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