January 27, 2020

Agenda – ISS: Say More on CEO Exit Deals, Or Else

Marc Hodak, partner at compensation consultancy Farient Advisors, says that aside from concerns with ISS, compensation committees should keep in mind that “investors generally are starting to ask about tightening provisions for termination if the executive is seen as contributing to, or perhaps overseeing, reputational damage.”

In those cases, Hodak says, “they may favor the forfeiture of all unvested awards and may, in extreme circumstances, look for clawbacks of awards already vested or paid out. Companies that adopt such provisions may choose to disclose them in order to score points with investors that would favor them.”

While Glass Lewis does not release FAQs as ISS does, its 2020 policy guidelines state that it will vote against all compensation committee members “if the company entered into excessive employment agreements and/or severance agreements.”

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