As I wrote last week, ISS has launched a new corporate governance ranking system, Governance QuickScore. ISS announced today that the data verifications website is now up and available for companies to review and verify the corporate governance data that ISS has on file. The website is www.issgovernance.com/quickscore. Companies can access the data verification section under the Data Verification tab (companies must have a log-in ID to access).
Here’s ISS’s timeline for implementing Governance QuickScore:
||Data review and verification site opens for companies to review their data against the Governance QuickScore factors.
||Data review and verification site closes (although the site will open again and remain open after QuickScores are calculated and released in late February/early March)
|Late Feb/early Mar
||ISS Governance QuickScore launches. Governance QuickScores are applied to all 4100 companies in the coverage universe. We anticipate a Governance QuickScore launch date on or around February 25, but will confirm/update that date in subsequent communications.
On January 24, 2013, ISS announced that it will once again be revising its corporate governance scoring system. Until this announcement, companies received Low, Medium, or High level concerns under four categories for its Governance Risk Indicators (GRId) scores. ISS will replace GRId with Governance QuickScore.
Governance QuickScore will differ a bit from GRId according to ISS:
Methodology — ISS Governance QuickScore uses a quantitatively-driven methodology that looks for correlations between governance factors and key financial metrics, with a secondary policy-based overlay that aligns the qualitative aspect of governance with ISS policy. The methodology is based on best practices across various governance factors, with the number of factors applied varying by region. Details regarding regional factors will be included in a forthcoming technical document.
Scoring — Moving away from GRId’s color-coded concern levels, ISS Governance QuickScore uses a numeric, decile-based score that indicates a company’s rank relative to region. Companies will still be assessed on four independent dimensions: board, compensation/remuneration, shareholder rights, and audit, and will also receive an overall Governance QuickScore and assessment. In the latter half of the year, scores relative to industry sector will be introduced.
Coverage — Initially, ISS Governance QuickScore coverage will encompass 4100 companies in 25 markets, including the largest 3000 U.S. companies by market cap, the largest 250 Canadian companies by market cap and U.K., European, Japanese, and Asia Pacific companies in the MSCI-EAFE index.
Companies will have access to the ISS data verification site for Governance QuickScore starting January 28, 2013. ISS will post a Technical Document and FAQ on January 25 at: www.issgovernance.com/quickscore
So it looks like companies won’t have to worry about GRId scores this proxy season, only their Governance QuickScore.
ISS recently posted its whitepaper detailing its pay for performance (P4P) methodology:
The Evaluating Pay for Performance white paper provides an overview of ISS’ approach in evaluating Pay for Performance alignment. Originally published prior to the 2012 proxy season [Note: a revised version of the whitepaper was published in February 2012], the document incorporates further updates for 2013 that describe ISS’ new peer selection methodology and approach to measuring realizable pay.
Evaluating Pay for Performance: ISS’ Quantitative and Qualitative Approach
As you are likely aware, Glass Lewis has adopted Equilar’s “Market Peers” for use in its Say on Pay quantitative analyses and are also used in Equilar’s Pay for Performance tool that can simulate the Glass Lewis quantitative tests. More information on Equilar’s Market Peers can be found at: http://www.equilar.com/peer-research/pdf/EquilarInsight-Market-Peers.pdf
US companies in the Russell 3000 index that plan on filing updated peer groups in their 2013 proxies can submit new peer groups here. Equilar asks that the updates be submitted by corporate issuers only. Companies will have until January 18, 2013 to update their peer groups.