ISS Issues FAQs on Equity Plan Scorecard

Greg Gautam • January 7, 2015

As reported in my October 24, 2014 post , Institutional Shareholder Services Inc. (“ISS”), a leading proxy advisory firm, has adopted a new “scorecard” approach to evaluating public company equity compensation plans.  In a recent set of FAQs, ISS offers additional guidance on how it will apply the new scorecard when analyzing equity plan proposals made on or after February 1, 2015.

Among other things, the FAQs clarify that regardless of other scorecard factors, the following equity plan features will continue to result in an “against” vote: (i) a liberal change in control definition that could result in vesting of awards by any trigger other than a full double trigger, (ii) provisions that permit the repricing and/or cash out of underwater options or stock appreciation rights without shareholder approval, (iii) provisions that make a plan a vehicle for problematic pay practices or create a pay for performance disconnect, and (iv) any other plan features that are detrimental to shareholder interests which may include tax gross-ups or reload options.

Importantly, the FAQs also clarify that equity plan proposals that only seek to ensure tax deductibility of awards under Section 162(m) of the Internal Revenue Code will generally receive a favorable recommendation from ISS regardless of other scorecard factors as long as the issuer’s compensation committee is 100% independent according to ISS independence standards.

The entire set of FAQs can be found here.

Employee burnout: what it is and how to prevent it

By Mardy Gould • May 24, 2024
Employee burnout has become an epidemic in today’s modern workplace. So much so that the World Health Organization (WHO) officially recognizes it as an “occupational phenomenon.”1 While many used to consider mounting workplace stress an individual employee problem, these days, it’s become an employer’s responsibility to prevent burnout before it hurts productivity and business performance—not to mention your employees’ physical and mental health. Luckily, you can prevent burnout from affecting your workforce in several ways. This article will explore the causes and signs of employee burnout and the steps you can take to create a positive work environment where employees feel safe from toxic stress levels.

Form 720 and PCORI fee FAQs

By Mardy Gould • May 23, 2024
If you're a small business owner, you may have heard of the acronym PCORI and the fees that come with it. But what is PCORI, and how does it apply to your organization? Under the Affordable Care Act (ACA), sponsors of self-insured health plans must pay a fee to fund the federal Patient-Centered Outcomes Research Institute (PCORI). PCORI is an independent organization the ACA created to conduct research to help healthcare consumers make better decisions for their specific needs and outcomes. It also performs research related to clinical effectiveness. Employers offering a self-insured medical reimbursement health plan, such as a health reimbursement arrangement (HRA), must pay this fee by July 31 each year via Form 7201. This fee was initially set to expire in 2019, but Congress extended it through September 30, 20292, due to the Further Consolidated Appropriations Act of 20203.
More Posts