The Advisors' Blog

– Lynn Jokela

Yesterday, in preparation for proxy season, ISS released its updated FAQs on compensation policies and equity compensation plans.  Along with those FAQs, ISS issued a pay-for-performance mechanics document and a document describing its peer group selection methodology.  Take a look at the particular FAQ document for questions about specific policies.  In terms of compensation policy updates, ISS highlighted these:

– For meetings on or after Feb. 1, 2021, ISS updated the quantitative pay-for-performance Multiple of Median (MOM) measure high concern threshold for S&P 500 companies by lowering it from 3.33x to 3.00x the peer median.

– For ISS’s assessment of COVID-related pay decisions, ISS didn’t really change anything but reminded readers that exceptional circumstances of the COVID-19 pandemic and its impact on company operations will be considered in ISS’ qualitative evaluation.  ISS then referenced the U.S. Compensation Policies and the COVID-19 Pandemic FAQ that it issued earlier in October.

The ISS Equity Compensation Plan FAQ walks through questions about the process ISS follows to evaluate equity compensation plan proposals. ISS uses its “Equity Plan Scorecard” model when evaluating these proposals and as previewed in ISS’s October FAQs, for 2021, the proxy advisor has raised the score needed to receive an ISS recommendation in favor of an equity plan proposal:

For meetings as of February 1, 2021, the threshold passing scores will increase for the S&P 500 model (from 55 points to 57 points) and the Russell 3000 model (from 53 points to 55 points). The threshold passing scores are unchanged for other models. There are no new factors or factor score adjustments.