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ISS Releases FAQs on 2015 US Equity Plan Scorecard
Practical Law Legal Update 5-593-9825 (Approx. 3 pages)
ISS Releases FAQs on 2015 US Equity Plan Scorecard
by Practical Law Corporate & Securities
| Published on 24 Dec 2014 • USA (National/Federal) |
Institutional Shareholder Services (ISS) released FAQs on its 2015 US Equity Plan Scorecard.
On December 22, 2014, Institutional Shareholder Services (ISS) released FAQs that discuss ISS's new scorecard approach to evaluating equity compensation proposals at US companies. The new policy will be in effect for shareholder meetings held on or after February 1, 2015.
Under the US Equity Plan Scorecard, ISS will consider a range of positive and negative factors, instead of a series of "pass/fail" tests, to evaluate equity incentive plan proposals. The new policy will continue to result in negative recommendations for equity plan proposals that exhibit problematic practices, such as authority to reprice stock options without shareholder approval. However, typically, a company's total score under the Equity Plan Scorecard will determine whether ISS will recommend voting for or against the proposal.
The FAQs cover:
- General questions regarding how the Equity Plan Scorecard will work.
- Questions regarding the factors that ISS will consider in evaluating proposals and how the factors will be weighted.
- Methodology-related questions, including:
- ISS's consideration of burn rate commitments;
- calculation of plan duration; and
- how the Equity Plan Scorecard will be used if multiple plan proposals are on the ballot or if a plan is on the ballot solely to obtain shareholder approval for purposes of Internal Revenue Code Section 162(m).
For more information on ISS's 2015 voting guidelines, see Legal Updates, ISS Releases 2015 Proxy Voting Guideline Updates and ISS Releases 2015 US Summary Proxy Voting Guidelines.