The NASPP Blog

If you have concerns or comments that you’d like to voice to ISS about their policies, now is your chance. ISS’s policy survey, the responses to which will be used to formulate their corporate governance policies, is open through the end of this week (Friday, August 17).  Speak now or forever hold your piece (well, not really “forever,” presumably they’ll do another survey next year).

This Year’s ISS Policy Survey

The only questions on the survey I noticed that directly address stock compensation were a couple of questions that ask about single-trigger acceleration of vesting of stock awards in the event of a change-in-control.  A few other topics in the survey that could indirectly have an impact on stock compensation include:

• ISS’s determination of peer groups
• How pay should be measured (always a challenge for stock compensation)
• Types of performance metrics (e.g., TSR vs. internal metrics)

A few last topics ISS focuses on in the survey that could have an even more indirect impact on stock compensation include director qualifications, director independence, and pledging (e.g., allowing executives to use company stock as collateral for margin accounts or other loans).  There also were a bunch of topics that fall under the heading of “Things I Don’t Care About,” so I didn’t read those questions (e.g., corporate lobbying, proxy access, sustainability performance measures).

A Preview of Policy Changes to Come?

The issues covered in the survey are likely indicative of the areas where ISS is considering revising its corporate governance policies for next year–otherwise why would they be asking about these topics?  ISS changed its peer group determinations as part of last year’s overhaul of the pay-for-performance analysis (see my blog entry “ISS Policy Updates for 2012,” November 29, 2011); now it looks like ISS may be considering further changes to peer groups. (But probably only for the pay-for-performance analysis; ISS didn’t change peer groups for burn rate purposes last year so I don’t think they’ll change burn rate peer groups for this year either.) 

Next Steps

The ISS survey will close this Friday.  ISS will hold round-table discussions of the topics covered in the survey during August and September and expects to release the survey results in September. ISS will then accept comments on the results until October and will release its final policy update in November. 

Complete the ISS survey by Friday, August 17, to give ISS your opinions.  To learn more about the survey, read “Companies Have Until August 17 to Respond to the ISS 2012-2013 Policy Survey,” by Jim Kroll and Brian Myers in Towers Watson’s Executive Pay Matters Blog (July 31, 2012).

To learn more about ISS (as well as Glass Lewis and other institutional investor) policies and developing an appropriate strategy for your stock plans in light of these policies, don’t miss the session “To ISS or Not to ISS: Equity Plan Governance in the Age of Unreason” at the 20th Annual NASPP Conference.

– Barbara