Last Thursday, ISS launched its annual policy survey. The on-line policy survey is designed to gather feedback from a wide range of stakeholders to give ISS guidance on where to set policy in areas that are emerging or unclear. Results of the policy survey will underpin ISS’s 2018 benchmark voting policy. This is your opportunity to voice an opinion on some of ISS’s compensation views.
This year, ISS has broken the survey into two pieces: Governance Principles Survey and Policy Application Survey. The first is a short high-level survey covering five governance and compensation issues, including:
- Pay Ratio Between Senior Executives and Employees: With Pay Ratio coming into effect in 2018, how does your organization plan to evaluate this data, and how should shareholders consider this information?
- One-Share, One-Vote Principle: With several high profile companies employing capital structures with unequal voting rights, when, if at all, is it appropriate for a company to issue unequal shares, and should there be a sunset provision on these rights?
- Gender Diversity on Boards: Gender diversity has received increased attention, but progress has been mixed. Is it concerning if there are no female directors on a public company’s board? And if the answer depends on certain factors, what are those factors?
- Share Issuance and Buyback Proposals: Some companies, for instance those incorporated in the U.K, Ireland, or the Netherlands, and listed in the U.S., may be subject to seek shareholder approval for share issuances or share repurchases that are not required for U.S. domiciled companies. What should be the approach for evaluating these proposals in general and for cross-market companies?
- Virtual/Hybrid Meetings: There has been an increase in the number of companies worldwide allowing virtual and hybrid meetings; over 175 virtual or hybrid meetings took place in the U.S. during the first half of 2017. Are virtual and/or hybrid meetings acceptable?
Upon completing the five questions above from the Governance Principles Survey, respondents will have the option to complete the Policy Application Survey. This Survey is composed of questions across five broad topic areas: (1) Board, (2) Compensation, (3) Environmental and Social, (4) Capital-Related/Other, and (5) Takeover Defenses. The compensation questions are as follows:
- Outcomes-based Compensation Measures: ISS is considering adding realized or realizable pay to the quantitative pay-for-performance (P4P) methodology. Does your organization support the use of realized or realizable pay as part of P4P, and if so, how should it be included?
- Non-employee Director (NED) Pay: According to ISS data, NED pay has increased significantly since 2012. Currently, ISS identifies NED outliers by comparing NED pay to other companies within the same index and GICS. What factors should ISS consider when determining if a governance concern exists in regard to high pay magnitude or problematic pay structures, and when should ISS provide an against recommendation?
- Gender Pay Gap: There has been an increase in shareholder proposals over the last two years requesting disclosure on gender pay equity. Should companies disclose this information? And if the answer depends on certain factors, what are those factors? When is it ok for a company to exclude this information?
The Governance Principles Survey will be open until August 31, and you can reach it by clicking here. Results of the survey will be published following the close of the survey; last year, the results were published roughly three weeks following the close of the survey. The Policy Application Survey will be open until October 6 at 5:00 p.m. EST.