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zations are likely to be influential . . . 23 Investor Initiatives and Voting ISS ? Oppose any proposed plan and mittee member reelection if — CEO pay “disconnect” from sustained pany performance — More than 50% of CEO pay increase from equity awards — CEO participates in proposed plan ? Disconnect if 1 and 3 year TSR is negative, but CEO’s total direct pay is above prior year ? Applies to Russell 3000, publicly traded 3 years, and CEO in place at least 2 years New voting guidelines effective for annual meetings after 1/31/04 . . . 24 Investor Initiatives and Voting GLASS LEWIS amp。 CO. Proxy advisory pany, and direct petitor to ISS, formed in 2021 . . . ? Equity pensation plans are evaluated based on qualitative and quantitative review — Qualitative review looks at plan administration, method and term of exercise, repricing history, and other factors — Qualitative review includes 20 different weighted analyses ? Employs a payforperformance model with assigned grades based on CEO pay and performance relative to peer pany median practice — No information provided on how information is used in developing voting remendations 25 Investor Initiatives and Voting CALPERS ? Model to identify . portfolio panies that are both high pay and low performance, and are opening dialogue with these panies to get them to change their practices ? Want panies to develop executive pensation policies for shareholder approval — Include pensation philosophy。 targeted mix of salary and incentives。 methodologies for alignment of employee and shareholder interest。 and parameters for employment contract provisions/severance ? Advocate all equity pensation tied to performance criteria including options and restricted stock They are working in close conjunction with Glass Lewis amp。 Co. . . . 26 CONCLUSION . . . ? Lead or follow ? Look beyond the data ? Understand new and proposed regulations ? Listen to shareholders