More from ISS–Equity Plan Data Verification

by Parker Poe Adams & Bernstein LLP
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Because it is “committed to industry-leading levels of transparency and engagement,” ISS recently announced its new equity plan data verification portal. The portal is intended to provide companies with an opportunity to preview, and update as necessary, the data that ISS uses to form its vote recommendation regarding equity plan proxy proposals. The new portal is in addition to, and separate from, the ISS QuickScore governance data verification portal. (See this Doug’s Note.) Companies that routinely monitor ISS’s voting recommendations and underlying data should consider adding this review to their annual proxy calendars.

How does the portal work?

According to the FAQs provided with ISS’s announcement:

  • A U.S. company submitting an equity plan proposal to its stockholders in a proxy statement filed after September 8, 2014 is eligible to participate. The definitive proxy materials must be filed at least 30 days before the stockholder meeting date.
  • The company must register via an ISS webform, even if the company already has separately registered for QuickScore governance data verification.
  • Only companies may register and access the portal. Outside consultants and advisors are not permitted.
  • The data verification period will open within 12 business days after the company files its definitive proxy materials. All designated contact persons will receive an email from ISS notifying them that the verification period has opened. The verification period will remain open for two business days, beginning at 9 am Eastern time on day one of the verification period and ending at 9 pm Eastern time on the following business day.
  • If the company submits a data update, ISS will generally email all contact persons a notice within five business days of its review of the submission. The results of ISS’s review will be posted on the portal platform.
  • Companies that have registered for the new portal will receive an email alert once ISS’s proxy analysis is published, which can then be accessed via the ISS Governance Analytics platform.
  • Eligible equity plans include the usual variety of stock option, restricted stock, stock bonus and omnibus plans for employees and non-employee directors. Cash and cash bonus plan data are not eligible for this review.

In a further display of helpfulness, ISS has provided a list of 27 questions (with instructions) that companies may preview to determine what ISS is looking for in equity compensation plans. (See Appendix A to the FAQs.)

This appears to be another attempt by ISS to respond to ongoing criticism of proxy advisors and the proxy voting process. Time will tell how useful it will be.

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.

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