Keeping with this evening’s Halloween spirit, members of Board of Directors and Compensation Committees should be aware of an allegation that is currently floating within the ominous fog – that some executives of publicly-traded issuers are trick-or-treating with “ghost revenue.” Kidding aside, the allegation (or potential allegation) is that some executive officers are using ghost revenue (i.e., deferred revenue) in order to satisfy otherwise unattainable non-GAAP performance metrics. A grossly-oversimplified explanation of this issue is addressed in the below portions of this post. Continue Reading Compensation Governance: Is Ghost Revenue Real?
Just a quick note that late last week ISS made available for public comment nine discreet voting policies for potential application in 2019. Only one of the draft voting policies addresses compensation, and it addresses the Financial Performance Assessment Methodology under the Pay-for-Performance Model. Continue Reading ISS Issues Draft 2019 Voting Policy Updates
Tomorrow I am speaking on “Trends in Designing Performance-Based Equity Awards” at the HC&B Total Rewards Summit in Houston, Texas. Discussion points include: (i) applicable forms of equity incentives conducive to performance-based awards, (ii) the more common performance metrics used to drive behavior, (iii) typical payout levels and performance periods, (iv) total shareholder return formulas, (v) administrative issues associated with accelerated vesting provisions upon retirement, (vi) maximizing capital gains with 83(b) elections, and (vii) recent revisions to Section 162(m) and the likely impact upon performance-based designs. Hope to see you there! Continue Reading HC&B Total Rewards Summit