Shareholder Value Transfer (SVT)
Shareholder Value Transfer (SVT) is a metric intended to guide shareholders in how much equity compensation should be awarded to employees and executives of publicly traded companies. ISS' proprietary compensation model calculates a Shareholder Value Transfer benchmark for each company — based on its market cap, industry, and relevant performance metrics relative to peers — which is used in evaluating the company's Shareholder Value Transfer. According to Institutional Shareholder Services, Shareholder Value Transfer refers to an estimate of the value that the company will transfer to its employees and directors via certain equity-based compensation programs, as measured at a given date based on a standard set of inputs. To find a Shareholder Value Transfer estimate, Institutional Shareholder Service's calculations use a combination of third-party data for an option pricing model as well as company-specific data (including outstanding grants and shares remaining for future grants) generally reported in the annual 10-K or proxy filing. The Shareholder Value Transfer metric was created by Institutional Shareholder Services (ISS), a research firm that advises shareholders on how to vote on shareholder proposals.
What Is Shareholder Value Transfer (SVT)?
Shareholder Value Transfer (SVT) is a metric intended to guide shareholders in how much equity compensation should be awarded to employees and executives of publicly traded companies. Shareholder Value Transfer is calculated as the total value of equity grants divided by the market capitalization of the company. This yields a percentage to which existing shareholders would be diluted under a given equity compensation plan.
Understanding Shareholder Value Transfer (SVT)
The Shareholder Value Transfer metric was created by Institutional Shareholder Services (ISS), a research firm that advises shareholders on how to vote on shareholder proposals. ISS calculates shareholder value transfer for the top companies within each industry and decides on a maximum "cap" amount that any company should have to pay in shareholder value transfer, in order to perform well. ISS then typically advises investors to vote against any equity compensation proposal that would exceed the shareholder value transfer cap.
According to Institutional Shareholder Services, Shareholder Value Transfer refers to an estimate of the value that the company will transfer to its employees and directors via certain equity-based compensation programs, as measured at a given date based on a standard set of inputs. ISS' proprietary compensation model calculates a Shareholder Value Transfer benchmark for each company — based on its market cap, industry, and relevant performance metrics relative to peers — which is used in evaluating the company's Shareholder Value Transfer.
To find a Shareholder Value Transfer estimate, Institutional Shareholder Service's calculations use a combination of third-party data for an option pricing model as well as company-specific data (including outstanding grants and shares remaining for future grants) generally reported in the annual 10-K or proxy filing.
Related terms:
10-K
A 10-K is a comprehensive report filed annually by a publicly traded company about its financial performance and is required by the U.S. Securities and Exchange Commission (SEC). read more
Business Valuation , Methods, & Examples
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Employee Stock Option (ESO Calculation)
An employee stock option (ESO) is a grant to an employee giving the right to buy a certain number of shares in the company's stock for a set price. read more
Fundamental Analysis
Fundamental analysis is a method of measuring a stock's intrinsic value. Analysts who follow this method seek out companies priced below their real worth. read more
Katie Couric Clause
The Katie Couric clause is a slang term for a proposed 2006 SEC rule that would have required firms to disclose the pay of non-executive employees. It was not adopted. read more
Overhang
Overhang is a measure of the potential dilution to which common shareholders are exposed due to possible awards of stock-based compensation. read more
Proxy Statement
A proxy statement is a document the SEC requires companies to provide shareholders that includes information needed to make decisions at shareholder meetings. read more
Public Company
A public company is a corporation whose ownership is distributed amongst general public shareholders through publicly-traded stock shares. read more