Archive 2011

ISS Posts Technical Document on 2012 Pay-for-Performance Methodology

On December 19, 2011, ISS posted the Technical Document, Evaluating Pay for Performance Alignment, ISS’ Quantitative and Qualitative Approach to its 2012 Policy page.  The complete document can be downloaded from:

http://www.issgovernance.com/sites/default/files/EvaluatingPayForPerformance_20111219.pdf

The Pay-for-Performance (P4P) methodology laid out differs in certain aspects from what ISS had previously communicated about its 2012 P4P Policy, e.g., peer group methodology. I’m in the process of reviewing and will post more details once I’m done with my analysis, but wanted folks to know that the document is available.

ISS Issues Final 2012 Policies

On November 17, 2011 (right on time), ISS issued its final policies for 2012. The policies will be effective for shareholder meetings occurring on or after February 1, 2012. Generally, the final policies kept to the draft policies issued a few weeks back and there were very few new surprises (a very welcome occurrence).  That said, there are a few interesting things to note about the final policies:

  • Say on Pay Votes that receive less than 70% votes cast in favor will trigger additional scrutiny under the ISS Management Say on Pay (MSOP) Policy which can cause ISS to recommend against compensation committee members (or, in rare cases, the full board) and the next MSOP proposal. ISS has identified things it will take into account and has indicated that support levels of less than 50% will warrant the highest level of company responsiveness.
  • Pay-For-Performance (P4P) Alignment – virtually identical to the draft policy put forward several weeks ago. ISS still offers scant details on how peer companies will be selected, although the final policy update includes a footnote identifying factors that ISS will consider (see Footnote 1, page 9).
  • Say When on Pay / Say on Pay Frequency – ISS includes a new policy that indicates ISS might recommend against or withhold from the entire board (except new director nominees) if the Board implements a SOP frequency that is less frequent than the frequency that received a plurality, but not a majority, of the votes cast. In making its recommendation, ISS will consider the Board’s rationale for such action, the company’s ownership structure and vote results, its own analysis of whether there are compensation concerns or a history of problematic compensation practices, and the previous year’s support level on the company’s SOP proposal.

The ISS materials about the final 2012 Policies can be found by following these links:

ISS Extends Comment Period on Draft Policies

On October 28, 2011, Institutional Shareholder Services Inc. (ISS) announced that it was extending the comment period on its Draft 2012 Policies until Monday, November 7, 2011.  Furthermore, ISS announced that the final 2012 Policies are expected to be issued the week of November 14, 2011.

For more details, see this entry on the ISS Governance Blog by Ted Allen:

http://blog.issgovernance.com/gov/2011/10/iss-policy-comment-period-extended-to-nov-7.html