Glass Lewis, a proxy advisor, recently unveiled its new Equity Compensation Model (“ECM”), which is reportedly intended to provide company issuers and investors with access to the process it uses to evaluate whether it will provide a favorable recommendation for shareholder approval of equity compensation plan proposals. Historically, Glass Lewis has been less than transparent regarding the actual criteria and methodology it uses to make its recommendations on equity plan proposals. Companies and investors will now be able to purchase on-demand access to the ECM, which will reportedly allow the user to test and review equity plans using Glass Lewis’ 11 key criteria components and scoring system for equity plan proposals. Institutional Shareholder Services (“ISS”), another proxy advisor, through ISS Corporate Services, provides similar access to ISS’s criteria and methodology on making its recommendations regarding equity plan proposals.
Companies that have institutional shareholders which subscribe to Glass Lewis advisory services will need to consider for themselves whether purchasing access to the ECM will provide them with an effective tool for assessing and forecasting Glass Lewis’ recommendations regarding their equity plan proposals and obviate the need for engaging compensation consultants for similar guidance.
Author
Sinead Kelly
Sinead Kelly is a partner in Baker McKenzie’s Compensation practice in San Francisco. She advises on U.S. executive compensation and global equity and has practiced in the compensation field since 2005. In her practice, Sinead counsels U.S. and non-U.S. public and private companies on all aspects of equity and executive compensation plans and arrangements, including plan design, drafting, administration and governance. In this regard, Sinead advises on and assists companies with compliance with U.S. federal and state securities and tax laws relating to compensation arrangements, as well as with preparing SEC disclosures, complying with stock exchange rules and addressing non-U.S. tax and regulatory requirements. She has been repeatedly recognized by Legal 500 as a leading lawyer for Executive Compensation and Employee Benefits.
Author
Victor Flores
Victor Flores is a partner in Baker McKenzie’s Employment & Compensation Practice, with a focus on Executive Compensation and Employee Benefits. Victor advises global US and non-US companies – both public and private – on all aspects of executive compensation and benefits matters, including the corporate, securities and tax law, and ERISA issues arising in the implementation and administration of compensation programs. He regularly helps clients with the design and implementation of equity and non-equity based incentive compensation programs and nonqualified deferred compensation programs. Victor also has extensive experience advising on compensations and benefits issues in mergers and acquisitions, corporate reorganizations, private equity and other corporate transactions.
