5 Pay Practices that Trigger ISS Attention

Because the Institutional Shareholder Services reports and positions on executive pay are widely reviewed and considered by investors, comp managers need to be aware of the principal concerns ISS has, says Deborah Lifshey, managing director at Pearl Meyer & Partners.  Here are five pay practices that most concern ISS, says Lifshey:

1.     Repricing/replacing underwater stock options without      shareholder approval

2.     Excessive perquisites or tax gross-ups

3.     New or extended agreements that provide for:

     a.     CIC (Change In Control) payments greater than three times base plus bonus

     b.     Single-trigger CIC payments

     c.     CIC payments with excise tax gross-ups

4.     Incentives that may motivate excessive risk-taking:

     a.     Multiyear guaranteed bonuses

     b.     Single or common performance metric used for short- and long-term incentive plans

     c.     Lucrative severance packages

     d.     High pay opportunities relative to industry peers

     e.     Disproportionate supplemental pensions

     f.      Mega annual equity grants with unlimited upside and no downside risk

5.     Options backdating

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