Return to NASPP Blog
The NASPP Blog

New Glass Lewis Policy on Front Loading Grants

Subscribe to the NASPP Blog

November 20, 2018 | Barbara Baksa

New Glass Lewis Policy on Front Loading Grants

I’ve never been a fan of mega grants for executives, even when they ostensibly aggregate several years’ worth of future awards into a single grant. For one thing, I think people, executives included, tend to have short memories. In a couple of years, the executives are going to be wondering why they haven’t gotten any grants lately—forgetting that the mega grant they got a couple of years ago was supposed to cover them for current year.

Now Glass Lewis has updated their voting policy to indicate that they aren’t such a fan of this practice either.

New Discussion of Front-Loaded Awards

For their 2019 voting policy, Glass Lewis added a discussion of what they refer to as “front-loaded” awards. These are, in Glass Lewis’ words, “large grants, usually in the form of equity awards, that are intended to serve as compensation for multiple years.”

Glass Lewis seems less concerned about the short memory span of executives and more with the problem of putting all of your compensation eggs in one basket, so to speak. Here’s what they say about the practice of front-loading grants:

While the use of front-loaded awards is intended to lock-in executive service and incentives, the same rigidity also raises the risk of effectively tying the hands of the compensation committee. As compared with a more responsive annual granting schedule program, front-loaded awards may preclude improvements or changes to reflect evolving business strategies. The considerable emphasis on a single grant can place intense pressures on every facet of its design, amplifying any potential perverse incentives and creating greater room for unintended consequences. In particular, provisions around changes of control or separations of service must ensure that executives do not receive excessive payouts that do not reflect shareholder experience or company performance.

So What?

Glass Lewis says that it expects any company that grants front-loaded awards to executives to include a firm commitment not to grant additional awards for a defined period. Where a company breaks this commitment, Glass Lewis may recommend against the company’s Say-on-Pay proposal, unless a convincing rationale for the additional grant(s) is provided.

Glass Lewis notes that it will evaluate the “quantum of the award” on an annualized basis, rather than in its entirety in the year of grant. (10 pts to Glass Lewis for the sheer coolness of the word “quantum.”)

Other Equity Comp Related Changes

In addition to the discussion of front-loaded awards, Glass Lewis also notes that it has updated its policy to provide more discussion of clawback policies, use of discretion in performance plans, and peer groups. They’ve also made some revisions to the discussions of their pay for performance model, disclosures required of smaller reporting companies, director compensation, and bonus plans.

Read Glass Lewis’ policy update for 2019 at

- Barbara

P.S. Because of the holiday, we won’t be posting a blog on Thursday.  Happy Thanksgiving!

About Us

The National Association of Stock Plan Professionals is the largest and oldest professional association for the stock and executive compensation community, with over two decades of leadership providing expert resources, education and other benefits for our more than 6,000 members across 32 affiliated chapters.


P.O. Box 21639 Concord, CA 94521-0639 Telephone: (925) 685-9271 Fax: (925) 930-9284

©NASPP 2019, All Rights Reserved.