Posts from: Carol Bowie

The “Do’s” and “Dont’s” for Say on Pay

Posted by Carol Bowie, Teneo Governance, on

Thursday, November 2, 2017

Boards of Directors, Compensation ratios, Executive Compensation, Incentives, Institutional Investors, Management, Proxy advisors, Say on pay, Shareholder voting
More from: Carol Bowie, Teneo Governance

Carol Bowie is Senior Advisor at Teneo Governance. This post is based on a Teneo publication by Ms. Bowie.

Advisory votes on compensation are more than half a decade old in the U.S., and the trends are clear:

The vast majority of companies provide for annual votes.
“Pay for performance” assessments underlie most investor voting.
Each year the overall support level averages more than 90 percent, while about only about 2 percent of companies fail to receive majority support for their pay programs.
Another 5 to 10 percent pass with what is deemed mediocre backing – below 70 or 80 percent support per proxy advisor policies (ISS and Glass Lewis, respectively) and in the eyes of many investors. This result triggers expectation that the compensation committee will demonstrate a substantive level of responsiveness to the relatively low vote.
Increasingly important, low support for say on pay can be a red flag to activist investors who closely monitor shareholder dissatisfaction at potential targets.

Women Directors and Participation on Key Committees

Posted by Carol Bowie, Institutional Shareholder Services, Inc., on

Wednesday, June 8, 2016

Audit committee, Australia, Board composition, Board dynamics, Boards of Directors, Canada, Compensation committees, Director qualifications, Diversity, EU, Europe, International governance, Japan, Nominating committees, UK
More from: Carol Bowie, Rob Yates, Institutional Shareholder Services Inc.

Carol Bowie is Head of Americas Research at Institutional Shareholder Services (ISS). This post is based on a recent publication authored by ISS U.S. Research analyst Rob Yates.

Women corporate directors globally are showing greater proportional gains on occupying key board committees than on boards overall, according to a new analysis by leading governance and ESG data and analytics provider Institutional Shareholder Services.

Between Jan. 1, 2014, and Jan. 1, 2016, the proportion of women directorships at companies across major markets and indices in Europe, the U.S., Australia, and Canada grew by 5.5 percentage points compared with 6.9 points for those on audit committees. Growth evidenced in the proportion of women on audit committees during that period included double digit gains at companies in Italy and France, 7.2 percentage points at U.K. companies, and 6 percentage points at Swiss companies. Meanwhile, the proportion of women on other key committees, including those addressing remuneration and nomination, similarly outpaced gains at the overall board levels, albeit less prominently, at 6.5 and 5.9 points, respectively.

ISS 2016 Board Practices Study

Posted by Carol Bowie, Institutional Shareholder Services, on

Wednesday, June 1, 2016

Board composition, Board performance, Board turnover, Boards of Directors, Director qualifications, Diversity, ISS, Majority voting, Overboarding, Shareholder elections, Shareholder Rights Project, Staggered boards
More from: Andrew Borek, Carol Bowie, Liz Williams, Rob Yates, Institutional Shareholder Services Inc.

Carol Bowie is Head of Americas Research at Institutional Shareholder Services (ISS). This post is based on a recent publication authored by ISS U.S. Research analysts Andrew Borek, Liz Williams, and Rob Yates. Information on how to obtain the full report is available here.

ISS’ latest update of the structure and composition of boards and individual director attributes at Standard & Poor’s U.S. “Super 1,500” companies (i.e., companies in the S&P 500, MidCap 400, and SmallCap 600 indices) found a number of new and continuing trends in board practices and director attributes at these key index companies.
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Board Leadership Structure: Impact on CEO Pay

Posted by Carol Bowie, Institutional Shareholder Services, on

Wednesday, March 16, 2016

Board composition, Board independence, Board leadership, Boards of Directors, Executive Compensation, Firm performance, Institutional Investors, Management, Outside directors, Shareholder value
More from: Carol Bowie, Steve Silberglied, Zachary Friesner, Institutional Shareholder Services Inc.

Carol Bowie is Head of Americas Research at Institutional Shareholder Services (ISS). This post is based on a recent publication authored by ISS U.S. Research analysts Steve Silberglied and Zachary Friesner. The complete publication is available here. Related research from the Program on Corporate Governance includes the book Pay without Performance: The Unfulfilled Promise of Executive Compensation by Lucian Bebchuk and Jesse Fried.

Do more titles equal higher pay? It is well-documented that U.S. CEOs’ compensation, when compared to that of the average worker, has ballooned in recent decades. Past studies of the drivers of CEO pay at public companies have largely focused on firm size, number of employees, revenues, and TSR (total shareholder return) among other factors. A recent analysis examines whether and, if so, how board structure may impact CEO compensation. Specifically, the analysis tests whether a combined CEO/chairman role correlates to higher pay, and if a particular board leadership structure has a statistically significant relationship with CEO compensation. The analysis focuses on S&P 500 companies whose board structure remained relatively constant over a recent three-year period, to provide a consistent view of the trends.

2015 US Compensation Policies FAQ

Posted by Carol Bowie, Institutional Shareholder Services Inc., on

Monday, March 2, 2015

Carol Bowie, CD&A, Executive Compensation, Institutional Investors, ISS, Management, Proxy advisors, Shareholder value
More from: Carol Bowie, Institutional Shareholder Services Inc.

Carol Bowie is Head of Americas Research at Institutional Shareholder Services Inc. (ISS). This post relates to ISS compensation policy guidelines for 2015. The complete publication is available here.

US Executive Pay Overview

1. Which named executive officers’ total compensation data are shown in the Executive Pay Overview section?

The executive compensation section will generally reflect the same number of named executive officer’s total compensation as disclosed in a company’s proxy statement. However, if more than five named executive officers’ total compensation has been disclosed, only five will be represented in the section. The order will be CEO, then the second, third, fourth and fifth highest paid executive by total compensation. Current executives will be selected first, followed by terminated executives (except that a terminated CEO whose total pay is within the top five will be included, since he/she was an within the past complete fiscal year).

2. A company’s CEO has resigned and there is a new CEO in place. Which CEO is shown in the report?

Our report generally displays the CEO in office on the last day of the fiscal year; however, the longer tenured CEO may be displayed in some cases where the transition occurs very late in the year.

2015 Benchmark US Proxy Voting Policies FAQ

Posted by Carol Bowie, Institutional Shareholder Services Inc., on

Thursday, February 26, 2015

Charter & bylaws, Institutional Investors, Proxy access, Proxy advisors, Proxy voting, Rule 14a-11, Rule 14a-8, Shareholder proposals, Shareholder rights
More from: Carol Bowie, Institutional Shareholder Services Inc.

Carol Bowie is Head of Americas Research at Institutional Shareholder Services Inc. (ISS). The following post relates to ISS’ 2015 Benchmark Proxy Voting Policies.

ISS is providing answers to frequently asked questions with regard to select policies and topics of interest for 2015:

Proxy Access Proposals

1. How will ISS recommend on proxy access proposals?

Drawing on the U.S. Securities and Exchange Commission’s (SEC) decades-long effort to draft a market-wide rule allowing investors to place director nominees on corporate ballots, and reflecting feedback from a broad range of institutional investors and their portfolio companies, ISS is updating its policy on proxy access to generally align with the SEC’s formulation.

Old Recommendation: ISS supports proxy access as an important shareholder right, one that is complementary to other best-practice corporate governance features. However, in the absence of a uniform standard, proposals to enact proxy access may vary widely; as such, ISS is not setting forth specific parameters at this time and will take a case-by-case approach when evaluating these proposals.

Vote case-by-case on proposals to enact proxy access, taking into account, among other factors:

ISS 2015 Equity Plan Scorecard FAQs

Posted by Carol Bowie, Institutional Shareholder Services Inc., on

Monday, February 2, 2015

Equity-based compensation, Executive Compensation, Incentives, Proxy advisors, Say on pay
More from: Carol Bowie, Institutional Shareholder Services Inc.

Carol Bowie is Head of Americas Research at Institutional Shareholder Services Inc. (ISS). This post relates to ISS’ Equity Plan Scorecard for 2015.

General Questions

1. What is the basis for ISS’ new scorecard approach for evaluating equity compensation proposals?

The new policy will allow more nuanced consideration of equity incentive programs, which are critical for motivating and aligning the interests of key employees with shareholders, but which also fuel the lion’s share of executive pay and may be costly without providing superior benefits to shareholders. While most plan proposals pass, they tend to get broader and deeper opposition than, for example, say-on-pay proposals (e.g., only 60% of Russell 3000 equity plan proposals garnered support of 90% or more of votes cast in 2014 proxy season, versus almost 80% of say-on-pay proposals that received that support level). The voting patterns indicate that most investors aren’t fully satisfied with many plans.

ISS 2015 Independent Chair Policy FAQs

Posted by Carol Bowie, Institutional Shareholder Services Inc., on

Monday, January 26, 2015

Board independence, Board leadership, Boards of Directors, Proxy advisors, Proxy season, Proxy voting, Shareholder proposals
More from: Carol Bowie, Institutional Shareholder Services Inc.

Carol Bowie is Head of Americas Research at Institutional Shareholder Services Inc. (ISS). This post relates to ISS independent chair voting policy guidelines for 2015.

1. How does the new approach differ from the previous approach?

Under the previous approach, ISS generally recommended for independent chair shareholder proposals unless the company satisfied all the criteria listed in the policy. Under the new approach, any single factor that may have previously resulted in a “For” or “Against” recommendation may be mitigated by other positive or negative aspects, respectively. Thus, a holistic review of all of the factors related to company’s board leadership structure, governance practices, and performance will be conducted under the new approach.

For example, under ISS’ previous approach, if the lead director of the company did not meet each one of the duties listed under the policy, ISS would have recommended For, regardless of the company’s board independence, performance, or otherwise good governance practices.

Under the new approach, in the example listed above, the company’s performance and other governance factors could mitigate concerns about the less-than-robust lead director role. Conversely, a robust lead director role may not mitigate concerns raised by other factors.

ISS Releases 2015 Benchmark Policy Updates

Posted by Carol Bowie, Institutional Shareholder Services Inc., on

Friday, January 16, 2015

Canada, France, Institutional Investors, International governance, Japan, Proxy advisors, Proxy season, Proxy voting
More from: Carol Bowie, Institutional Shareholder Services Inc.

Carol Bowie is Head of Americas Research at Institutional Shareholder Services Inc. (ISS). This post relates to ISS global benchmark voting policy guidelines for 2015.

ISS recently issued updated guidelines for several of its benchmark global voting policies, which will be effective for analyses of publicly traded companies with shareholder meetings on or after Feb. 1, 2015. For the 10^th year running, ISS gathered broad input from institutional investors, corporate issuers, and other market constituents worldwide as a key part of its policy development process. The 2015 updates reflect the time and effort of hundreds of investors, issuers, corporate directors, and other market participants who provided input through a variety of channels, including ISS’ annual policy survey, topical and regional roundtables, and direct engagements with staff.

ISS Proposes New Approach to Independent Chair Shareholder Proposals

Posted by Carol Bowie, Institutional Shareholder Services Inc., on

Tuesday, October 28, 2014

Board independence, ISS, Non-executive chairman, Proxy advisors, Proxy voting, Shareholder proposals
More from: Carol Bowie, Institutional Shareholder Services Inc.

Carol Bowie is Head of Americas Research at Institutional Shareholder Services Inc. (ISS). This post relates to draft policy changes to voting recommendations on independent chair shareholder proposals issued by ISS on October 15, 2014.

Calls for independent board chairs were the most prevalent type of shareholder proposal offered for consideration at U.S. companies’ annual meetings in 2014. As of June 30, 62 of these proposals have come to a shareholder vote, up from 55 resolutions over the same time period in 2013. Notably, the number of proposals calling for independent board chairs has more than doubled over the past five years. Under the current policy formulation, ISS recommended against 32 of these 62 proposals in 2014. In line with results from recent seasons, independent chair proposals received average support of 31.2 percent of votes cast at 2014 meetings. Only four of these proposals received the support of a majority of votes cast.

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Posts from: Carol Bowie

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