Center's Ani Huang Featured in Bloomberg Law Blog, "The Importance of Performance in Say on Pay"

Proxy Advisory Firms

Companies should "prioritize direct engagement with shareholders on the issues that matter to them" when it comes to responding to increasing scrutiny of the link between pay and performance, advised Ani Huang, Senior Vice President of the Association's Center On Executive Compensation, in a recent interview with Bloomberg Law.  Ms. Huang discussed the latest approach used by proxy advisor ISS in evaluating company pay and performance, including the recent addition of the Financial Performance Assessment, which "shows how the CEO's pay and the company's financial performance stack up versus the peer group" based on selected financial metrics other than total shareholder return (TSR).  Noting that "investors, corporations, and other stakeholders have been increasingly skeptical of the sole use of TSR as a performance metric," Ms. Huang explained that although the new screen will only affect companies with a low or bordering on low quantitative score in the ISS tests, companies should still consider conducting their own assessments using the new financial metrics and engaging with investors on how performance drives pay on a long-term basis.