Archive December 2012

ISS Burn Rate Caps for 2013

ISS has released updated Burn Rate Caps as part of its policy updates.  The new Burn Rate Caps appear in the revised Setting the Bar presentation circulated by ISS Corporate Services for 2013.  These Burn Rate Caps will apply to all shareholder meetings on or after February 1, 2013 and ISS will update them in late 2013 for meetings after February 1, 2014.

The presentation below includes these burn rate caps as well as a chart looking at how the caps have changed from 2009 through 2013.

 

Interestingly, there are no instances for Russell 3000 GICS groups where the ISS 2 percentage point governor limited an increase/decrease from last year’s ISS burn rate caps.  This is the first time since the governor was introduced that this happened.  Note though that the governor did apply to a few Non-Russell 3000 company GICS groups.

Also, on an aggregate basis, the burn rate caps didn’t change all that much and remained flat (aggregate total -0.76% decline in burn rate caps for 2013 versus a 6.21% aggregate increase in 2012, a 29.74% aggregate increase in 2011, and a -15.53% aggregate decline in 2010).

Presentation: 2013 Proxy Season Outlook

On Thursday, January 10, 2013, Jones Day, Georgeson and Exequity will present a 2013 Proxy Season Outlook featuring Ed Hauder and Chris Dowd. Topics will cover key developments facing companies and investors, including changes in CD&A disclosure, ISS and Glass Lewis policies, compensation risk disclosure, clawback policies, and pay equity disclosure.

3:30 – 4:00 p.m. Registration

4:00 – 6:00 p.m. Presentations

Cocktail Reception to Follow

Presentation Location:

Jones Day Dallas
2727 N. Harwood Street
Dallas, Texas 75201

To register, please click HERE.

 

ISS Research Peer Group Data Entry Request Email

Last week (on December 4, 2012), ISS Research sent out an email to all U.S. corporate issuers asking them to upload their peer group changes into their system by December 21, 2012.  I’ve received a few questions about the email (specifically the bolded and italicized language below) and have gone back and forth with ISS to clarify the email’s meaning.

As I suspected, ISS Research is looking for companies to upload details about the CEO pay benchmarking peer group that was used for 2012 and will be disclosed in a company’s 2013 proxy. If companies do not provide this information, ISS will default to using the 2011 benchmarking peer group that was disclosed as part of the company’s 2012 proxy.

So I’ve been encouraging clients to take the time to provide this updated information to ISS.  Doing so should help ensure that ISS will use the relevant peer group when it analyzes the company’s P4P alignment.  If you have any questions about this process, please let me know.

ISS U.S. Research Email

December 4, 2012

A Communication to U.S. Corporate Issuers

RE:  2013 Peer Groups

As outlined in our 2013 policy updates summary, ISS will be evolving its peer group construction methodology to incorporate companies’ self-selected peer information.

ISS’ current peer group methodology focuses on the subject company’s GICS industry classification, which may not reflect multiple business lines in which many companies operate.

To address this issue, the new 2013 methodology incorporates information from companies’ self-selected pay benchmarking peer groups in order to identify and prioritize GICS industry groups beyond the subject company’s own GICS classification.

The methodology then looks to an 8-digit GICS resolution to identify peers that are more closely related in terms of industry. Finally, when selecting peers, the methodology prioritizes peers that maintain the company near the median of the peer group, are in the subject company’s peer group, and that have chosen the subject company as a peer.  ISS’ peer group methodology maintains its focus on identifying companies that are reasonably similar to the subject company in terms of industry profile, size, and market capitalization. For more information on ISS’ new peer selection methodology, please visit ISS’ 2013 Peer Group Methodology FAQ.

We are aware, however, that some companies may have modified their peer groups since their most recent disclosure or may intend to do so as they prepare their 2013 proxy.

In an effort to ensure that the most accurate and up-to-date information is incorporated into our peer group selection process, ISS is offering companies an opportunity to proactively inform us of changes to company self-selected peers for 2013.  We believe that taking this extra step of collecting updated information will help produce a better outcome for investors and issuers alike.

If you have not made or do not intend to make changes to your previously disclosed peer group, or do not wish to provide this information in advance, no action is required.

To provide updated information on your benchmarking peers:

Please use the web form ISS has created to collect this information. The site is available at http://www.issgovernance.com/PeerFeedbackUS. Further instructions are available there.

Please note the following:

  • The peer group provided should be the peer group used for benchmarking CEO pay.
  • While public disclosure of this information is not required, our expectation is that the same peers provided via this form will be disclosed in the upcoming proxy. The ISS research team will use this information only for the purpose of constructing peer groups.
  • Please avoid multiple submissions per company or provision of information other than relevant peers as described above.
  • Following submission of the form, you will receive further instructions via e-mail regarding confirmation of the submitted list. In particular, you will be asked to provide an electronic copy of the submitted list on your company’s letterhead.
  • Feedback should be submitted by December 21, 2012 in order to ensure its consideration in ISS’ peer group construction for 2013.
  • Note that, as in prior years, ISS peer groups are not finalized until our research is published.

If you have any questions, please refer to ISS’ 2013 Peer Group Methodology FAQ or feel free to contact our U.S. Research Helpdesk at usresearch@issgovernance.com.

Regards,

ISS U.S. Research

[emphasis added]