ISS Publishes Equity Plan Scorecard FAQs

ISS Publishes Equity Plan Scorecard FAQs

January 13 2015

PDFISS recently published FAQs for its new Equity Plan Scorecard (EPSC) approach for evaluating equity plan proposals.  The methodology is effective for all U.S. companies with annual meetings on or after February 1, 2015.

Equity Plan Scorecard Methodology
The EPSC considers a range of positive and negative factors related to a company’s equity plan.  ISS voting recommendations are based on a company’s total EPSC score.  A score of 53 (out of 100 maximum total points) is required to receive a positive voting recommendation.  However, ISS maintains the ability to recommend against a company, even in instances where it passes the EPSC tests, if any of the following apply:

  • Awards may vest in connection with a liberal change in control definition
  • The plan permits repricing or cash buyout of underwater options without shareholder approval
  • The plan is a vehicle for problematic pay practices or a pay-for-performance disconnect
  • The plan contains any other features that are determined to have a significant negative impact on shareholder interests, such features may include:
    • Tax gross-ups on equity awards
    • Provisions for reload options

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