ISS's newly issued 2012 Policy Updates include signficant 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.
The 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.