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).

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