Those of you who have seen my presentation over the past decade may know that I have been predicting for a while that more than 90% of companies would use performance equity. The day is here.  Are you ready?  Contact me if you need help....Dan Walter, 415-625-3406, dwalter@performensation.com

Meridian’s
Study Identifies Changing Landscape of Executive Compensation and
Corporate Governance Practices Among Major U.S. Companies

BusinessWire · Oct. 17, 2011 | Last Updated: Oct. 17, 2011 2:48 PM ET

Meridian Compensation Partners, a leading executive compensation and
corporate governance consulting firm, has identified that a majority of
large U.S. companies are strengthening their executive compensation
program’s pay and performance alignment as well as implementing
shareholder friendly corporate governance practices. “The pace at which
companies have adopted more rigorous executive compensation programs and
sound corporate governance practices is remarkable and confirms that
Boards and management teams are listening to shareholders,” observed
Matthew Isakson, a senior consultant at Meridian. He continued, “It is
notable that Boards now require performance based awards to be the
primary component of long-term incentives, especially considering the
volatile and challenging economic environment.”

The findings are part of Meridian’s 2011 Corporate Governance and
Incentive Design Survey which reviewed pay practices of 250 large U.S.
companies with median revenues of $12.8B. Among the findings:

• 
  The mix of long-term incentives (“LTI”) has shifted dramatically from
  stock options to performance shares. Nearly 90% of companies surveyed
  now use a performance share-type instrument that pays out only upon
  achievement of certain performance criteria, most often relative total
  shareholder return or critical financial performance metrics. However,
  stock options and service-based restricted stock remain prevalent too;
  used by 72% and 64%, respectively. This demonstrates widespread use of
  a “portfolio” approach towards LTI grant practices.
  


• 
  Companies are now providing almost one-half (46%) of an executive’s
  LTI value in performance shares. Stock options, which are worthless
  unless there is share price appreciation, now account for only
  one-third of the LTI value (down dramatically from 80% ten years ago),
  while service-based restricted stock makes up the remaining value
  delivered (21%).
  


• 
  Nearly 80% of companies now have a majority voting standard (versus a
  plurality voting standard) in place for director elections.
  Additionally, over 90% of these same companies have a mandatory
  resignation policy in place if a director fails to receive majority
  support from shareholders.
  


• 
  While separating the Chairman of the Board and Chief Executive Officer
  roles remain a strong minority practice (36% prevalence) among U.S.
  major companies, Boards appear to be responding to concerns over Board
  leadership and separation of duties. This is illustrated through our
  findings that 9 in 10 major U.S. companies now have a Lead Director
  role in place, often with very significant responsibilities.
  

For your copy of Meridian’s 2011 Corporate Governance & Incentive
Design Survey, please contact Jennifer Turner at jturner@meridiancp.com.