Update on ISS Performance Metrics for 2017

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Institutional Shareholder Services (ISS) has announced a new methodology for its pay-for-performance models which will become effective on February 1, 2017. The announcement states that additional criteria will be introduced as metrics for the evaluation of corporate performance for the evaluation of executive compensation programs.

In addition to the use of total shareholder return (TSR), ISS will present relative evaluations of:

• Return on equity
• Return on assets
• Return on invested capital
• Revenue growth
• EBITDA growth
• Growth in cash flow from operations

These metrics were added as a result of the 2016-2017 Global Policy Survey, published September 29, 2016. A summary of the results of the survey is available here.

Montgomery Investment Technology closely follows all developments in the field of executive compensation. If you have questions about the impact of the new ISS guidelines on your executive compensation program, please contact us.

November 15, 2016

About the Author:

Greg is a Derivative Valuation Consultant with Montgomery Investment Technology, Inc. He holds a BS from Carnegie-Mellon University and a PhD in Chemical Engineering with a concentration in Applied Mathematics from Princeton University. His experience spans management at both public and privately held companies, as well as teaching finance at the university level. Greg is a Chartered Alternative Investment Analyst (CAIA) and a Financial Risk Manager (FRM)