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ISS Updates FAQs on Its 2015 Equity Plan Scorecard
Practical Law Legal Update 7-603-3185 (Approx. 4 pages)
ISS Updates FAQs on Its 2015 Equity Plan Scorecard
by Practical Law Corporate & Securities
| Published on 05 Mar 2015 • USA (National/Federal) |
Institutional Shareholder Services (ISS) updated the FAQs on its 2015 US Equity Plan Scorecard.
On March 3, 2015, Institutional Shareholder Services (ISS) issued updated FAQs that discuss ISS's new scorecard approach to evaluating equity compensation proposals at US companies. The new policy is in effect for shareholder meetings held on or after February 1, 2015. ISS first issued FAQs on the policy in December 2014.
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, including 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.
New questions include:
- Whether there are additional factors that could result in a recommendation on an equity plan proposal that differs from the Equity Plan Scorecard "score" recommendation.
- How ISS will assess a plan's minimum vesting requirement under the Equity Plan Scorecard.
- How the treatment of performance-based awards affects ISS's determination of whether a plan provides for automatic single-trigger accelerated vesting on a change in control.
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.