Anyone looking for yet another headache likely to arise this proxy season, look no further: Institutional Shareholder Services has unveiled a new analytical model it will use to evaluate executive compensation.
In a white paper it published Dec. 19, ISS says it will now take a two-pronged approach to reviewing compensation packages. First will be a quantitative review that examines the CEO’s pay and performance relative to other CEOs, and to his own company’s shareholder returns for the last five years. Should that first phase raise any concerns, an in-depth qualitative assessment will follow where ISS will dispatch analysts to see whether any long-term disconnect between pay and performance has arisen.
