Board response to majority-supported shareholder proposals. For 2013, ISS made several revisions to its policy on board responsiveness to majority-supported shareholder proposals intended to strengthen accountability of directors who fail to respond to shareholder proposals. A key change was the announcement that a majority of shares cast on a shareholder proposal in one year triggers evaluation of a company's response to majority-supported shareholder proposals the following year (see Legal Update, Institutional Shareholder Services Releases 2013 Updates to its Proxy Voting Guidelines). The 2014 policy updates further clarify that:

Pay for performance quantitative screen. When evaluating a company's pay-for-performance alignment, ISS conducts an initial quantitative assessment to identify companies with a significant misalignment that merits a deeper qualitative review. Currently, when determining the Relative Degree of Alignment (RDA), ISS calculates the difference between a company's total stockholder return (TSR) rank and its CEO's total pay rank within a peer group over three-year and one-year periods (weighted 60% and 40%, respectively) (see Legal Update, Institutional Shareholder Services Updates White Paper on Pay for Performance). To better reflect long-term performance and to avoid distortion caused by volatility in the final year, among other purposes, ISS is eliminating the use of the one-year period. Instead, ISS will base the calculation on the three-year period alone (or as many full fiscal years that the company has been publicly traded and disclosed pay data). Under the new model, each year of TSR will be weighted equally and calculated to produce the annualized TSR for the measurement period, providing a smoother performance measure that does not over-emphasize any particular year during the measurement period.

Social and environmental issues. ISS clarified the language of its policy on proposals requesting information on a company's lobbying activities, policies and procedures to include consideration of management and board oversight in ISS's analysis. ISS also adopted a new formal policy (a case-by-case analysis) on proposals requesting that a company assess the human rights risks in its operations or supply chain or report on its human rights risk assessment process.