What boards choose to disclose about a CEO’s departure could impact how Institutional Shareholder Services makes voting recommendations this proxy season, according to the proxy advisor’s recently released FAQs document on compensation policies.
According to ISS, CEOs should not receive severance if they stepped down willingly. As a result, ISS said, it wants more detail on whether the CEO was officially terminated for cause or not.
The vast majority of S&P 500 CEOs — 33 of the 35 — who left their company in 2019 were not terminated but rather resigned, according to public company intelligence provider MyLogIQ. Only two companies, McDonald’s and Gap, disclosed that they terminated their CEOs; most others used language in 8-Ks or other filings noting that the CEO “ceased to serve” or is “leaving” or “stepping down.” Gap’s filing noted that former CEO Arthur Peck was “stepping down,” in addition to being “terminated without cause” for the purposes of triggering post-termination benefits.
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