Cracking the Code: New Pay Governance Research Helps Companies Meet Challenges of ISS’ Qualitative Pay Program Review and Say on Pay
NEW YORK--(BUSINESS WIRE)--Pay Governance LLC, a U.S.-based, independent compensation advisor, has introduced the Pay Governance Qualitative Factors Score, a new approach to assist clients facing qualitative compensation program reviews from institutional shareholder advisor ISS.
“From the Compensation Committee’s perspective, the Qualitative Factors Score focuses the conversation on the specific group of pay practices that may influence the ISS say on pay vote recommendation. This helps clients understand where they should prioritize their efforts.”
Despite the overwhelming endorsement of executive pay by shareholders, some companies have struggled with these qualitative reviews. Pay Governance’s new study is based on research into how companies fared on ISS’ qualitative executive pay program review after failing an initial quantitative pay-for-performance testing. The research database includes all S&P 1500 companies that failed the initial quantitative test.
The Qualitative Factors Score provides a methodology to assess how a company’s pay programs and practices may be viewed by ISS. Additionally, Pay Governance is able to use its proprietary database of Qualitative Factors Scores to estimate the relative risk of receiving an “AGAINST” recommendation from ISS on the advisory say-on-pay vote.
“The key challenge is to motivate executives to create shareholder value in an ISS and say-on-pay world. We have found a unique way to help our clients do this by effectively navigating ISS’ complex and subjective qualitative review,” said Ira Kay, a managing partner at Pay Governance.
The Qualitative Factors Score is not intended to predict ISS’ recommendations for the advisory say-on-pay vote. Rather, the scoring process provides insight into which specific pay practices will be viewed most favorably and which may be viewed as “concerns” by ISS.
Pay Governance partner Don Kokoskie explained, “From the Compensation Committee’s perspective, the Qualitative Factors Score focuses the conversation on the specific group of pay practices that may influence the ISS say on pay vote recommendation. This helps clients understand where they should prioritize their efforts.”
Additional information on the research underlying the Qualitative Factors Score is available on the firm’s website at www.paygovernance.com.
About Pay Governance LLC Pay Governance is an independent consulting firm focused on delivering advisory services to compensation committees. The consultancy also advises the management of companies in situations in which the firm does not serve as the independent committee advisor. With a staff of 50 consultants, Pay Governance has locations throughout the United States in cities including New York, Boston, Detroit, Philadelphia, Pittsburgh, Chicago, St. Louis, Dallas, Cleveland, San Francisco and Los Angeles.