"CalPERS Adopts New Say-on-Pay Methodology" from Pay Governance educates on CalPERS' new pay-for-performance model that extended its three-year compensation analysis to five years, includes both quantitative and qualitative analyses and a new proprietary P4P scorecard, and reportedly generated an unprecedented rate of opposition - 53% - to portfolio company say-on-pay proposals in 2019 compared to what was an already-stunning 43% opposition rate during the 2018 proxy season.
Pay Governance observes:
One of the more perplexing issues of the CalPERS methodology is its adoption of yet another proprietary pay for performance model. This further complicates the landscape for public companies in evaluating advisor or shareholder proxy voting standards. This quantitative model, which includes a 5-year time reference, is a new tool independently developed for CalPERS’ proprietary use in deciding Say-on-Pay advisory votes. Public companies are already subject to the quantitative analysis and modeling conducted by proxy advisors ISS and Glass Lewis as well as investment firm Northern Trust. These firms each use their own proprietary algorithms to ascertain pay for performance outcomes. Recently, Glass Lewis announced it is updating its analytics in delivering Say-on-Pay votes, and ISS has announced it is studying how to incorporate an economic value added analysis into its pay for performance modeling.
See our prior reports: "Equilar-CalPERS Introduce P4P Five-Year Analysis" and "CalPERS Discusses its New 5-Year Pay-for-Performance Model" and additional information & resources on our Pay for Performance, Say-on-Pay, and Institutional Investors pages. This post first appeared in the weekly Society Alert!