north america Articles

How Boards Can Guard Against Lawsuits Alleging Excessive Stock Awards

Shareholder lawsuits alleging that boards have awarded themselves too much equity got a boost this year from the Delaware court, which now says the business judgment rule may not apply. However, there are a number of steps directors can take to help protect themselves against a lawsuit.

The Aon Hewitt Multiple-Point Binomial Model: A More Precise Approach to Option Expensing

Rather than assuming that all employees have homogenous option exercise behaviors, the Aon Hewitt Multiple-Point Binomial Model considers the unique exercise activity of employee groups. This results in greater modeling flexibility and more accurate fair value calculations.

Navigating ISS' 2016 Compensation and Governance Policy Changes

ISS' updated 2016 policies have arrived. The proxy advisory firm made modifications to its equity plan scorecard system, limited the number of outside boards it recommends directors and CEOs can serve on, and implemented new governance recommendations for recently public companies.

Glass Lewis Clarifies Its Approach to One-Off Equity Awards for Executive Officers

In recent years, off-cycle equity grants for executives have received increased scrutiny from proxy advisory firms. Glass Lewis' latest proxy voting policies finally provide issuers with much-needed guidance on how Glass Lewis intends to evaluate such awards going forward. This could have a big impact on upcoming say-on-pay votes.

Glass Lewis Updates Its US Compensation & Governance Policies for the 2016 Proxy Season

On November 13, 2015, Glass Lewis released its 2016 proxy season policy updates for the US market. In this client alert, we summarize key compensation and governance updates, and provide commentary from experts across Aon Hewitt on potential challenges for issuers.

Mind the Gap: Companies Frequently Exceed Merit Increase Budgets for Top Performers

The difference between companies' merit budget and overall higher salary budget is often cash reserved for exceptional raises for top performers. Yet, this figure is often underreported. This article explores the reasons why.

ISS Seeks Lower Limits on Number of Boards on Which Directors and CEOs Can Serve

If implemented, ISS's new limits will have a big impact on CEOs who sit on more than one outside board, and professional directors who serve on four or five boards.

Seeking a New Share Authorization? Don't Ignore the Shifting Governance Environment.

ISS' new method of evaluating employee equity plans, in additional to evolving institutional investor policies, could make passage of your plan more difficult. We analyze the issues around share authorization plans that matter to various constituents.

New Options for Share-Based Payment Accounting May be Attractive to Some Issuers

New accounting guidelines from FASB allow companies to opt out of estimating forfeitures of employee stock awards, which can be a particularly attractive option for some smaller, private companies.

Data Digest: How China's Economic Situation Is Impacting Its Technology Workforce

China's economic slowdown is negatively impacting some industries, but we find the technology sector has remained resilient. A growing domestic field of companies has ramped up competition with multinationals — affecting workforce growth, employee turnover and salary increases.

Use These HR Disciplines to be an Essential Part of Sales Force Effectiveness

In the September 2015 issue of WorldatWork's Sales Compensation Focus newsletter, Radford's Scott Barton discusses how HR can be more involved in maximizing sales force effectiveness and productivity through three key areas of talent management.

Private Companies Redesign Their Employee Equity Plans as IPOs Near

Our latest study of shifts in compensation plans before and after technology and life sciences go public reveals interesting insights into pay strategies and reflects perceptions of good governance in the public markets.

Decoding the Meaning of Pre- and Post-IPO Equity Overhang Rates

Equity overhang rates at recently public companies are a clue to the overall health of equity compensation programs. Our five-year study provides valuable insight on how overhang levels shift as companies transition from a private to public company.

Getting a Grip on Sales Compensation Pay Mix

In the July 2015 issue of WorldatWork's Sales Compensation Focus newsletter, Radford's Scott Barton discusses what to consider when setting pay mix for job levels and how the ratio of guaranteed to at-risk pay influences quota achievement and total target compensation.

Rising Market Volatility Doesn't Always Mean Your Equity Plan Costs Have to Go Up

The recent drop in the stock market created by global economic uncertainty can drive up volatility assumptions— resulting in a greater cost to companies' equity plans. We explain alternative methodologies to mitigate this risk that can help offset the impact of market volatility and ultimately reduce the cost to companies.

Is Your Global Account Sales Strategy Truly Global?

One of the biggest challenges for large, multi-national companies' sales operations is executing on an effective global account strategy. However, aligning different territories around a common global goal can be challenging, and having the right structure in place is tantamount to executing on your sales strategy.

Measuring the Health of Your Equity Program as Your Private Company Matures

All private companies in the technology and life sciences sectors struggle with how much equity to grant employees. As companies prepare for an IPO, stock plans fall under greater scrutiny. We take a look at how well companies are managing their equity programs based on factors such as the age of the company and level of outside investment.

What the SEC's Final CEO Pay Ratio Rules Mean for Companies

The SEC's final CEO pay ratio rule as adopted earlier this month has some key departures from the proposal, including a delayed implementation period and flexibility on calculating median employee pay.

Data Digest: Tech and Life Sciences Sectors Diverge in LTI Design

The inaugural article in our new Data Digest series explores a distinct but little talked about way that technology and life sciences companies are different in their design of long-term incentive plans. Data Digest explores the latest trends in Radford's extensive data from across the world.

With More Retirement-Ready Employees, Tech Companies Address Gaps in Plans

The wave of tech companies that went public in the 1990s with an emphasis on employee equity are seeing more and more of their employees reach retirement age. Against that backdrop, companies are facing a tough decision about what to do about unvested shares — and the decision isn't an easy one.

2015 Say-on-Pay Review for the Technology Sector

In this report, Radford examines five years of say-on-pay voting results for the technology sector compared to the broad Russell 3000. We also review the influence of proxy advisors, industry performance and top governance concerns.

2015 Say-on-Pay Review for the Life Sciences Sector

In this report, Radford examines five years of say-on-pay voting results for the life sciences sector compared to the broad Russell 3000. We also review the influence of proxy advisors, industry performance and top governance concerns.

Radford Methodologies: How to Value and Apply Equity Compensation Market Data

Designing effective equity programs is one of the most important roles for human resources and compensation professionals. But before companies can design an effective equity program they need to gather market data and have a common methodology for valuing that data.

Is Your Employee Equity Plan IPO-Ready?

In preparation for an upcoming IPO, one of the most important considerations for compensation and HR professionals is evaluation their employee equity incentive plan— which is strikingly different for public vs. private companies. In this article, we outline the top five areas of equity plans for employers to consider as they prepare for a public offering.

Risky Business: What to Expect as Treasury Rates Rise

Historically low interest rates won't last forever. Compensation professionals that understand the effects that the inevitable increase in risk-free rates will have on equity compensation valuations will be ahead of the game.

In a Competitive Market, Biotech Firms Proving Effective in Retaining Employees

Biotech companies have higher salary increases compared to the general life sciences sector and have increased their target cash positioning. This has allowed companies to keep voluntary turnover at bay and attract new talent to fuel their rapid growth. Our article examines the latest data for the red hot biotech industry.

Hot Topics Excerpt: Technology Firms Aim Higher for Engineers than Executives

How fierce is the competition for technical talent? Well, our latest research shows that technology companies now set the bar higher for engineers than executives, targeting pay levels above the market 50th percentile for technical roles more often than for executive officers. Read our latest report to learn more.

The SEC Proposes Pay-versus-Performance Disclosure Rules. Now What?

The SEC has issued a long-awaited rules proposal on how companies should disclose the alignment between executive pay realized in a given year relative to total shareholder return. We expect the proposed rules to have special implications for our clients in the technology and life sciences sectors.

As the Race for Top Talent Intensifies, US Tech Firms Ratchet Up New-Hire Equity Awards

As corporate valuations climb, so too does the value of unvested equity awards. This makes it harder to recruit talent and drives demand for larger and larger new-hire equity grants. In our latest article, we unearth a little known pay metric to highlight the dramatic uplift in new-hire equity award sizes over the past five years.

When is it Time to Get Worried about High Sales Force Turnover?

Our recent article on sales force turnover at software companies turned a few heads and prompted a number of interesting questions from readers. With those inquiries in mind, we decided to dig deeper and explore the potential impact of sales rep turnover on revenue goals, as well as turnover rates across key US regions.

 

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