Institutional Shareholder Services Releases Updated FAQs Regarding 2015 US Compensation Policies | Practical Law

Institutional Shareholder Services Releases Updated FAQs Regarding 2015 US Compensation Policies | Practical Law

Institutional Shareholder Services (ISS) released an updated set of FAQs regarding its 2015 US compensation policies.

Institutional Shareholder Services Releases Updated FAQs Regarding 2015 US Compensation Policies

by Practical Law Employee Benefits & Executive Compensation
Published on 10 Feb 2015 • USA (National/Federal)
Institutional Shareholder Services (ISS) released an updated set of FAQs regarding its 2015 US compensation policies.
On February 9, 2015, Institutional Shareholder Services (ISS) published a set of updated FAQs regarding its 2015 US compensation policies which are effective for meetings on or after February 1, 2015. The FAQs cover:
  • General executive pay questions.
  • Management say on pay (MSOP) evaluation topics, including:
    • pay for performance evaluation;
    • selection of peer companies;
    • problematic pay practices;
    • frequency of advisory vote on executive compensation; and
    • advisory votes on golden parachutes.
  • Equity-related topics, including:
    • repricing provisions;
    • cost of equity plans;
    • calculation and use of the burn rate;
    • liberal share recycling;
    • accelerated vesting;
    • liberal change in control definitions;
    • fungible plans;
    • equity plan duration;
    • compensation plans under Section 162(m) of the Internal Revenue Code; and
    • stock-option overhang carve-outs.
The 2015 FAQs address several new issues within these topical areas, including:
  • Permissible actions for a company that adopts biennial or triennial frequency for MSOP resolutions but fails to put the proposal on the ballot in the next expected year.
  • The companies that are subject to the quantitative pay-for-performance screens.
  • How ISS evaluates pay-for-performance alignment when pay data is not analyzed in the quantitative screens.
  • Which date ISS uses for the data used in an equity plan analysis.
  • The implications for companies that are committed to addressing excessive burn rate under ISS' previous policy.
As was the case for ISS' previous compensation policy FAQs, these FAQs provide general guidance and do not guarantee how the ISS Global Research Department will apply its benchmark policy in any particular situation.
For more information on proxy advisory firms and on ISS proxy voting recommendations, see Practice Note, Developing Relationships with Proxy Advisory Firms and Handling ISS Proxy Voting Recommendations Checklist.