{"id":46603,"date":"2024-06-19T14:56:59","date_gmt":"2024-06-19T18:56:59","guid":{"rendered":"https:\/\/allianceadvisors.org\/?p=46603"},"modified":"2025-03-17T15:34:47","modified_gmt":"2025-03-17T19:34:47","slug":"case-study-compensation-101-pay-for-performance-applies-to-service-providers-as-well","status":"publish","type":"post","link":"https:\/\/allianceadvisors.org\/es\/case-study-compensation-101-pay-for-performance-applies-to-service-providers-as-well\/","title":{"rendered":"Case Study: Compensation 101 \u2013 Pay for Performance applies to service providers as well."},"content":{"rendered":"<div class=\"wpb-content-wrapper\">[vc_row remove_bottom_col_margin=&raquo;true&raquo;][vc_column]<style>.vcex-heading.vcex_68e44a1de5385{color:#ffffff;background-color:#393939;}<\/style><h2 class=\"vcex-heading vcex-heading-plain vcex-module wpex-heading wpex-text-2xl wpex-px-30 wpex-py-30 wpex-text-center vcex_68e44a1de5385\"><span class=\"vcex-heading-inner wpex-inline-block\">Introduction<\/span><\/h2>[\/vc_column][\/vc_row][vc_row css=&raquo;.vc_custom_1682408560766{background-color: #eaeaea !important;}&raquo;][vc_column][vc_column_text css=&raquo;.vc_custom_1718812039738{padding-top: 30px !important;padding-right: 30px !important;padding-bottom: 30px !important;padding-left: 30px !important;}&raquo;]When it is time for a corporate issuer to ask shareholders for a new equity plan or to increase the available shares under an existing plan one of the first things they think about is &ldquo;how many shares will ISS support.&rdquo; The next step for many companies is to pay ISS Corporate (formerly ICS), the corporate consulting arm of ISS, to determine how many shares the <a class=\"glossaryLink cmtt_Shareholder Vote Projection\" aria-describedby=\"tt\" data-cmtooltip=\"&lt;div class=glossaryItemTitle&gt;Proxy Advisory Firm&lt;\/div&gt;&lt;div class=glossaryItemBody&gt; Proxy Advisory Firm is an independent firm that provides research, analysis, and voting...&lt;\/div&gt;&lt;div id=&amp;quot;cmtt_related_articles&amp;quot; class=&amp;quot;cmtt_related_articles_wrapper&amp;quot;&gt;&lt;div class=&amp;quot;cmtt_related_title cmtt_related_articles_title&amp;quot;&gt;Related Articles: &lt;\/div&gt;&lt;ul class=&amp;quot;cmtt_related&amp;quot;&gt;&lt;li class=&amp;quot;cmtt_related_item&amp;quot;&gt;&lt;a href=&amp;quot;https:\/\/allianceadvisors.org\/es\/compensation-advisory-case-study\/&amp;quot;&gt;Case Study: Previously, Failed Say on Pay Proposal Compensation Advisory, Shareholder Meeting Advisory&lt;\/a&gt;&lt;\/li&gt;&lt;li class=&amp;quot;cmtt_related_item&amp;quot;&gt;&lt;a href=&amp;quot;https:\/\/allianceadvisors.org\/es\/apac-power-generation-company\/&amp;quot;&gt;Case Study: EGM &amp;#8211; Shareholder Engagement&lt;\/a&gt;&lt;\/li&gt;&lt;\/ul&gt;&lt;\/div&gt;&lt;div class=glossaryTooltipMoreLinkWrapper&gt;&lt;a class=glossaryTooltipMoreLink href=https:\/\/allianceadvisors.org\/es\/glossary-index\/proxy-advisory-firm\/ &gt;Read more...&lt;\/a&gt;&lt;\/div&gt;\" data-link=\"https:\/\/allianceadvisors.org\/es\/glossary-index\/proxy-advisory-firm\/\" href=\"https:\/\/allianceadvisors.org\/es\/glossary-index\/proxy-advisory-firm\/\" data-mobile-support=\"0\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">proxy advisory firm<\/a> will support.\n<p>This is not always the best approach since ISS Corporate will only give you a view of the shares that follow ISS recommendations and not a 360-degree view of all your shareholders. The Case Study that follows serves as a cautionary tale to consider before signing up with ISS Corporate.[\/vc_column_text][\/vc_column][\/vc_row][vc_row remove_bottom_col_margin=&raquo;true&raquo;][vc_column]<style>.vcex-heading.vcex_68e44a1de6958{color:#ffffff;background-color:#393939;}<\/style><\/p><h2 class=\"vcex-heading vcex-heading-plain vcex-module wpex-heading wpex-text-2xl wpex-px-30 wpex-py-30 wpex-text-center vcex_68e44a1de6958\"><span class=\"vcex-heading-inner wpex-inline-block\">Assignment and Challenges<\/span><\/h2>[\/vc_column][\/vc_row][vc_row css=&raquo;.vc_custom_1682408560766{background-color: #eaeaea !important;}&raquo;][vc_column][vc_column_text css=&raquo;.vc_custom_1718811814530{padding-top: 30px !important;padding-right: 30px !important;padding-bottom: 30px !important;padding-left: 30px !important;}&raquo;]Our client is a 7 billion market capitalization financial services firm with over 90 percent of its outstanding shares held by institutional investors. Well before the proxy was filed our client paid and worked with ISS Corporate to arrive at a share number that ISS would support. The proxy was filed in the early spring of this year and our client felt confident that with the ISS Corporate consulting work performed when structuring the plan proposal, the ISS research side would recommend for the equity plan proposal.\n<p>However, when ISS released its report, our client was shocked to find out that they were recommending against the share increase for the equity plan. Obviously, this caused a high level of frustration for our client and more importantly concern as to whether the plan proposal would pass a shareholder vote.[\/vc_column_text][\/vc_column][\/vc_row][vc_row equal_height=&raquo;yes&raquo;][vc_column]<\/p><div class=\"vcex-spacing wpex-w-100 wpex-clear\" style=\"height:25px;\"><\/div>[\/vc_column][\/vc_row][vc_row equal_height=&raquo;yes&raquo; remove_bottom_col_margin=&raquo;true&raquo; css=&raquo;.vc_custom_1718811828321{margin-bottom: -15px !important;}&raquo;][vc_column]<style>.vcex-heading.vcex_68e44a1de7b63{color:#ffffff;background-color:#393939;}<\/style><h2 class=\"vcex-heading vcex-heading-plain vcex-module wpex-heading wpex-text-2xl wpex-px-30 wpex-py-30 wpex-text-center vcex_68e44a1de7b63\"><span class=\"vcex-heading-inner wpex-inline-block\">Solution<\/span><\/h2>[vc_column_text css=&raquo;.vc_custom_1718811845412{padding-top: 30px !important;padding-right: 30px !important;padding-bottom: 30px !important;padding-left: 30px !important;background-color: #eaeaea !important;}&raquo; el_class=&raquo;equal-height-content&raquo;]The ISS Corporate team was in black-out during this time would not assist. Springing into action Alliance Advisors analyzed our client&rsquo;s shareholder base to determine how much impact the ISS recommendation would have. Next, we compared the equity plan&rsquo;s quantitative and qualitative features to the policy guidelines of their shareholders. At this point it became clear to Alliance Advisors that there was a high probability that the plan proposal, with active solicitation, would overcome the negative ISS recommendation. We then determined exactly what institutions we needed to target to overcome negative votes from the ISS influenced shares.\n<p>Not leaving anything to chance, our client and our <a class=\"glossaryLink cmtt_Institutional Shareholder Engagement\" aria-describedby=\"tt\" data-cmtooltip=\"&lt;div class=glossaryItemTitle&gt;Shareholder Engagement&lt;\/div&gt;&lt;div class=glossaryItemBody&gt; The process of establishing and maintaining communication and relationships between...&lt;\/div&gt;&lt;div id=&amp;quot;cmtt_related_articles&amp;quot; class=&amp;quot;cmtt_related_articles_wrapper&amp;quot;&gt;&lt;div class=&amp;quot;cmtt_related_title cmtt_related_articles_title&amp;quot;&gt;Related Articles: &lt;\/div&gt;&lt;ul class=&amp;quot;cmtt_related&amp;quot;&gt;&lt;li class=&amp;quot;cmtt_related_item&amp;quot;&gt;&lt;a href=&amp;quot;https:\/\/allianceadvisors.org\/es\/contacto\/&amp;quot;&gt;Contacto&lt;\/a&gt;&lt;\/li&gt;&lt;li class=&amp;quot;cmtt_related_item&amp;quot;&gt;&lt;a href=&amp;quot;https:\/\/allianceadvisors.org\/es\/compensation-advisory-case-study\/&amp;quot;&gt;Case Study: Previously, Failed Say on Pay Proposal Compensation Advisory, Shareholder Meeting Advisory&lt;\/a&gt;&lt;\/li&gt;&lt;\/ul&gt;&lt;\/div&gt;&lt;div class=glossaryTooltipMoreLinkWrapper&gt;&lt;a class=glossaryTooltipMoreLink href=https:\/\/allianceadvisors.org\/es\/glossary-index\/shareholder-engagement\/ &gt;Read more...&lt;\/a&gt;&lt;\/div&gt;\" data-link=\"https:\/\/allianceadvisors.org\/es\/glossary-index\/shareholder-engagement\/\" href=\"https:\/\/allianceadvisors.org\/es\/glossary-index\/shareholder-engagement\/\" data-mobile-support=\"0\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">shareholder engagement<\/a> team embarked on a shareholder outreach program to talk them through the plan. Our outreach program confirmed our research that most institutions did not have any concerns about the equity plan. We also targeted several shareholders that we knew were directly influenced by ISS and several of them disregarded ISS recommendations and voted with management.[\/vc_column_text][\/vc_column][\/vc_row][vc_row equal_height=&raquo;yes&raquo; remove_bottom_col_margin=&raquo;true&raquo; css=&raquo;.vc_custom_1682414370373{margin-bottom: -15px !important;}&raquo;][vc_column]<style>.vcex-heading.vcex_68e44a1de86db{color:#ffffff;background-color:#393939;}<\/style><\/p><h2 class=\"vcex-heading vcex-heading-plain vcex-module wpex-heading wpex-text-2xl wpex-px-30 wpex-py-30 wpex-text-center vcex_68e44a1de86db\"><span class=\"vcex-heading-inner wpex-inline-block\">Results<\/span><\/h2>[vc_column_text css=&raquo;.vc_custom_1718855996016{padding-top: 30px !important;padding-right: 30px !important;padding-bottom: 30px !important;padding-left: 30px !important;background-color: #eaeaea !important;}&raquo;]The equity plan proposal was approved by shareholders at the annual meeting with over 80 percent support.\n<p>Here are lessons learned from the above situation:<\/p>\n<ul>\n<li><strong>Analyze your shareholder base:<\/strong> This analysis will help you determine which or your shareholders are influenced by ISS, and how many have their own internal guidelines. This is the FIRST step a company should do before spending the money with ISS Corporate. You may find the ISS Corporate cost is counterproductive.<\/li>\n<li><strong>Take stock of your relationships with your shareholders:<\/strong> In the event ISS does recommend against your equity plan it will be important to know which of your ISS-influenced shareholders you might be able to engage with to override ISS.<\/li>\n<li><strong>ISS support is rarely critical to getting shareholder support for your equity plan, providing that you have done a proper analysis of your shareholder base and are conducting an active solicitation:<\/strong> While almost all plans that ISS recommends against pass a shareholder vote, companies should not leave anything to chance. Know where you are going to get the votes to overcome ISS-influenced shares that vote against and have your <a class=\"glossaryLink cmtt_Proxy Solicitor\"  aria-describedby=\"tt\"  data-cmtooltip=\"&lt;div class=glossaryItemTitle&gt;Proxy Solicitor&lt;\/div&gt;&lt;div class=glossaryItemBody&gt; A specialized firm retained by a company or shareholder to assist in the solicitation of...&lt;\/div&gt;&lt;div id=&amp;quot;cmtt_related_articles&amp;quot; class=&amp;quot;cmtt_related_articles_wrapper&amp;quot;&gt;&lt;div class=&amp;quot;cmtt_related_title cmtt_related_articles_title&amp;quot;&gt;Related Articles: &lt;\/div&gt;&lt;ul class=&amp;quot;cmtt_related&amp;quot;&gt;&lt;li class=&amp;quot;cmtt_related_item&amp;quot;&gt;&lt;a href=&amp;quot;https:\/\/allianceadvisors.org\/es\/compensation-advisory-case-study\/&amp;quot;&gt;Case Study: Previously, Failed Say on Pay Proposal Compensation Advisory, Shareholder Meeting Advisory&lt;\/a&gt;&lt;\/li&gt;&lt;li class=&amp;quot;cmtt_related_item&amp;quot;&gt;&lt;a href=&amp;quot;https:\/\/allianceadvisors.org\/es\/apac-power-generation-company\/&amp;quot;&gt;Case Study: EGM &amp;#8211; Shareholder Engagement&lt;\/a&gt;&lt;\/li&gt;&lt;\/ul&gt;&lt;\/div&gt;&lt;div class=glossaryTooltipMoreLinkWrapper&gt;&lt;a class=glossaryTooltipMoreLink href=https:\/\/allianceadvisors.org\/es\/glossary-index\/proxy-solicitor\/ &gt;Read more...&lt;\/a&gt;&lt;\/div&gt;\"  data-link=\"https:\/\/allianceadvisors.org\/es\/glossary-index\/proxy-solicitor\/\"  href=\"https:\/\/allianceadvisors.org\/es\/glossary-index\/proxy-solicitor\/\"  data-mobile-support=\"0\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex='0' role='link'>proxy solicitor<\/a> go get them.<\/li>\n<li><strong>Hiring ISS Corporate guarantees you nothing but a large invoice.<\/strong> Too often we see issuers retaining ISS Corporate to assist with their compensation or governance needs which only takes the narrow ISS view. At Alliance Advisors our process is more comprehensive with data-driven intelligence that leads to consistently successful outcomes for all our clients.<\/li>\n<\/ul>\n<p>At Alliance Advisors we take a 360-degree view and will account for all your investors voting policies. Although ISS can be an important part of the proxy we do not focus solely on them. Our process is comprehensive and backed with data driven intelligence that leads to consistently successful outcomes for all our clients.[\/vc_column_text][\/vc_column][\/vc_row]\nCompensation 101 Pay for Performance<\/p>\n<\/div>","protected":false},"excerpt":{"rendered":"<p>A cautionary tale to consider before signing up with ISS Corporate.<\/p>\n","protected":false},"author":9,"featured_media":46614,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[224],"tags":[277],"post_series":[],"ppma_author":[459],"class_list":["post-46603","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-case-studies-es","tag-compensation-advisory-proxy-solicitation-es","entry","has-media"],"authors":[{"term_id":459,"user_id":9,"is_guest":0,"slug":"nthomas","display_name":"Nick Thomas","avatar_url":"https:\/\/secure.gravatar.com\/avatar\/b13c51d67934aa5957c1ce7fa0b768b9bfe3a377d9d110466cd3131b1c32362a?s=96&d=mm&r=g","author_category":"","first_name":"Nick","last_name":"Thomas","user_url":"https:\/\/www.grid24.co.uk\/","job_title":"","description":""}],"_links":{"self":[{"href":"https:\/\/allianceadvisors.org\/es\/wp-json\/wp\/v2\/posts\/46603","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/allianceadvisors.org\/es\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/allianceadvisors.org\/es\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/allianceadvisors.org\/es\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/allianceadvisors.org\/es\/wp-json\/wp\/v2\/comments?post=46603"}],"version-history":[{"count":5,"href":"https:\/\/allianceadvisors.org\/es\/wp-json\/wp\/v2\/posts\/46603\/revisions"}],"predecessor-version":[{"id":56498,"href":"https:\/\/allianceadvisors.org\/es\/wp-json\/wp\/v2\/posts\/46603\/revisions\/56498"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/allianceadvisors.org\/es\/wp-json\/wp\/v2\/media\/46614"}],"wp:attachment":[{"href":"https:\/\/allianceadvisors.org\/es\/wp-json\/wp\/v2\/media?parent=46603"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/allianceadvisors.org\/es\/wp-json\/wp\/v2\/categories?post=46603"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/allianceadvisors.org\/es\/wp-json\/wp\/v2\/tags?post=46603"},{"taxonomy":"post_series","embeddable":true,"href":"https:\/\/allianceadvisors.org\/es\/wp-json\/wp\/v2\/post_series?post=46603"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/allianceadvisors.org\/es\/wp-json\/wp\/v2\/ppma_author?post=46603"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}