ISS Opens Peer Group Submission Period

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

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ISS Issues FAQs on New GICS Group

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.
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Changes Coming to GICS

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.

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ISS Opens Peer Group Submission Window July 9, 2018

For companies having annual meetings between September 16, 2018 and January 31, 2019, ISS will open its peer group submission window next Monday, July 9th at 9 am Eastern, and the window will remain open until 8 pm Eastern on Friday, July 20, 2018. Companies that will be disclosing a change in their peer group in their upcoming proxy should seriously consider providing the updated peer group to ISS during this peer group submission window.  ISS uses the peer group submitted when it creates its peer group for companies, so ensuring ISS has your latest peers should help ensure ISS is using the latest and greatest peer group your company used for its last fiscal year. Failure to submit your peer group could cause ISS to not accurately reflect your company’s peer group when constructing its own peer group.

Companies simply need to log into their Governance Analytics account (or request an account) and submit the requested information under My Company > Peer Submission:

https://login.isscorporatesolutions.com/galp/login

Companies that have not had a change in their peer group that will be reflected in their next proxy statement, do not need to submit a peer group to ISS.

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