Institutional Shareholder Services (ISS) has released its 2013 updates to corporate governance policy, which include some variations from the proposed updates it issued mid-October for public comment. Pat McGurn, ISS Special Counsel, spoke on Friday morning immediately after ISS released the new updates at the ABA Shareholder and Investor Relations subcommittee panel, moderated by Squire Sanders. He outlined the highlights of the new policy and offered some helpful commentary to those in attendance; a few of his points are integrated within the enclosed summary of the new 2013 ISS Corporate Governance Recommendations. In general, the policy updates will be effective for shareholder meetings held on or after February 1, 2013. On December 6, 2012 at 11 a.m. ET, ISS will host a webinar to highlight its updates. Either on that date or thereafter, ISS will also release frequently asked questions to provide additional guidance related to some of the new policies.
Of particular note, beginning in 2013 ISS plans to incorporate information from a company’s self-selected pay benchmarking peer group to identify and draw peers for carrying out ISS’ pay for performance analysis, in addition to ISS’ consideration of a company’s S&P Global Industry Classification Standard (GICS) (rather than solely focusing on a company’s GICS for ISS peer group selection as in the past). For those companies that plan to make adjustments to their self-selected pay benchmarking peer group in 2013 and would like ISS to take those changes into account in its 2013 review of the company, ISS plans to launch a web portal where companies will be able to update their peer groups for ISS purposes. Unless otherwise updated by a company, the ISS methodology will incorporate the company’s self-selected 2012 peer group.
For information on these recommendations and other policy updates, see our publication "ISS Issues 2013 Corporate Governance Recommendations" (PDF).