ISS Updates Compensation FAQs

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On December 17, 2021, ISS released several updates to its compensation-related FAQs, including its FAQs on Compensation Policies, Equity Compensation Plans, Peer Groups, and Pay-for-Performance Mechanics. These updated FAQs can be found at: https://www.issgovernance.com/policy-gateway/upcoming-policies/

Compensation Policies FAQs

Of note, ISS added FAQs on what practices are most likely to trigger an adverse ISS vote recommendation on Say on Golden Parachute votes, how ISS will evaluate management proposals seeking separate shareholder approval of equity award grants, and an update on how it will assess COVID-related pay decisions.

Equity Compensation Plans FAQs

ISS added information about its new Value-Adjusted Burn Rate that will be used for meetings on and after February 1, 2023. ISS confirmed that it made no changes to the factors, weightings or passing scores for any of the Equity Plan Scorecard models for 2022. ISS added a new FAQ that addresses how it will assess a company’s clawback for purposes of scoring under the EPSC policy. Finally, the FAQs include the applicable 2022 burn rate benchmarks in their appendix.

Peer Group FAQs

The only addition is an FAQ that addresses how ISS uses peer groups.

Pay-for-Performance Mechanics FAQs

ISS did not highlight any changes in the Pay-for-Performance Mechanics FAQs. However, ISS did, in fact, tweak the quantitative concern thresholds for both S&P 500 and Non-S&P 500 companies. The new concern thresholds are detailed on page 11 of the FAQs.