las recomendaciones emitidas en virtud de la política de evaluación de la compensación ejecutiva pueden aplicarse a cualquiera o todas las partidas siguientes, dependiendo de la cuestión de la remuneración (según se detalla en la política): Elección de directores (principalmente miembros del comité de compensación) , Y / o propuestas de Plan de Equidad. Si una compañía tiene una resolución MSOP en la boleta electoral, ISS aplicará también las recomendaciones relacionadas con la compensación a los miembros del comité de compensación que están en proceso de elección. En general, si una compañía tiene una resolución MSOP en la boleta electoral, Aplicada a esa propuesta, sin embargo, si se identifican prácticas atroces, o si una empresa recibió previamente una recomendación negativa sobre una resolución del MSOP relacionada con una cuestión que todavía está en curso, la ISS también puede recomendar votos de RETENCIÓN / EN CONTRA con respecto a los miembros del comité de compensación . Si uno o más directores recibieron una recomendación negativa en el año anterior debido a ISS8217 las preocupaciones sobre las prácticas de compensación tendrá una relación con la recomendación del año siguiente 8217s si uno o más directores recibieron menos del 50 por ciento del apoyo de los accionistas (independientemente de si es un problema de compensación ), La ISS podrá recomendar que los accionistas renuncien a todo el consejo con la excepción de los nuevos nominados si la empresa no toma las medidas adecuadas para responder o remediar las cuestiones planteadas en el informe anterior. Si uno o más directores reciben un alto nivel de disensión (30 por ciento a 49.5 por ciento), la compañía debe discutir cualquier acción o consideración tomada para abordar la preocupación. Un alto nivel de disidencia indica una insatisfacción general y el consejo / comité debe responder a las preocupaciones de los accionistas. La falta de discusión o consideración, junto con las preocupaciones límite existentes pueden tener relación con la recomendación del año siguiente. Pago por Evaluación de Rendimiento Consulte el documento de trabajo ISS8217 8220Evaluación de Pago por Desempeño 8221 para una explicación de la metodología cuantitativa utilizada en la primera fase de Este análisis y resumen de los factores cualitativos considerados. Cómo el pago cuantitativo inicial para el análisis del desempeño afecta la recomendación final del voto para las sugerencias de la gerencia de la opinión sobre paga o la elección de los miembros del comité de la remuneración (en ausencia de dirección dicen en la oferta de la paga) Company8217s pagan por alineación de rendimiento. Una preocupación alta o media de la pantalla cuantitativa da lugar a una revisión cualitativa en profundidad del análisis de la amp; amp; amp; amp; amp; amp; amp; amp; amp; amp; amp; amp; amp; amp; amp; amp; amp; amp; amp; amp; amp; Posteriormente a la revisión cualitativa de la declaración de la compañía, sólo 53 de las empresas de alta preocupación resultaron en recomendaciones de voto negativo durante la temporada de proxy de 2012, mientras que 47 de las empresas de alta preocupación recibieron una recomendación de voto favorable debido a los factores atenuantes identificados en la evaluación cualitativa . Cuáles son los factores que la ISS considera al realizar la revisión cualitativa de la remuneración por el análisis de desempeñoHere son factores clave que la ISS considera al realizar la revisión cualitativa del análisis del pago por desempeño: Los resultados reales de las métricas financieras / operacionales, tales como el crecimiento en los ingresos, el beneficio, la rentabilidad y la rentabilidad, Flujo de caja, etc. tanto absoluto como relativo a sus pares Circunstancias especiales relacionadas, por ejemplo, con un nuevo consejero delegado en el ejercicio anterior o prácticas anómalas de concesión de capital Pago realizable comparado con el pago de la subvención y Otros factores que se consideren pertinentes. Los factores relevantes serán discutidos en el informe. Si una empresa recibe una preocupación 8220low8221 en el modelo cuantitativo de pago por desempeño, ISS todavía evaluará los programas de incentivos de la compañía 8217s revisa todas las empresas 8217 Análisis de Compensación y destaca las cuestiones destacables para los inversionistas independientemente del nivel de preocupación cuantitativa. La evaluación cualitativa es la parte más importante del análisis. Los diseños de incentivos problemáticos tales como pagos garantizados de varios años, componentes de pago discrecionales o ausencia de metas rigurosas se abordan generalmente en el análisis cualitativo y pueden resultar en una recomendación negativa a pesar de una preocupación cuantitativa. ¿Cómo utiliza la ISS el pago realizable en su análisis? El informe estándar de la investigación ISS8217 mostrará un pago realizable de tres años comparado con el pago de tres años concedido para las compañías SampP 500 a partir de las fechas de las reuniones del 1 de febrero de 2013. Vea la pregunta 7 abajo para la definición de ISS8217 de pago realizable y cómo se calculará. Generalmente se discutirá la remuneración realista en los casos en que la pantalla cuantitativa inicial de la compañía muestre una preocupación alta o media. Para las compañías SampP 500, podemos utilizar la tabla de pago realizable para ver si la paga realizable es más alta o más baja que la paga concedida y explorar aún más las razones subyacentes. Por ejemplo, es el pago realizable más bajo que la paga concedida debido a la falta del logro de la meta en premios basados funcionamiento, o simplemente debido a una declinación en precio de la acción. Si es así, los objetivos subyacentes son lo suficientemente rigurosos, o es la diferencia debido al aumento del precio de las acciones Para todas las empresas, ISS8217 consideración de pago realizado y / o realizable es ayudar a determinar si la empresa demuestra un fuerte compromiso con un pago - Filosofía de rendimiento. El hecho de que la paga realizable sea menor o mayor que el pago de la fecha de concesión no necesariamente obviará otras indicaciones fuertes de que los programas de compensación de una empresa no están suficientemente ligados al desempeño diseñado para aumentar el valor de los accionistas a lo largo del tiempo. Sin embargo, a falta de tales indicaciones, el pago realizable que demuestre un compromiso de pago por rendimiento será una consideración positiva. ¿Cómo se paga Realizable para las empresas de grandes capitales calculó el objetivo de LS8217 es calcular una cantidad estimada de 8220realizable pay8221 para los CEOs de SampP 500 empresas. Incluirá los montos efectivamente pagados o realizados, o el valor actual de las subvenciones de incentivos otorgadas, durante un período de medición especificado, al final de ese período de medición. El pago realizable incluirá todos los montos de compensación no incentivos pagados durante el período de medición, más el valor de los premios de incentivos de capital o de incentivos a largo plazo otorgados durante el período y ganados o, si el premio permanece en curso, revaluado al nivel objetivo como Del final del período de medición. El valor total realizable para estas subvenciones y pagos será la suma de lo siguiente: Salario base reportado para todos los años en el período de medición Bonos reportados para todos los años Premios a corto plazo (típicamente anuales) reportados como Plan de Incentivos No Equitativos Compensación por Todos los años Para todos los posibles premios en efectivo a largo plazo otorgados durante el período de medición, el valor ganado del premio (si se obtiene durante el mismo período de medición) o su valor objetivo en el caso de ciclos de adjudicación continuos Para todos los premios basados en acciones Durante el período de medición, el valor (basado en el precio de las acciones al final del período de medición) de los premios otorgados durante el período (menos todas las acciones o unidades perdidas por falta de cumplimiento de los criterios de desempeño) El valor objetivo de dichas adjudicaciones Para las opciones sobre acciones concedidas durante el período de medición, el valor neto obtenido con respecto a las opciones otorgadas que también fueron ejercitadas durante el período para las opciones otorgadas pero no ejercidas durante el período de medición, ISS volverá a calcular El valor de la opción, utilizando el modelo de precios de opciones Black-Scholes, al final del período de medición. Cambio en el valor de la pensión y remuneración diferida no calificada Ganancias registradas para todos los años y todas las otras compensaciones registradas para todos los años. Generalmente tres años fiscales, basado en el año fiscal de la compañía. Para el pago realizable calculado como parte de los análisis del ISS8217 2013, esto generalmente consistirá en los años fiscales 2010 a 2012. Tenga en cuenta que el monto de la cantidad realizable del ISS8217 se basará en un enfoque consistente, usando información de las revelaciones del proxy de la compañía. Dado que las reglas actuales de divulgación de la SEC están diseñadas para enumerar la remuneración en lugar de la remuneración realizable, estas estimaciones se basarán en los mejores esfuerzos de ISS8217 para determinar los insumos necesarios para el cálculo. En los casos en que, por ejemplo, no está suficientemente claro si un premio aplicable se ha obtenido o perdido durante un período de medición, el ISS utilizará el nivel de adjudicación objetivo otorgado. Por qué doesn8217t ISS utilizar el valor intrínseco (precio de ejercicio menos el precio actual de mercado) de las opciones sobre acciones al calcular realizables payTop ejecutivos 8217 stock options suelen caducar después de siete a 10 años, lo que significa que incluso si una opción está bajo el agua en los primeros años después de su concesión, Hay una probabilidad sustancial de que finalmente entregará algún valor al tenedor antes de la expiración. Los accionistas reconocen que al considerar la remuneración como un factor de pago por desempeño, es importante incluir el valor económico de las opciones subacuáticas (lo que también reflejará el impacto de un menor precio de las acciones, si corresponde). Una compañía desearía divulgar los premios de acciones en ejecución y / o completados por premios otorgados en los últimos tres años. ¿Qué tipo de formato de divulgación sugeriría ISS? La divulgación de los premios de capital actualizados o en ejecución de forma coherente facilitaría el cálculo de la remuneración realizable (que se basa en una extracción de la información necesaria de las declaraciones de poder). Si una empresa ha otorgado premios de acciones basadas en el desempeño en los últimos tres años, la divulgación de los premios en la siguiente tabla sería útil: No determinado todavía El período de desempeño no incluye el requisito de adquisición de tiempo. Con respecto a la alineación de pago por rendimiento y los cálculos de pago realizable, ¿cómo tratará ISS a los CEO que no han estado en la posición durante tres años? La metodología cuantitativa analizará el total de los pagos del CEO para cada año en el análisis sin considerar si todos los años son los CEOs iguales o diferentes. Si ese análisis indica un pago significativo por la desalineación del rendimiento, el análisis cualitativo resultante puede tener en cuenta cualquier factor relevante relacionado con un cambio en el CEO durante el período. Sin embargo, dada una aparente desconexión entre el desempeño y el salario del CEO, los accionistas esperan que el nuevo paquete de pago de CEO8217s esté sustancialmente basado en el desempeño. Durante años, cuando una empresa tiene más de un CEO, usaremos solo un salario de CEO: el CEO que estaba en el cargo al final del año fiscal será generalmente el que se pagará. El salario base para el CEO será anualizado. Del mismo modo, con respecto a la remuneración realizable, ISS calculará la cantidad realizable, al final del período de medición, del pago de la Tabla Resumen de Compensación informada por el CEO en la oficina el último día de cada año fiscal en el período de medición. Cómo se calculan los rendimientos totales de los accionistas de un año y tres años (TSR) ¿Cómo se contabilizan los 8220picos y valles8221 en el análisis quinquenalLos TSR de un y tres años representan tasas anualizadas de rendimiento que reflejan el precio de las acciones La apreciación del período, más el impacto de la reinversión de los dividendos (y el efecto de composición de los dividendos pagados sobre los dividendos reinvertidos). Bajo la evaluación absoluta, TSR indexada representa el valor de una inversión hipotética en la empresa, asumiendo la reinversión de dividendos. La inversión comienza el día cinco años antes del final del mes más cercano al final del año fiscal más reciente de la compañía y se mide en los cinco aniversarios subsecuentes de esa fecha. La medida de Alineación de TSR de Pago (PTA) (como se describe en el documento de evaluación de la ISS para Alineación de Rendimiento) está diseñada para tener en cuenta la posibilidad de 8220bumps8221 en la tendencia general. La siguiente tabla muestra cómo se calcularía la TSR indexada para una compañía con un fin de año fiscal del 2 de octubre de 2011 y cómo la TSR indexada se relaciona con los retornos totales anuales de los accionistas: ¿Cuál período de TSR utilizará ISS para la compañía objeto y los pares en El análisis de Pago por Desempeño ¿Qué pasa con el período de compensación? Los RTS para la empresa en cuestión y todos sus pares se miden a partir del último día del mes más cercano al fin de año fiscal de la compañía objeto. Por ejemplo, si el fin de año de la compañía objeto es el 31 de diciembre, entonces los TSR de un año y de tres años para la empresa en cuestión y sus pares se basarán el 31 de diciembre. Las cifras de compensación para todas las empresas son a partir de la fecha más reciente disponible . Para las empresas con reuniones a comienzos del año, cuyos salarios 2011 no han sido liberados, ¿qué datos de pago utiliza ISS ISSO utiliza los últimos datos de compensación disponibles para las empresas pares, que pueden ser del año anterior. Do you include the subject company in the derivation of the peer group median When you say 14 companies minimum for peers, does the 14 include the subject companyNo, neither the CEO pay nor the TSR of the subject company is included in the median calculation. The subject company is also not included in the number of peer companies, which will generally be a minimum of 14. What impact might an adverse pay-for-performance recommendation have on equity plans proposalsIf a significant portion of the CEOs misaligned pay is attributed to non-performance-based equity awards, and there is an equity plan on the ballot with the CEO as one of the participants, ISS may recommend a vote AGAINST the equity plan. Considerations in recommending AGAINST the equity plan may include, but are not limited to: Magnitude of pay misalignment Contribution of non-performance-based equity grants to overall pay and The proportion of equity awards granted in the last three fiscal years concentrated at the named executive officer level. A concentration ratio for the top 5 that exceeds 25 would warrant additional scrutiny. We would look at both the CEO and the top 5 concentration ratios. If the CEO has less than 20 but the top five has 50 due to a new hire situation, it is unlikely that we would recommend against equity plan. We would also look at the past three years of concentration ratio with and without CEO. Is the concentration high due to the CEO or is there more/less equal distribution among the key exec Is the LTI program similar for the CEO and the top 5 Are there performance features for the equity awards and is it the same for all top five Are the performance goals sufficiently rigorous If a company has not been publicly traded for five fiscal years, does the quantitative Pay-for-Performance evaluation still apply What if the company has not been publicly traded for three fiscal years Would such a company be used as a peer company for other companiesIf the company has not been publicly traded for five fiscal years, the relative assessment, specifically the relative one-year and three-year TSR pay and performance rank and the multiple of pay against the peer median, will still apply. If the company has not been publicly traded for three fiscal years, the one-year pay and performance ranking and the multiple of pay against the peer median will still apply if the company has been public at least one year. In both cases, the company8217s limited life as a publicly traded company will be considered as part of any qualitative evaluation. Generally, only companies with three full years of data will be peer companies. In limited circumstances, a company with less than 3 years of data may be used when the quantitative evaluation focuses on only one year. Will pay continue to be defined as summary compensation table pay or consider the current value of LTIs (potential realizable pay)Total compensation calculated by ISS will continue to be defined as granted pay and pay opportunities, for a number of reasons but including that: 1) it is the best reflection of the compensation committee8217s oversight and decision-making, and 2) pay opportunities should be reflective of the company8217s past performance to some degree in particular, if the opportunity appears to be misaligned with that performance (in a negative way), shareholders expect those grant opportunities to be strongly performance-based. Realized or potentially realizable pay will be considered as part of ISS8217 qualitative evaluation of pay-for-performance alignment. With the discount rate at its lowest, the calculated value of pension benefits has increased. Will ISS take this into account in their assessment of CEO payBecause ISS8217 quantitative analysis has a long-term orientation, year-to-year pay anomalies are not expected to have a significant impact on the results. However, such anomalies may be considered in the qualitative evaluation conducted before a negative recommendation would be issued. ISS has recommended withholds on a companys compensation committee or recommended against a companys management say on pay or equity plan proposal on the basis of a CEO pay for performance disconnect. What actions can the company take to address the concernsThe pay for performance evaluation is a case-by-case analysis, and actions should be tailored according to the underlying issues identified in the pay for performance disconnect. Prospective commitments to increase the proportion of performance-based pay in the future will not adequately address concerns adjustment to recent awards to strengthen their performance linkage may be considered, however. As an example, if the primary source of pay increase is due to time-vested equity awards, a remedy could be for the company to make a substantial portion of such equity awards to named executive officers performance-based. A substantial portion of performance-based awards would be at least 50 percent of the shares awarded to each of the named executive officers. Please note that this is 50 percent of the shares awarded rather than 50 percent of the value of the awards. Performance-based equity awards are earned or paid out based on the achievement of pre-established, measurable performance targets. The company should disclose the details of the performance criteria (e. g. return on equity) and the hurdle rates (e. g. 15 percent) associated with the performance awards at the time they are made. From this disclosure, shareholders will know the minimum level of performance required for any equity grants to be earned. In this context, strongly performance-based equity awards do not include standard time-based stock options or performance-accelerated grants. Instead, performance-based equity awards are performance-contingent grants, where the individual will not receive the equity grant if target performance is not achieved. Premium-priced options with an exercise price at least 25 percent higher than the fair market stock price on the date of grant may be considered performance-based. The 25 percent premium should serve as a guideline rather than a bright line test. A 25 percent premium may not be rigorous for a company trading at 1.00. If option vesting is contingent on the stock reaching a specified price, the price condition should be maintained for at least 30 consecutive trading days before vesting. In order for shareholders to assess the rigor of the performance-based bonus and equity programs, the company needs to disclose the performance measures and goals. Complete and transparent disclosure is critical. The company needs to disclose the following: the measures(s) used (and rationale for the selections) the goal(s) that were set for each metric and the target (and, if relevant, threshold and maximum) payout level(s) set for each NEO the reason that each goal was determined to be appropriate for incentive pay purposes (including the expected difficulty of attaining each goal) the actual results achieved with respect to each goal and the resulting award (or award portion) paid to the NEO with respect to each goal. The pay-for-performance action must be made in a public filing, such as a Form 8-K or DEFA 14A. Based on the additional disclosure of a renewed commitment, ISS may recommend a vote FOR the compensation committee members up for annual election and/or vote FOR the management say on pay or equity plan proposal, if there is one on the ballot. However, ISS is not likely to recommend a vote FOR the compensation committee members and/or vote FOR the management say on pay or equity plan proposal if ISS believes the company has not provided compelling and sufficient evidence of action to strengthen the performance-linkage to its executives8217 compensation and transparent additional disclosure. A company makes equity grants near the beginning of each year based on an evaluation of the company and/or the executives performance in the immediately preceding year. Such grant information will appear in the following years proxy statement. Will ISS take into account the timing of these early equity grants made in the current fiscal year and make adjustments to the top executives total compensation when conducting its pay-for-performance evaluationSuch timing issues can be problematic for investors evaluating the relationship between performance and pay. The value of equity grants generally represents a significant proportion of top executives pay if the grants are made subsequent to the performance year, disclosures in the Grants of Plan-Based Awards Table may distort the pay-for-performance link. Some investors believe that equity awards can incentivize and retain executives for past and future performance therefore, adjustments for such timing issues may not be relevant. In addition, ISS8217 pay-for-performance analysis has a long-term orientation, where these types of timing issues are less relevant than an evaluation of one year8217s pay. Nevertheless, ISS may consider the timing of equity awards made early in a fiscal year in its qualitative assessment if complete disclosure and discussion is made in the proxy statement. In order to ensure that pay-for-performance alignment is perceived, the company should discuss the specific pre-established performance measures and goals that resulted in equity awards made early in the next fiscal year. A general reference to last years performance is not considered sufficient and meaningful to shareholders. If the company makes equity grants early in each year, based on the prior years specific performance achievement, shareholders should not be required to search for the information in Form 4s and compute the adjusted total compensation for the top executives in order to make a year-over-year comparison. Instead, companies should provide information about grants made in relation to the most recently completed fiscal year in the proxy statement for the shareholder meeting that follows that fiscal year (aligned with other compensation reported for that year). Many companies provide an alternate summary compensation table that takes into account the recent equity awards made in the current fiscal year. The number of options or stock awards with the relevant exercise price or grant price should be disclosed in the proxy statement. The term of the options should be provided as well. In order for ISS to compute the adjusted total compensation and include it for purposes of our narrative discussion and analysis, companies need to make transparent and complete disclosure in the proxy statement ISS will not search for the companies Form 4 filings to make such adjustments but will rely on the specific grant disclosures found in the proxy statement. With respect to pay-for-performance alignment, how does ISS treat CEOs who have not been in the position for three yearsISS8217 quantitative methodology analyzes total CEO pay for each year in the analysis without regard to whether all years represent the same or different CEOs. If that analysis indicates significant pay for performance misalignment, the ensuing qualitative analysis may take into account any relevant factors related to a change in CEO during the period. However, given an apparent disconnect between performance and CEO pay, shareholders would expect the new CEO8217s pay package to be substantially performance-based. For years when a company has more than one CEO, we will use only one CEOs pay: the CEO who was in the position at the end of the fiscal year will generally be the one whose pay will be used. The base salary for a recruited CEO will be annualized. A company awards time-based stock awards after meeting specific performance criteria. Does ISS consider such awards to be performance contingent compensationPerformance measures and goals need to be pre-established and disclosed in the proxy statement for ISS to consider such awards as performance contingent compensation. How does ISS capture transition period compensationDisclosure of transition period compensation varies across companies. Therefore, ISS does not apply a standardized methodology in all cases. Transition periods generally represent an extension of a recently completed fiscal year (until the start of a new fiscal year period). ISS will generally include transition period pay as part of the most recently completed fiscal year pay. Cash pay components such as base salary and bonus will be annualized and equity pay components will be added, subject to a company-specific case by case review. Determining Peer Companies How does ISS select constituents for the peer groups used in its Pay-for-Performance analysis As of 2013, ISS8217 methodology for selecting peers maintains its focus on identifying companies that are reasonably similar to the subject company in terms of industry profile, size, and market capitalization, taking into account a company8217s self-selected peers to guide industry selections. ISS8217 selected peer group generally contains a minimum of 14 and maximum of 24 companies based on the following factors: following: the GICS industry classification of the target company the GICS industry classifications of the company8217s disclosed benchmarking peers size constraints for both revenue (or assets for certain financial companies) and market value. Subject to the size constraints, and while choosing companies that push the subject company8217s size closer to the median of the peer group, peers are selected from a potential peer universe in the following order: the measures(s) used (and rationale for the selections) from the subject8217s own 8-digit GICS group from the subject8217s peers8217 8-digit GICS groups from the subject8217s 6-digit GICS group from the subject8217s peers8217 6-digit GICS groups from the subject8217s 4-digit GICS group When choosing peers, priority is given to potential peers within the subject8217s 8220first-degree8221 peer group (the companies that are either in the subject8217s own peer group, or that have chosen the subject as a peer), and companies with numerous connections (by choosing as peer or being chosen as a peer) to these first-degree peers. All other considerations being equal, peers closer in size are preferred. What are some ways that the peer groups constructed via ISS methodology implemented for 2013 differ from ISS8217 previous peer groupsThe following table outlines some of the characteristics of the projected 2013 peer groups (based on most recent disclosure as of September 2012) relative to prior peer groups: New Methodology (as of 2013) While ISS may choose peers that fall outside a subject company8217s market cap bucket if necessary to reach a minimum peer group size, none may have a market cap of less than 0.25 times the low end or more than 4 times the high end of the subject8217s market capitalization bucket. Which industry groups will be use assets for size comparisons What happens when a company has potential peers in both asset-based and revenue-based industry groupsISS will use balance sheet assets (rather than revenue) to measure the size of companies in the following 8-digit GICS groups to disclose the performance measures and goals. Complete and transparent disclosure is critical. The company needs to disclose the following: 40101010 Commercial Banks 40101015 Regional Banks 40102010 Thrifts mortgage 40202010 Consumer Finance 40201020 Other diversified Both subject and potential peer must be in the asset-based GICS groups listed above in order to be compared on the basis of assets. In cases where a subject company is in one of the asset-based GICS groups and a potential peer is not, revenues will be used for size comparisons. This principle applies to the size comparisons made to qualify a peer for potential inclusion as a peer, to the size rankings made to maintain the subject company near the median size of the peer group, and to the size prioritization of peers When will a company8217s peer group have more than 14 membersIn general, the closer the industry match, the larger the subject size of the peer group: for direct matches to the company8217s own 8-digit GICS, as many as 24 peers may be chosen. For matches of the company8217s peers8217 8-digit GICS, as many as 18 peers may be chosen, falling to a maximum of 14 peers when choosing from the company8217s 4-digit GICS. More peers, however, may be selected in order to bring the target company8217s size closer to the median of its peers. If the standard methodology fails to yield the minimum number of acceptable peers, what peer group will be usedHow will ISS create peer groups for very large 8220super-mega8221 companies for 2013In general, ISS will supplement the peer group generated by the standard methodology in such cases. For larger 8220super-megacap8221 companies, ISS will use the standard methodology to identify as many peers as possible for these very large companies. In cases where this does not provide a sufficient number of peers, ISS will supplement these peer groups according to the principles above. In exceptional cases, the ISS peer group may contain a minimum of 12 constituents. How does ISS treat foreign-domiciled or privately-held company peersISS uses these peers for the purpose of identifying relevant GICS industry groups, if relevant industry data is readily available. Foreign-domiciled companies that file Def14A, 10-Qs, and 10-Ks may be included as ISS selected peers. Privately-held or other foreign-domiciled companies that do not make such filings are not included as ISS selected peers. If a company used multiple peer benchmarking groups, which group will ISS use as an input to the process What does ISS do if a company does not employ a peer group for benchmarkingAISS uses the company peergroup that is used for CEO pay benchmarking purposes. If there is no peer group employed, the peer methodology will draw peers from the company8217s own 8-, 6- and 4-digit GICS groups, subject to ISS8217 size constraints. Does ISS apply additional judgment in the process of building peer groupsISS may adjust any peer groups that appear to have inappropriate constituents at the time of our analysis. The basic principles of the methodology will still apply: peers should come from similar industries and be of similar size, and company peers should be prioritized where possible. What impact will peer group methodology changes have on the pay-for-performance quantitative screen ISS8217 preliminary back-testing indicates that more than 80 percent of companies would experience a change of less than 15 points (up or down) in their Relative Degree of Alignment (RDA) measure under the new methodology, compared to the current peer methodology. Similarly, 80 percent of companies would experience a change of less than 0.2 in their Multiple of Median (MOM) measures under the new methodology. Accordingly, for the overwhelming majority (gt95) of companies, the quantitative screen concern levels would not be affected by the new peer groups. In addition, the overall distribution of these RDA and MOM measures under the new methodology does not deviate significantly from the current distribution of these scores. When will ISS reconstruct peer groupsCompany peer groups will be reconstructed during July and August, after the Russell 3000 index is updated in July. Expectation is that any revisions to company peer groups, which are not anticipated to be significant, will be in place for research in process as of September 1 (generally affecting companies that have filed DEF14As after mid August). A subsequent peer group construction will occur in December and early January, effective for meetings as of February 1. In December 2012, ISS provided companies an opportunity to communicate any changes made to their benchmarking peer groups following their 2012 proxy disclosures. Will companies with later fiscal year-ends that did not know at that time what changes they were making to peer groups used with respect to fiscal 2012 compensation decisions also have an opportunity to communicate changesYes, ISS will provide asimilar opportunity after proxy season, prior to reconstruction of its peer groups per above, for companies with later meetings. Can only Russell 3000 companies be used as peer companies Will ISS use companies that an issuer considers as peers (specified in the proxy) to develop the ISS comparator groupIf a Russell company discloses the names of the companies that it uses as its peers, and these companies are public, ISS will collect the data on them even if they are not in the Russell 3000. If these companies fit ISS criteria for peers, then they may be used as ISS peers as of the next update of ISS peer groups. What are GICS codes Who can I contact if I disagree with the GICS classificationThe Global Industry Classification Standard (GICS) was developed by Standard amp Poor8217s and MSCI in response to the financial community8217s need for a reliable, complete (global) standard industry classification system. GICS codes correspond to various business or industrial activities, such as Oil amp Gas Drilling or Wireless Telecommunication Services. GICS is based upon a classification of economic sectors, which is further subdivided into a hierarchy of industry groups, industries and sub-industries. The GICS methodology is widely accepted as the industry analysis framework for investment research, portfolio management, and asset allocation. ISS does not classify companies into the GICS codes. Please contact Standard amp Poor8217s at 1-800-523-4534 if you believe that a company has been misclassified. Are the same peer companies used for a company8217s allowable cap on an equity plan proposal (as used under the pay-for-performance analysis)No, the list of companies shown in the executive compensation section is not the same peer group used in calculating a company8217s allowable cap on an equity plan proposal. The peer group used for benchmarking executive pay is based on a combination of industry and size (revenue/assets and market cap) the peer group used for creating the allowable cap calculations for stock-based compensation is based on industry, with adjustments for market cap size. How are the peer medians calculated for the Components of Pay tableThe median is separately calculated for each component of pay and for the total annual compensation (TC). For this reason, the median total compensation of the peer CEOs will not equal the sum of all the peer median pay components, because the values are calculated separately for each pay component the median TC reflects the median of TC of the peer group constituents. Problematic Pay Practices/Commitments on Problematic Pay Practices What is ISS8217 Problematic Pay Practices evaluation Pay elements that are not directly based on performance are generally evaluated on a CASE-BY-CASE basis considering the context of a company8217s overall pay program and demonstrated pay-for-performance philosophy. The list below highlights the problematic practices that carry significant weight in this overall consideration and may result in adverse vote recommendations: Repricing or replacing of underwater stock options/SARS without prior shareholder approval (including cash buyouts and voluntary surrender of underwater options) Excessive perquisites or tax gross-ups, including any gross-up related to a secular trust or restricted stock vesting New or extended agreements that provide for: o CIC payments exceeding 3 times base salary and average/target/most recent bonus o CIC severance payments without involuntary job loss or substantial diminution of duties (8220single8221 or 8220modified single8221 triggers) o CIC payments with excise tax gross-ups (including 8220modified8221 gross-ups). Would an agreement which is automatically extended (e. g. an evergreen feature) but is not modified warrant a negative vote recommendation if it contains a problematic pay practice)Automatically renewing/extending agreements (including agreements that do not specify any term) are not considered a best practice, and existence of a problematic practice in such a contract is a concern. However, if an 8220evergreen8221 agreement is not materially amended in manner contrary to shareholder interests, it will be evaluated on a holistic basis, considering a companys other compensation practices along with features in the existing agreement. The policy lists the most problematic practices. What is the full list of pay practices that are considered problematic and may result in a withhold or against recommendation, on a case-by-case basisBased on input from client surveys and roundtables, ISS has identified certain adverse practices that are contrary to a performance-based pay philosophy, which are highlighted in the list below. o Egregious employment contracts: Contracts containing multi-year guarantees for salary increases, non-performance based bonuses, or equity compensation. o New CEO with overly generous new-hire package: Excessive make whole provisions without sufficient rationale Any of the problematic pay practices listed in this policy. o Abnormally large bonus payouts without justifiable performance linkage or proper disclosure: Includes performance metrics that are changed, canceled, or replaced during the performance period without adequate explanation of the action and the link to performance o Egregious pension/SERP (supplemental executive retirement plan) payouts: Inclusion of additional years of service not worked that result in significant benefits provided in new arrangements Inclusion of performance-based equity or other long-term awards in the pension calculation o Excessive Perquisites: Perquisites for former and/or retired executives, such as lifetime benefits, car allowances, personal use of corporate aircraft, or other inappropriate arrangements Extraordinary relocation benefits (including home buyouts) Excessive amounts of perquisites compensation o Excessive severance and/or change in control provisions: Change in control cash payments exceeding 3 times base salary plus target/average/last paid bonus New or materially amended arrangements that provide for change-in-control payments without loss of job or substantial diminution of job duties (single-triggered or modified single-triggered, where an executive may voluntarily leave for any reason and still receive the change-in-control severance package) New or materially amended employment or severance agreements that provide for an excise tax gross-up. Modified gross-ups would be treated in the same manner as full gross-ups Excessive payments upon an executive8217s termination in connection with performance failure Liberal change in control definition in individual contracts or equity plans which could result in payments to executives without an actual change in control occurring o Tax Reimbursements: Excessive reimbursement of income taxes on executive perquisites or other payments (e. g. related to personal use of corporate aircraft, executive life insurance, bonus, restricted stock vesting, secular trusts, etc see also excise tax gross-ups above) o Dividends or dividend equivalents paid on unvested performance shares or units. o Internal pay disparity: Excessive differential between CEO total pay and that of next highest-paid named executive officer (NEO) o Repricing or replacing of underwater stock options/stock appreciation rights without prior shareholder approval (including cash buyouts, option exchanges, and certain voluntary surrender of underwater options where shares surrendered may subsequently be re-granted). o Other pay practices that may be deemed problematic in a given circumstance but are not covered in the above categories. Why does ISS now consider hedging and pledging of company stock under its policy framework for the election of directors, rather than under the problematic pay practices policyIn considering new policy related to the significant pledging of company stock, ISS obtained market feedback from our policy survey, roundtables, comment letters, and other means. While shares that are used by executives or directors who engage in hedging or pledging transactions often have been acquired via compensation programs, many investors expressed the view that the board is specifically responsible for setting policies related to risks to shareholder value. Since both hedging and pledging raise such risks, ISS decided to move this aspect of the policy to the appropriate section, election of directors, where it will be evaluated under the Egregious Actions framework. How does ISS view hedging or significant pledging of company stock by an executive or directorHedging is a strategy to offset or reduce the risk of price fluctuations for an asset or equity. Stock-based compensation or open market purchases of company stock should serve to align executives8217 or directors8217 interests with shareholders. Therefore, hedging of company stock through covered call, collar or other derivative transactions sever the ultimate alignment with shareholders8217 interests. Any amount of hedging will be considered a problematic practice warranting a negative vote recommendation against appropriate board members. Please see the Frequently Asked Questions (excluding Compensation) Board Accountability for more insight on ISS policy in this regard. After its most recently completed annual and/or long-term performance cycle ended with no payout (due to failure to achieve goals), a company granted retention awards of cash or equity to executives. How would ISS view such awardsInvestors do not expect boards to reward executives when performance goals are not achieved, whether by 8220moving the goalposts8221 (i. e. lowering goals) or granting other awards to compensate for the absent incentive payouts. They recognize, however, that retention of key talent may be critical to performance improvements and future shareholder value. Companies that grant special retention awards of cash or equity to executives when regular incentive plan goals are not met should provide clear and compelling rationale in their proxy disclosure. Awards of cash should be conservative and reflect the fact that performance is lagging (i. e. should generally be significantly less than unearned target award levels). Optimally, 8220extra8221 awards designed to encourage retention should also include performance conditions that will ensure strong alignment of pay and performance going forward and avoid 8220pay for failure8221 scenarios if the executive is not retained. Does the presence of single trigger vesting acceleration in an equity plan result in an automatic AGAINST recommendation for the plan, the say on pay vote, the entire compensation committee, or the full boardThere are no automatic negative recommendations under ISS policy. We will consider all relevant aspects included with the companys ultimate disclosure. With regard to equity-based compensation, ISS policy encourages double trigger vesting of awards after a CIC (considered best practice). In the absence of double-triggered vesting, the current preferred practice is for the board to have flexibility to determine the best outcome for shareholders (e. g. to arrange for outstanding grants to be assumed, converted, or substituted), rather than the plan providing for automatic accelerated vesting upon a CIC. Equity plans or arrangements that include a liberal CIC definition (such as a very low buyout threshold or a CIC occurring upon shareholder approval of a transaction, rather than its consummation), coupled with a provision for automatic full vesting upon a CIC, are likely to receive a negative recommendation. While guaranteed multi-year incentive awards remain problematic, is providing a guaranteed opportunity for what ISS considers a performance-based vehicle acceptableWhile guaranteeing any executive pay elements (outside of salary and standard benefits) is not considered best practice, the fact that the payout of such an award would ultimately depend on performance attainment (i. e. no payout would occur if performance is below a specified standard), assuming the performance hurdles appear reasonably, robust would generally mitigate concerns about the guaranteed award opportunity. Are material amendments other than extensions of existing contracts a trigger for analysis with respect to problematic existing contract provisionsShareholders are concerned with the perpetuation of problematic practices thus, agreements that are extended or new will face the highest scrutiny and weight in ISS8217 analysis. Material amendments will be considered an opportunity for the board to fix problematic issues, but as part of the holistic analysis. In 2009, in response to an ISS vote recommendation, a company adopted a policy prohibiting payments of tax gross-ups made on life insurance premiums in new or amended agreements. Certain officers were grandfathered at that time, and they continue to receive such payments. Is that policy, which ISS approved, to no longer be honored by ISSAll factors are weighed in the holistic analysis including existing agreements, commitments, and continuing practices of the company. However, unless the existing contracts are extended, they do not rise to the level of the most problematic practices. Will commitments entered into in 2010 or prior, before ISS announced its policy not to consider forward-looking commitments for the 2011 Proxy Season, be 8220grandfathered8221 Commitments not to enact problematic features in future agreements will no longer mitigate the enacting of problematic pay practices in new or amended agreements during the prior fiscal year. If a company put excise tax gross-ups in new agreements in the last fiscal year, what action can they take to prevent an against recommendation from ISSA company can remove that provision from the new agreements. Frequency of Advisory Vote on Executive Compensation In the event that a companys board decides not to adopt the say on pay vote frequency supported by a plurality of the votes cast, what are the implications in terms of ISS voting recommendations at subsequent meetings Per 2012 policy, if the board adopts a longer frequency for say-on-pay votes than approved by a plurality of shareholder votes, ISS will make a case-by-case recommendation, considering the following: The board8217s rationale for choosing a frequency that is different from the frequency which received a plurality The company8217s ownership structure ISS8217 analysis of the company8217s executive compensation and whether there are compensation concerns or a history of problematic compensation practices and The previous year8217s support level on the company8217s say-on-pay proposal. Advisory Vote on Golden Parachutes (SOGP) An event has technically triggered a change in control according to the company8217s formal definition however the company continues to exist and there is minimal impact on board turnover or management structure. How would ISS apply its SOGP policy in this regard In cases where ISS concludes that a bona-fide change in control event has not occurred (e. g. the company8217s equity remains outstanding and the board is not significantly affected) ISS views that severance payments or automatic acceleration of outstanding equity awards should not occur. If ISS8217 policy framework is not applicable due to unusual circumstances, recommendations will generally be made on a case-by-case basis, taking into consideration whether the outcome is beneficial to shareholders. How would ISS determine that the performance measures would not have been achieved in the absence of the decision to accelerate the performance based awards If a truncated performance period is used, then how would ISS know whether the performance measures would not have been achieved had no CIC transaction occurredBest practice is pro rata vesting based on current achievement. If it is impossible to measure performance under pre-determined performance criteria the board should justify paying an award as if target or highest performance goals were met. How does ISS determine whether specified golden parachute payouts are 8220excessive8221In evaluating disclosed payouts related to a change in control with respect to the SOGP proposal, ISS may consider a variety of factors, including the value of the payout on an absolute basis (e. g. relative to an executive8217s annual compensation) or one or total payouts relative to the transaction8217s equity value. There are no bright line thresholds for these considerations, since they are made in conjunction with other factors in ISS8217 review. How will ISS consider existing problematic change-in-control severance features in its SOGP evaluationBeginning in 2013, ISS will consider existing (as opposed to new in the last year) problematic features such as excise tax gross-up provisions and single and modified single payout triggers in determining a vote recommendation on SOGP proposals. In general, legacy excise tax gross-up provisions will be considered in the context of the amount of actual tax gross-ups reported as part of the company8217s SOGP disclosure. Legacy single/modified single triggers also may be considered in the context of the total change-in-control payout and whether they result in unjustifiable payouts in the absence of an executive8217s termination without cause in connection with the change in control. Equity Related Option Repricing/Exchange Proposals With the market rebound, fewer companies are seeking shareholder approval for option exchange programs. If a company were to consider such a program, can you provide additional guidance besides the standard shareholder friendly features, such as value-for-value exchange, exclusion of named executive officers and directors, resetting vesting schedules Option exchange creates a gulf between the interests of shareholders and management, since shareholders cannot reprice their stock. Option exchange should be the last resort for management to use as a tool to re-incentivize employees. Only deep underwater options should be eligible for the program rather than somewhat underwater options, especially if the companys stock is volatile. Using a companys 52-week high as the threshold exercise price may be reasonable in a depressed economy, but it may not be rational in a market rebound. A companys 52-week high may be its current stock price which may suggest that these options are marginally underwater. As a rule of thumb, the threshold exercise price for eligible options should be the higher of the 52-week high or 50 percent above the current stock price. That way, only deep underwater options are eligible for the program. However, this rule of thumb should not be considered in isolation, as there are several other factors, such as the timing of the request and whether the company has experienced a sustained stock price decline that is beyond managements control among others. Further, a companys current stock price can be a consideration as well. A premium of 50 percent for a company trading at 1 may be a low threshold if the companys stock price is particularly volatile. A company should discuss the various levels of employees (management versus non-management) who will be eligible participants in the program. Some companies have broad-based option programs whereas others tend to grant to management at the Vice President level. Absent such disclosure, institutional investors may assume that equity grants are generally awarded to management. Cost of Equity Plans A company has a May 2013 shareholder meeting and did not start trading until January 2013. ISS would normally use a December QDD for this company but there is no data for this company. What would be ISS8217 approach in determining the company8217s stock price in evaluating its equity plan proposal Here is the hierarchy of choices that ISS uses to determine stock price with respect to equity plan proposal evaluations: 200-day avg. stock price as of the applicable QDD 50-day avg. stock price as of the applicable QDD Closing stock price as of applicable QDD If applicable QDD is not available, use most recent QDD 200-day avg stock price If applicable QDD is not available, use most recent QDD 50-day avg stock price If applicable QDD is not available, use closing price as of the most recent QDD Last resort, use current stock price How does ISS look at the practice of buying shares on the open market to fund employees8217 equity grantsThe practice of repurchasing shares on the open market in order to avoid dilution from employees equity grants may be beneficial to shareholders if this represents a good use of the companys cash. However, there is still a cost to the company, and we would still capture that cost by our SVT calculation. In an efficient market, the buyback should have a positive impact on the companys stock price despite the reduction in outstanding shares. Therefore, it should have a generally neutral effect on market valuation. In addition, when a buyback is executed, a company immediately receives higher EPS and other share denominated accounting performance metrics, which in turn may lead to higher allowable cap. With respect to burn-rate calculations, ISS uses the weighted average number of outstanding common shares for the applicable year(s), which smooths out the impact of both share buybacks and share issuances. Adjustments to reduce the voting power dilution may be made if the share repurchase is implemented to offset dilution from stock-based compensation and if such repurchase is made within the past two years. What is the policy on stock in lieu of cash plansISS includes all stock in lieu of cash plans in evaluating the total costs of equity plans. ISS believes that cash or stock payments are considered as compensation to the employees and therefore should be considered in evaluating equity proposals. The total cost of equity-based compensation to directors is also generally considered under the compensation model. However, some stock-based plans do provide directors to take all or a portion of their cash compensation in the form of stock. If such plan provides for a clear dollar-for-dollar stock exchange of the cash compensation, ISS will view the stock in lieu of cash as value neutral for SVT purposes. Any other non-value neutral form of exchange which may include a premium for deferring cash compensation for stock is considered by ISS to cause transfer of shareholders equity which should still be measured. A non-REIT company would like ISS to consider its limited partnership (LP) units as part of the company8217s common shares outstanding when determining market capitalization in the shareholder value transfer analysis and weighted common shares outstanding in the burn rate analysis. Currently, operating partnership (OP) units are included for REIT companies because each OP unit is generally equivalent to one share of common stock and is convertible into common stock. OP units also receive the same dividend payout as common stock. ISS applies a case-by-case analysis to determine if a company8217s convertible equity or debt should be considered as part of common stock outstanding. If the convertible vehicle carries direct voting and dividend rights and may be converted into common stock, then ISS may include such convertible vehicle as part of common stock outstanding. The total number of outstanding convertible vehicle, vested or unvested should be clearly disclosed in the company8217s proxy statement or 10-K. Burn Rate Policy How does ISS calculate the burn rate and annual stock price volatility The annual burn rate is calculated as follows: Annual Burn rate ( of options granted of full value shares awarded Multiplier) / Weighted Average common shares outstanding) Stock Volatility is based on the 3-year historical volatility as of the company8217s quarterly data download, then annualized: Annualized stock volatility Stock Volatility X Square Root of 250. A company went public two and a half years ago. However, the 10-K discloses three years of historical grant information. Does the burn rate policy applyThe burn rate policy applies to companies that have been publicly traded for three complete fiscal years. However, ISS will closely scrutinize cases where there is any unusual outsized equity grant made just before the three-year burn rate policy becomes applicable to such companies. Such scrutiny may result in application of the burn rate policy, if appropriate. What action may a company take if it fails to meet the three-year average burn rate policyA company may commit to a prospective gross three-year average burn rate, which excludes stock options with a reload feature granted prior to 2005, equal to the higher of two percent of the company8217s common shares outstanding or the mean plus one standard deviation of its GICS peer group. A company8217s burn rate may exceed the peer group average in the first year, provided the prospective three-year average burn rate remains below the commitment level. The company would need to publicly notify shareholders of its commitment via, e. g. a form 8-K, DEFA14A, or in the summary plan description of the stock plan proposal in the DEF14A. The company would also be required to disclose in its future proxy statements the status of the commitment during the applicable period. 8220The Company commits that, with respect to the number of shares subject to awards granted over the next three fiscal years period of time, we will maintain an average annual burn rate over that period that does not exceed x of weighted common shares outstanding. For purposes of calculating the number of shares granted in a particular year, all awards will first be converted into option-share equivalents. In this case, each share that is subject to awards other than options will count as equivalent to current multiplier option shares. 8220 Making a commitment does not guarantee a vote change if ISS believes there are concerning flaws that remain in the company8217s equity plan design. Also, when the plan potentially propagates an egregious compensation practice that was identified, a recommendation AGAINST the plan may persist. Note that when a prior burn-rate commitment was modified or has been violated mid-stream, it may warrant a vote AGAINST the plan absent justifiable reasons, or in some cases, may result in a recommendation AGAINST the compensation committee members. What multiplier is used to evaluate whether the company has fulfilled its burn rate commitmentMost companies, as part of their burn rate commitment, 8220lock in8221 the current year8217s multiplier to reduce uncertainty. If the multiplier is thus specified in the commitment, ISS will use that multiplier. If a company did not lock in the multiplier as part of their burn rate commitment, then ISS uses the multiplier that applies to them in the year we are analyzing them to see if they fulfilled their burn rate commitment. Are reload options included in the numerator of the three-year burn rate calculationYes, reload options are included. ISS anticipates that many companies will eliminate reload options since FASB maintained under SFAS 123R that they must be counted as separate grants. However, reload options are excluded in the prospective three-year average burn rate commitment. Which burn rate policy applies to a company whose GICS classification or Index Membership has been recently changedPresumably, the new classification or index membership will reflect the appropriate operational and revenue size thus the burn rates that are reasonable for the compensation structure of similar companies under the new classification will apply. In very limited cases, ISS may consider a modified burn-rate commitment. Does the burn rate policy apply to a company that has been recently acquiredYes. For companies that have been acquired, we would generally use the three-year average burn rate data for the acquirer. For companies that have merged in a merger of equals, we would generally average the three-year average burn rate for both companies. If a company assumes an acquired companys stock options in connection with a merger, will ISS exclude these stock options in the three-year average burn rate calculationIf the company discloses in the option activity table of the 10-K the number of assumed options in connection with the merger, ISS will not include assumed options for that year. However, if the company does not separate the number of assumed options and number of options granted, the assumed options will be included. This exclusion does not apply to new (inducement, recruitment, retention) equity awards granted following an acquisition, as these have the effect of depleting the available share reserves for compensation purposes. How many prospective burn rate commitments may a company maintain at one timeShareholders prefer to see clear demonstration that a company is fulfilling a burn rate commitment before accepting a new commitment thus, consecutive-year commitments will generally not be accepted. In the case of a company that has made multiple overlapping burn-rate commitments, each average burn-rate commitment level is expected to be maintained for the applicable commitment period (i. e. a second burn-rate commitment does not supersede a prior one that is still in effect). What are the implications for a company that is unable to fulfill its burn rate commitmentISS may recommend that shareholders withhold votes from the compensation committee members and is unlikely to accept another burn rate commitment from the company due to the company8217s failure to fulfill its burn rate commitment made to shareholders previously. If a company reprices options, how will the shares be counted to avoid double countingIf the company discloses the number of repriced options in the option activity table of the 10-K, and the repricing was approved by public shareholders, ISS will not include repriced options for that year. However, if the company does not separate the number of repriced options from number of options granted, the repriced options will be included. If a company grants performance-based awards, how will the shares be counted to avoid double countingIf the company clearly distinguishes the portion of unearned performance-based awards from the year8217s grants in its proxy statement or 10-K, ISS will not include these in the burn-rate calculation, provided that the company also clearly discloses the number of performance shares that vest each year based on attainment of performance goals. Actual performance-based shares earned, deferred shares earned, or any performance-based equity awards that deplete the share reserve will be counted as they are earned, provided that all disclosure is adequate. In general, time-based awards are counted in the year in which they are granted, and performance-based awards are counted in the year in which they are earned (subject to adequate disclosure practice). Liberal Share Recycling What is the liberal share recycling policy Plans that have liberal share recycling provisions, i. e. where shares granted and exercised can, under certain circumstances, be added back to the plan reserve for future grants, will receive a more costly valuation in that all shares will be evaluated in the ISS model as full-value awards. Under what circumstances are shares considered recycledFor purposes of ISS liberal share recycling policy, recycled shares may include, but are not limited to, the following: Shares tendered as payment for an option exercise Shares withheld from exercised shares for taxes Shares added back that have been repurchased by the company using stock option exercise proceeds Stock-settled SARs where only the actual shares delivered with respect to the award are counted against the plan reserve. Are SARs settled in cash considered recycledIn cases where a plan allows SARs to be settled in either cash or stock, ISS will assume all to be stock-settled. If the plan also provides that only the net shares delivered with respect to the award will be counted against the plan reserve, the liberal share recycling policy will be triggered. What happens if a company provides a limit on the number of shares that it can recycleIf there is an articulated limit on full value awards and it is explicit that liberal recycling is only allowed on full value awards, then ISS will apply the limit accordingly as stated. However, if liberal recycling is also permitted on other forms of awards (i. e. options), then ISS will consider that the recycling feature effectively nullifies the stated limit under the plan because of the additional cost attributed to the potential of recycling other types of awards. Repricing Does ISS consider the cancellation and regrant of stock options/SARs as repricing What about the cancellation of stock options/SARs for cash payments Yes, ISS considers the above two scenarios as repricing and will recommend an AGAINST vote on the equity plan if the company allows such arrangement without shareholder approval. What progressive action may a company take if it fails to meet the repricing provision policy in equity plansCompanies may eliminate the provision that allows the board or the administrator discretion to implement any form of repricing without seeking prior shareholder approval. Alternatively, such provisions can also be explicitly superseded by a statement clarifying that any transaction allowing for an economic value exchange by optionees will require further shareholder approval. 8220Except in connection with a corporate transaction involving the Company (including, without limitation, any stock dividend, distribution (whether in the form of cash, Common Shares, other securities or other property), stock split, extraordinary cash dividend, recapitalization, change in control, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Common Shares or other securities, or similar transaction(s)), the company may not, without obtaining stockholder approval: (a) amend the terms of outstanding Options or SARs to reduce the exercise price of such outstanding Options or SARs (b) cancel outstanding Options or SARs in exchange for Options or SARs with an exercise price that is less than the exercise price of the original Options or SARs or (c) cancel outstanding Options or SARs with an exercise price above the current stock price in exchange for cash or other securities. Liberal Definition of Change in Control What is the policy on liberal change in control definitions found in equity plans ISS may recommend a vote AGAINST an equity plan if it could permit accelerated vesting of equity awards based upon a liberal change in control definition (e. g. a trigger linked to shareholder approval of a transaction, rather than its consummation, or an unapproved change in less than a substantial proportion of the board, or acquisition of a low percentage of outstanding common stock, such as 15 percent). What progressive action may a company take if its equity plans contain liberal change in control definitionsA company may qualify the problematic change in control definition to be preconditioned on determinate events that effectively constitute a change in control event, such as 8220consummation of a transaction8221 or 8220constructive loss of employment (double-triggered CIC).8221 Sample language: Change in Control shall be deemed to have occurredupon the consummation of a merger or consolidation of the Company with any other corporation. For an existing plan that is being amended, as opposed to a new plan, it is acceptable to specify that the CIC definition is effective for grants made after the plan amendment date. Fungible Plans How does ISS evaluate flexible share plans or fungible share pools Under a flexible share plan, each full-value award counts more than one share and each option counts as one share of the plan reserve. ISS evaluates the total costs of the plan by analyzing a flexible share plan under two scenarios: (1) all new shares requested as full value awards (2) all new shares requested as stock options. Under the first scenario, ISS adjusts the number reserved according to the ratio provided in the plan document. ISS will support a flexible share plan as long as both scenarios generate total costs below the allowable cap. ISS presents the more costly scenario in our proxy analysis. 162(M) Plans A post-IPO company submits an equity plan that has problematic issues (e. g. repricing provisions) for approval by public shareholders for the first time, solely for 162(m) purposes. The company will not be adding shares to the plan or in any way changing any provision in the plan. Will ISS review the plan Per 2012 policy updates, while ISS generally recommends support for 162(m) plan approvals, all equity plans put up for shareholder approval, for any reason, for the first time following a company8217s IPO will receive a standard analysis, including SVT calculation and a review of plan features. This is to ensure that any adverse provisions would not have a more detrimental potential impact on shareholders than a potential loss of tax deductions related to named executive officer grants. Stock Option Overhand Carve-Out When will ISS apply the stock option overhang carve-out policy Companies with sustained positive stock performance and high overhang cost attributable to in-the-money options outstanding in excess of six years may receive a carve-out of these options from overhang as long as the dilution attributable to the new share request is reasonable and the company exhibits sound compensation practices. A company needs to demonstrate that the in-the-money options outstanding in excess of six years have been continuously in-the-money after they were vested. The fact that employees had the opportunity to exercise these options but chose not to exercise them may reflect the confidence they have in the companys future prospects. Presenting in-the-money options in excess of six years is not sufficient information for ISS to determine whether these options were continuously in-the-money after they were vested. Companies are advised to provide the individual tranches of option grants with grant dates, option exercise prices and vesting schedules so that ISS can analyze the portion of in-the-money options to potentially carve out from the overhang. In the stock option overhang carve-out policy, what does ISS consider to be sustained positive stock performanceISS generally looks for positive 5-year total shareholder return (TSR) as well as positive year over year performance for the past five fiscal years at the time of the analysis. Exceptions may be made if stock performance was negative for the first two years and then strongly positive for the remaining three years, but vested grants that have been underwater for a substantial time during the 5-year period will not be eligible for the carve-out. These options should be deeply in the money for the periods where the companys stock performance was only high for the latest three years. A comparison of the companys five-year TSR against its four-digit GICS group can be helpful. Is ISS making any exceptions to the sustained positive stock performance criteria in light of the financial debacle experienced by almost all companies in 2009ISS recognizes that companies are affected by the global recession and would take that into consideration of the companys stock performance during this tumultuous period. Strong performing companies have experienced significant market rebound and should reflect that the stock price decline is temporary. Can ISS provide an example of a company providing such disclosure in order for ISS to carve out continuously in-the-money options outstanding in excess of six yearsPlease see Myriad Genetics DEFA 14A filed Oct. 28, 2009, Air Products and Chemicals8217 8K filed Jan. 5, 2010, NVR8217s DEF 14A filed March 19, 2010. How does ISS define high overhang cost in applying the stock option overhang carve-out policyHigh overhang cost means that the sum of outstanding options and stock awards and remaining shares available under existing equity plan(s) should exceed or approach the companys specific allowable cap. Outstanding options and stock awards must be a significant driver of the high overhang, and should be in the range of 75 to 100 percent of the total overhang. What does ISS look for with respect to the distribution of awards to executives vs. other employees (concentration ratio) in the stock option overhang carve-out policyISS will calculate the concentration ratio in the past fiscal year, defined as total equity grants to the top five executives divided by total equity grants to employees and directors. Concentration ratios greater than 50 percent to named executive officers may be concerning. Note: The questions and answers in this FAQ page are intended to provide high-level guidance regarding the way in which ISS8217 Global Research Department will generally analyze certain issues in the context of preparing proxy analysis and vote recommendations for U. S. companies. However, these responses should not be construed as a guarantee as to how ISS8217 Global Research Department will apply its benchmark policy in any particular situation.
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