Since the enactment of Say on Pay following the passage of Dodd-Frank, executive compensation has been closely watched and scrutinized by corporate shareholders. However, the compensation of those who represent shareholders—the board of directors—often flies under the radar. While no mandated check or balance like Say on Pay currently exists for director compensation, recent events may change the current governance landscape.
As covered in a recent Equilar blog, Institutional Shareholder Services (ISS) published annual updates to its proxy voting guidelines. With respect to director pay, the new guidelines state:
“[ISS will] generally [recommend a] vote against members of the board committee responsible for approving/setting non-employee director compensation if there is a pattern (i.e. two or more years) of awarding excessive non-employee director compensation without disclosing a compelling rationale or other mitigating factors.”
EQUILAR. January 15, 2017
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