ISS Issues Policy Updates for 2012 Proxy Season - Vital Pay-for-Performance Guidance Still Pending  

December 7, 2011

ISS's newly issued 2012 Policy Updates include signficiant changes to the process for evaluating select proxy proposals, including Say on Pay and Director re-election matters, for shareholder meetings held on or after February 1, 2012.  However, vital details about implementation of ISS’s most significant policy change -  its pay-for-performance test - await additional guidance scheduled for release in late December.

This Client Alert summarizes four significant compensation and two related governance changes disseminated so far: 

Compensation

• Pay-for-Performance Test: Modified approach for selecting peer companies 
• Say on Pay (SOP): Will include consideration of prior year support for SOP  
• Say on Frequency (SOF): Will include consideration of whether Boards adopt SOP voting frequency favored by a majority of shareholders
• 162(m) Equity Plan Review for Post-IPO Companies: Case-by-case review, rather than routine recommendations in favor

Governance

• Proxy Access: New considerations for proxy access proposals submitted by shareholders.
• Consideration of Risk Oversight: Makes “material failure of risk oversight” a consideration in Director vote recommendations.