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:
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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.
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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.
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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.