Archive for 2016

Institutional Shareholder Services (ISS) has announced a new methodology for its pay-for-performance models which will become effective on February 1, 2017. The announcement states that additional criteria will be introduced as metrics for the evaluation of corporate performance for the evaluation of executive compensation programs.

In addition to the use of total shareholder return (TSR), ISS will present relative evaluations of:

• Return on equity
• Return on assets
• Return on invested capital
• Revenue growth
• EBITDA growth
• Growth in cash ...

In March of this year, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU 2016-09) entitled Improvements to Employee Share-Based Payment Accounting. This document describes changes to ASC Topic 718, which governs accounting for stock or other share-based compensation. This includes restricted stock, employee stock options, and relative total shareholder awards among other instruments. The changes to ASC 718 set forth in ASU 2016-09 will take effect for public companies for annual periods which begin after December ...

Our previous two blog posts have addressed the inclusion of post-vest holding period restrictions in share-based payment awards. We are beginning to see such provisions in the awards our clients submit to us for valuation. We have implemented a number of models for the valuation of such provisions as part of a share-based payment award, and are ready and able to apply these models whenever they are called for. In light of the somewhat vague comments made by an employee ...

In our previous blog post, we discussed comments by the SEC regarding the application of discounts to the grant-date fair value of share-based awards which include post-vest holding periods. In accordance with ASC 718-10-30-10, we consider the effect of the post-vest holding period on the grant-date fair value and estimate a discount. The academic literature presents a number of different models for the estimation of the discount, which depends upon the volatility of the company’s shares and the length of ...

We have noted a recent trend in incentive compensation practice regarding the inclusion of a Post Vest Holding Period as a provision in new awards. Post-Vest Holding Periods (PVHPs) require that any shares acquired as the result of the exercise of an ESO or the vesting of a TSR must be held for a specified period of time before they can be sold. Such provisions may result in a decrease in the fair value of the award, and afford an ...