ISS and Glass Lewis (Equilar) Peer Group Submissions Open

ISS and Equilar both recently opened up their peer group submission periods. This will enable companies to update the peer groups that they will report in their next proxy statement to ensure that these groups are reflected in both ISS’s and Equilar’s records (Note: Equilar uses this information to determine the Equilar Market Peer Group that is used by Glass Lewiss in its pay for performance analysis and the proxy voting groups of a number of institutional shareholders).

ISS’s peer group submission runs from 9 am EST on Tuesday, November 24th until 8 PM EST on Friday December 11th.

  • Only companies with shareholder meetings between February 1, 2016 and September 16, 2016 are invited to participate.
  • For the first time ISS will include companies in the Russell MicroCap Index.
  • Only companies that have made changes to their peer groups (from the peer groups disclosed in their last proxy) need to submit information to ISS
  • Peers submitted should be the peers used to set compensation for the fiscal year that will be disclosed in the next proxy.
  • Companies can begin the peer group submission process at: ISS Peer Group Submission
  • Companies submitting new peer companies must follow-up their submissions with a letter on company letterhead (in PDF) with the full list of peers submitted online.

Equilar’s peer group update window runs from November 16th through December 31st.

  • The peer group update is recommended for companies that file proxy statements between January 15, 2016 and July 15, 2016.
  • More information about the Equilar peer group validation process can be found here: Equilar Peer Group Validation
  • Equilar has also published a FAQ on its Peer Group Update process, available at: Equilar Peer Group Update FAQ

 

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ISS and Glass Lewis Issue 2016 Policy Updates

Both ISS and Glass Lewis have issued their 2016 policy updates.  Glass Lewis issued its 2016 policy with little fanfare in early November and ISS issued its updated policies for 2016 on November 20, 2015.  Links to both firms’ 2016 policies are as follows:

ISS at the same time issued an updated FAQ on its Equity Plan Scorecard (EPSC) Policy: 2016 U.S. Equity Plan Scorecard, Frequently Asked Questions: http://www.issgovernance.com/file/policy/faq-on-iss-us-equity-plan-scorecard-methodology.pdf

The ISS policy updates and FAQs apply to shareholder meetings held on or after February 1, 2016.

Taking a look at the specific policy updates of each for 2016 concerned with compensation, we see the following:

Glass Lewis

Glass Lewis now indicates that if it identifies egregious compensation practices, it may not only recommend against the Say-on-Pay vote but also recommend against the compensation committee based on the practices or actions of the committee during the year. Glass Lewis identifies as possible egregious practices: large one-off payments; the inappropriate, unjustified use of discretion; or, sustained poor pay performance practices.

ISS

ISS’ 2016 policy updates did not directly impact the majority of its compensation policies. Of note is that ISS did revise its policy with respect to compensation-related votes at externally-managed issuers. Now, ISS will generally recommend against the Say-on-Pay proposal where there is an external management structure in place and there is insufficient detail in the company’s disclosures for ISS to perform a comprehensive pay-for-performance analysis. ISS also changed the way ti will approach shareholder proposals to adopt holding periods and will now “strongly consider retention ratio and holding period duration among several other factors.”

In regard to directors, ISS also modified its policy with respect to overboarding. ISS is providing a 1-year transition period for companies to comply with the new overboarding policy and will only issue “warnings” in its proxy reports.  After that period, ISS will issue negative vote recommendations on directors who are not public company CEOs and who sit on more than five (5) public company boards. ISS will issue such negative vote recommendations until the director sits on five (5) or fewer public company boards. ISS decided not to further restrict the number of boards on which an acting CEO can sit (Sitting CEOs will not be overboarded unless they sit on more than three public company boards–their own board and up to two (2) other public company boards).

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SEC Announces Agenda and Panelists for Roundtable on Proxy Advisors

On November 27, 2013, the Securities and Exchange Commission (SEC) announced the agenda and panelists for its December 5, 2013 roundtable on proxy advisors. The roundtable will be broken into two sessions.

The first session will explore the current use of proxy advisory services, including the factors that may have contributed to their use, the purposes and effects of using the services, and competition in the marketplace for such services.

The second session will explore issues identified in the Commission’s 2010 concept release on the U.S. proxy voting system, including potential conflicts of interest that may exist for proxy advisory firms and users of their services, and the transparency and accuracy of recommendations by proxy advisory firms.

For more information, please see: SEC Announces Agenda, Panelists For Roundtable On Proxy Advisory Services, available at:

http://www.sec.gov/News/PressRelease/Detail/PressRelease/1370540419621#.UpYo7uJ76Ds

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Equilar (Glass Lewis ) Peer Group Update

Last week, Equilar announced that it had opened up its peer group update process for companies.  Russell 3000 companies and Canadian companies in the S&P/TSX Composite Index can provide updated peer groups that will be disclosed with their next proxy covering pay decision made for this current fiscal year (i.e., calendar year companies that changed their peer group for 2013 pay decisions which will be disclosed as part of the company’s 2014 proxy).

Companies will be able to provide peer group updates until December 31, 2013. The updated peer groups will be used by Equilar in Equilar’s Pay for Performance Analysis and Glass Lewis’ (Say on Pay) pay for performance quantitative analysis. If a company does not update its peer group, Equilar will use the peer group the company disclosed in its 2013 public filing (proxy).

Companies that want to submit peer group updates can do so at the following Equilar website set up to take such submissions:

http://insight.equilar.com/app/peer_update/index.jsp

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