ISS 2015 Policy Update: First Look at the Equity Plan Scorecard

Client Alert: ISS Releases 2015 Policy Update

November 12 2014

ISS recently released its final policy guidelines for the 2015 proxy season.  As announced in the draft rules published last month, ISS is adopting an Equity Plan Scorecard model (“EPSC”) that considers a range of positive and negative factors, rather than a series of “pass” or “fail” tests, to evaluate equity incentive plan proposals. The total EPSC score will generally determine whether ISS recommends for or against the proposal. The updated guidelines will be effective for all companies with annual meetings on or after February 1, 2015.

Equity Plan Scorecard
The updated policy will evaluate a broader range of factors that investors may consider when determining whether an equity plan serves their long-term interests.  EPSC factors fall into three categories: Plan Cost, Grant Practices, and Plan Features.  Individual company scorecards and factor weightings will be developed for index groups based on a company’s membership in one of the following groups:  S&P 500, Russell 3000 (excluding S&P 500), Non-Russell 3000 and IPOs.  While detailed information on the factor categories has not been released at this time, the overall EPSC category weightings and factors reviewed are provided below.  We expect more detailed information to be provided in December when ISS releases its Compensation FAQ.

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