ISS Corporate Services Releases Executive Compensation Study

ISS Corporate Services Releases Executive Compensation Study

Rockville, MD (July 21, 2011) – ISS Corporate Services (ICS), the leading provider of governance advisory services and analytical tools to corporate issuers, announced today the release of its study, “Executive Pay Through a Peer Benchmarking Lens.”  

The white paper summarizing this research provides an analysis of executive pay levels as well as the processes by which companies benchmark their executive pay relative to peers.   Drawing from ISS’ new executive compensation database, the study included a review of almost 15,000 proxy filings from over the past four years.

 “An examination of the underlying data shows clear trends regarding peer benchmarking composition and its impact on executive pay,” said Daniel Cheng, ICS vice president and author of the paper.  “As expected, highly paid CEOs are the most prevalent peers for benchmarking.  The group of companies in our study with the highest paid group of CEOs was used 34% more often for benchmarking.”

With the passage of the Dodd-Frank Act last year and the resulting “Say on Pay” advisory vote afforded to shareholders, scrutiny on executive compensation has been intense, with a primary focus on total CEO pay vis-à-vis firm performance.  Thus far, according to ISS data, nearly 40 Russell 3000 companies failed to obtain shareholder approval of their pay plans in 2011.

“Peer selection remains a key concern with roughly 1,400 companies including peers that significantly increased their CEO pay while, concurrently, shareholders saw weak returns,” Cheng noted.

 “The choice of peers and articulating the rationale behind the peer group selection continues to be one of the biggest challenges for companies as they prepare each year to seek shareholder approval of executive compensation plans,” said Mark Brockway, Executive Director, ISS Corporate Services.  “With compensation benchmarking a growing concern for a broader number of governance stakeholders, issuers and investors alike will face growing pressure to analyze related patterns to ensure best practices are maintained.”

To download a copy of “Executive Pay Through a Peer Benchmarking Lens,” please click here.

ISS media contact:
Cheryl Gustitus
(O) 301.556.0395
(M) 240.406.6329
cheryl.gustitus@issgovernance.com