Yesterday, ISS published the Summary of Results of its 2019 Global Policy Survey. According to ISS, it received 128 responses from investors and 268 responses from non-investors to this year’s Global Policy Survey (in a few cases, multiple people responded from the same organization). What’s new for executive compensation professionals? Based on the Summary, not much.
ISS plans to incorporate EVA metrics into the Financial Performance Assessment (FPA) screens for the U.S. pay-for-performance models. The FPA is a secondary pay-for-performance screen that is used to assess a narrow subset of companies where the primary pay-for-performance screens indicate a borderline result between Low and Medium concern levels. Four EVA metrics will be used in the FPA's comparison of relative long-term financial performance. Aside from the change to using the four EVA metrics where the FPA screen is applied, the basic operation of the FPA as a secondary screen affecting a relatively small number of companies would be unchanged.
Initial feedback from some investor clients in 2018 indicated that, in the event of the use of EVA metrics in this manner, they would find it useful for ISS to continue to display the prior-used GAAP metrics separately as a point of comparison. Which of the following best describes your organization's viewpoint?
ISS’ focus on EVA has become somewhat controversial (see this ExeQuity Briefing), but ISS acquired EVA Dimensions LLC a couple of years ago, so this focus not going away.
ISS usually publishes the information executive compensation professionals more important in late November, so stay tuned.