Yet Another Reason to Focus on Director Pay

Greg Gautam • June 26, 2018

We have previously encouraged our readers to focus on the size of their director pay packages and the processes their boards undertake in setting director compensation.  Prior focus on these issues was recommended largely as a way to mitigate the risk of litigation for excessive pay.  In their current U.S. Compensation Policies FAQ, Institutional Shareholder Services Inc. (“ISS”) has given boards yet another reason to focus on director compensation. In the FAQ, ISS indicates the following:

  • In evaluating non-employee director pay, ISS will look for “reasonable practices” that “adequately align the interests of directors to those of shareholders.”
  • A director pay program should incorporate “meaningful” stock ownership and/or holding requirements.
  • A “meaningful” annual limit on annual director pay is a positive feature.
  • It is a problematic pay practice for non-employee directors to receive performance-based equity awards, retirement benefits and other perquisites.
  • Transparent disclosure of director pay decisions should be provided, including a disclosure on each pay element.

ISS may recommend a “no” vote if it finds a recurring pattern of two or more consecutive years of excessive non-employee director pay without a “compelling rationale.” ISS has indicated that it is looking for outliers, which are issuers that have historically paid their directors in the top 5% of all comparable directors.

We continue to believe that our public company clients should familiarize themselves with the applicable case law and proxy advisor guidance in this developing area.

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.
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