The Advisors' Blog

As Dave shared on TheCorporateCounsel.net, ISS recently ran its Annual Benchmark Policy Survey (closed on September 5). As this Winston & Strawn blog notes, ISS selects the questions it asks of survey respondents to gauge investor and other stakeholder interests and market sentiment. For that reason, the survey can shed light on ISS’s potential areas of policy focus for the upcoming proxy season. Here are two highlights from the executive compensation-related questions:

Time-vesting Equity Awards. Under ISS’s current approach to its pay-for-performance analysis, when reviewing a quantitative pay-for-performance misalignment, ISS generally views a predominance of performance-conditioned equity awards as a positive mitigating factor, while a predominance of time-vesting equity awards is generally considered a negative exacerbating factor.

ISS is contemplating revising the weight given to performance-vesting over time-vesting equity awards to view both performance-vesting and long-term time-vesting equity awards as positive mitigating factors. To that end, ISS is soliciting feedback with respect to the threshold vesting period for such time-vesting equity awards and whether a meaningful post-vesting holding period should be required for ISS to view such awards as a positive mitigating factor.

Discretionary Performance Assessments. ISS generally views incentive programs with quantified, pre-set goals and disclosed targets favorably and views incentive programs that are heavily reliant on discretionary determinations negatively. However, some companies maintain incentive programs that are entirely based on discretionary performance assessments on the basis of company-, peer-, and/or industry-specific considerations.

ISS is soliciting feedback with respect to whether discretionary incentive programs should be viewed negatively in all circumstances, even where such discretionary incentive programs are consistently used across a particular industry or group of peer companies.

– Meredith Ervine