Equilar Peer Group Submission Window Opens

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On November 28, 2018, Equilar announced that its 2019 peer submission window opened. The submission deadline is December 31, 2018. Companies have the opportunity to submit the peer companies that will be listed in a proxy to be filed between January 15, 2019, and July 15, 2019. This will help ensure that Equilar uses the correct company peers when constructing its MarketPeers for the company.

According to Equilar:

  • institutional investors use Equilar’s MarketPeers for independent validation of  company disclosed peer groups,
  • Glass Lewis uses Equilar’s MarketPeers algorithm to generate peer groups using in formulating Say on Pay recommendations for investors, and
  • The Pay for Performance (P4P) modeler in Equilar Insight’s Shareholder Engagement Center includes simulations for ISS and Glass Lewis P4P analyses based on the most recent peer group information.

The Equilar web page where companies may submit their peer groups is:

https://insight.equilar.com/app/peer_update/

ISS Opens Peer Group Submission Period

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On November 5, 2018, ISS announced that it will soon open its peer group submission period for companies having shareholder meetings between February 1, 2019, and September 15, 2019.

The ISS peer group submission period will run from Monday, November 19, 2018, at 9 am Eastern, through Friday, December 7, 2018, at 8 pm Eastern. Companies can submit peer groups using ISS Corporation Solutions’ (ICS) Governance Analytics platform.

If your company’s peer group changed from the one disclosed in your last proxy, you should give due consideration to providing the updated peer group to ISS during this period.  Providing your company’s updated peer group will help ensure that ISS uses the correct peer group in its analysis of your next proxy.

For more information, including links to ISS’ FAQs on its peer group methodology and the ICS Governance Analytics platform, please go to:

Company Peer Group Feedback

ISS Issues FAQs on New GICS Group

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On September 20, 2018, ISS issued a series of FAQs concerning Global Industry Classification Standard (GICS) Code 5020 Implementation (available at: https://www.issgovernance.com/file/policy/active/americas/GICS-5020-FAQ.pdf). This change caused a number of companies to be moved from the GICS 2540, Media, group to the new GICS 5020, Media & Entertainment, group.

The key points from these FAQs are:

  • Companies in the new GICS 5020 group should see higher Burn Rate Thresholds than in the old GICS 2540 group.
  • ISS peer groups being constructed for shareholder meetings starting September 15, 2018 have been updated to reflect the new GICS group.
  • ISS will continue to use a company’s legacy GICS group to assess non-employee director pay (under ISS’ excessive NED pay policy) until February 1, 2019. At that date, ISS will switch over to utilizing the new GICS group in assessing NED pay.
  • ISS will update the GICS groupings used to determine median 1-, 3- and 5-year TSR starting September 30, 2018.
  • ISS will evaluate equity plan proposals using the updated GICS group for burn rate information starting with meetings on February 1, 2019.

Changes Coming to GICS

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Back in January 2018, S&P Dow Jones Indices and MSCI announced that certain changes would be made to GICS on September 28, 2018 (the press release can be found here). Those changes are almost upon us.

Summary of Key GICS Changes:

  • The Telecommunications Sector will be broadened and renamed Communication Services. This group will now include telecommunication companies, as well as companies selected from the Consumer DIscretionary Sector currently classified under the Media Industry Group, select companies from the Internet & Direct Marketing Retail Sub-Industry along with certain companies currently classified in the Information Technology Sector.
  • The Internet & Direct Marketing Retail Sub-Industry under Consumer Discretionary Sector will be revised to include all online marketplaces for consumer products and services.
  • Companies currently classified in the Internet Software & Services Sub-Industry (e.g., data centers, cloud networking, storage infrastructure, and web hosting services) will be moved to a new Sub-Industry called Internet Services & Infrastructure under the IT Services Industry.
  • Cloud-based software companies currently classified as Internet Software & Services will be re-classified as Application Software.

While this is interesting to note and generally something folks in business should know will happen, it may have implications for the peer groups developed by ISS and Glass Lewis for the 2019 Proxy Season. ISS does use the GICS codes as a starting point when constructing its peer groups. So, this change in GICS should be reflected in the peer groups it uses for shareholder meetings after February 1, 2019. Companies may want to simulate how their ISS peer groups may change once the ISS system has been updated to accommodate these GICS changes to ensure they have an idea of how their ISS peer group  in 2019 might change.