The NASPP Blog

Here are a few items that recently showed up in my Google Alert/email that I found interesting.

Return on Executives
Exequity is promoting a new way to measure alignment of pay with performance: return on executives (ROX).  This measure compares the change in compensation paid to executives with the aggregate change in shareholder wealth.  According to Exequity’s alert, ROX results in greater correlation between pay and performance and fewer disconnects in pay for performance alignment than other models (e.g., relative degree of alignment) typically used by ISS, Glass Lewis, and institutional investors.

The alert doesn’t go into a lot of detail on the calculation, but if you are having trouble with your Say-on-Pay story, maybe you should give Exequity a call.

Canada’s Loophole
Activists in Canada are jumping on the stock options loophole bandwagon.  Their objection isn’t related to corporate tax deductions, however (companies already don’t typically get a deduction for stock compensation in Canada).  Stock options that meet certain requirements are taxed as capital gains in Canada, which generally results in a 50% income deduction.  The requirements seem to be somewhat straightforward (you can read about them on pg 28 the NASPP’s Canada Guide) and there isn’t a limit on the number of shares that can qualify for this benefit, like there is with ISOs in the US. Canadian tax activists think option gains should be taxed as compensation.  But I wonder, if the options are taxed as compensation, shouldn’t companies then be entitled to a corporate tax deduction for them? 

Less Disclosure
It’s not often that you hear about the SEC reducing the disclosures companies are required to make.  Recently, however, the Corporation Finance staff updated the SEC’s Financial Reporting Manual to reduce the amount of disclosure companies have to make about their pre-IPO stock price valuations.  The SEC doesn’t note what is new in the Manual, but a blog by Polk Davis describes what has changed with respect to the disclosures. This seems to be an outcome of the SEC’s Reg S-K study that I blogged about last week.

– Barbara