Proxy advisory firm Institutional Shareholder Services, Inc. (ISS) recently published a set of Frequently Asked Questions (FAQs) on its U.S. policy interpretation and research. The FAQs cover four areas: (1) research conducted by ISS, including how an issuer can obtain a copy of ISS proxy analysis and address negative recommendations; (2) ISS engagement with external parties such as shareholders and issuers; (3) an issuer's ability to review ISS proxy analysis prior to publication; and (4) general policy questions. Given the continuing influence of ISS in today's proxy process, public companies should carefully review the ISS FAQs and contact ISS with any questions.
Among other topics, the FAQs note that issuers generally can receive a free copy of ISS' U.S. proxy analyses 13-25 calendar days before the shareholder meeting. Only S&P 500 companies may elect to receive a draft proxy report from ISS before distribution to ISS clients. All issuers should contact ISS in advance to obtain a free login and password, thus enabling the issuers to access current (and past) proxy analyses as soon as released and to check Governance Risk Indicators (GRId) data. The FAQs also highlight steps that issuers should take if they believe that an ISS report contains a factual error. If an issuer wishes to reverse a negative recommendation of ISS, the issuer must publicly disclose additional information addressing the issue and send a link of the relevant filings to ISS via email. If a change is warranted, ISS will send a "Proxy Alert" to its clients correcting or updating its recommendations, provided the shareholder meeting is at least five business days away.
The ISS FAQs can be found at: http://www.issgovernance.com/policy/USResearchFAQ.