On November 21, 2013, Institutional Shareholder Services Inc. (“ISS”) released its final US policy updates for the 2014 proxy season (the “2014 Policies”), having received comments to its draft policies released on October 21, 2013. The 2014 Policies are substantially similar to the draft policies. There are only three updates for the US, none of which represent a significant change. The first modifies the existing pay for performance quantitative screen, the second clarifies ISS’s policy on board responsiveness to majority supported shareholder proposals and the third modifies the existing ISS policies on shareholder proposals related to lobbying and human rights. The 2014 Policies will generally be effective for shareholder meetings of publicly traded companies held on or after February 1, 2014.

Pay for Performance Quantitative Screen -

Under its current policies (the “2013 Policies”), ISS uses two principal quantitative screens to identify companies where a potential pay for performance misalignment merits a deeper qualitative analysis of the pay program—absolute degree of alignment (“Absolute Alignment”) and relative degree of alignment (“RDA”). The Absolute Alignment screen measures alignment between CEO pay and total shareholder return (“TSR”) over the prior five fiscal years. The RDA screen measures the degree of alignment between the company’s TSR and the CEO’s total pay, as compared against the company’s peers and as measured over one year and three year periods (weighted 40% and 60%, respectively).

Please see full memo below for more information.

LOADING PDF: If there are any problems, click here to download the file.

Written by:

Published In:

ISS

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Shearman & Sterling LLP | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »

All the intelligence you need, in one easy email:

Great! Your first step to building an email digest of JD Supra authors and topics. Log in with LinkedIn so we can start sending your digest...

Sign up for your custom alerts now, using LinkedIn ›

* With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name.
×
Loading...
×
×