The NASPP Blog

March 23, 2010

Will RiskMetrics Red Light Your Stock Compensation?

New RiskMetrics Rating System Highlights Compensation Practices
RiskMetrics introduced a new system to rate public companies in four key areas of corporate governance:

  • Audit
  • Board structure
  • Compensation
  • Shareholder rights

Governance Risk Indicators (GRId) uses color coding to indicate how companies score in each of the above areas: green for low concern, yellow for medium concern, and red for high concern.

The new measure will replace the Corporate Governance Quotient (CGQ) rating, which provided a single overall rating. By separately rating the four areas listed above, RiskMetrics focuses more attention on each. Thus, companies with poor compensation practices may not be able to fully compensate (sorry for the pun, but I can’t think of a more appropriate word) with excellent practices in the other three areas.

Certain stock compensation practices, such as repricing without shareholder approval or issuing mega grants are likely to impact a company’s compensation rating. If you haven’t done so already, now might be a good time to review how your stock compensation programs stack up under RiskMetrics analysis; you don’t want compensation to be the only red rating in an otherwise perfect score!

For more information on GRId, see RiskMetrics’ announcement and FAQ for issuers or read memos from Compensia and Choate Hall & Stewart.

Less Than Three Weeks Left to Participate in the Stock Plan Design Survey!
You have less than three weeks left to participate in the NASPP’s 2010 Domestic Stock Plan Design Survey (co-sponsored by Deloitte).  Don’t miss your chance–you have to complete the survey by April 9 to get the results.

The winner of last week’s survey raffle is Martin Cannon of Paychex, who receives a $50 Amazon.com gift certificate.  Complete the survey today to be included in next week’s raffle (and qualify to receive 10% off the NASPP Conference and NASPP membership).

18th Annual NASPP Conference
This year’s NASPP Conference will be September 20-23 in Chicago.  Last year’s Conference sold out and we expect even more attendees this year.  Don’t wait to register–early bird discounts are only available until April 15.

NASPP “To Do” List
We have so much going on here at the NASPP that it can be hard to keep track of it all, so I keep an ongoing “to do” list for you here in my blog. 

-Barbara