Looking for Burn Rates?

Many companies issuing equity awards want to know what their industry practices are for "burn rates." Burn rates are the percentage of shares available each year under the company's various individual equity plans. Institutional Shareholder Services (ISS), a firm that advises institutional shareholders on how to vote on corporate governance, pay practices, and other matters, sets annual recommended standards for what it considers acceptable. The group recommends voting against "equity plans for companies whose average three-year burn rates exceed the greater of: (1) the mean plus one standard deviation of the company's GICS [industry] group segmented by Russell 3000 index and non-Russell 3000 index...; or (2) two percent of weighted common shares outstanding."

The table referred to provides mean burn rates and standard deviations by industry group. It is included in ISS's U.S. Corporate Governance Policy Updates at this link. The guidelines are updated annually. The most recent were released in November 2009.