I did not want to post any more blogs this year, but last week, ISS posted its Compensation Policies; Compensation Policies; Frequently Asked Questions; and Equity Compensation Plans; Frequently Asked Questions; each as updated December 21, 2020. The changes were not dramatic, but we summarize them below:
Compensation Policies
For meetings on or after February 1, 2021, the high concern threshold for S&P 500 companies in the Multiple of Median (MOM) measure will be lowered from 3.33x to 3.00x the peer median. The MOM is one of the four measures of alignment between executive pay and company performance ISS uses in its quantitative pay-for-performance screen.
ISS will assess companies’ COVID-related pay decisions under its U.S. Compensation Policies and the COVID-19 Pandemic FAQ, released on October 15, 2020.
Equity Compensation Plans
ISS made changes to its EPSC evaluations for 2021. Effective for meetings as of February 1, 2021, the threshold passing scores will increase for the S&P 500 model (from 55 points to 57 points) and the Russell 3000 model (from 53 points to 55 points), out of a total 100 possible points. The threshold passing score for all other models is unchanged at 53. There are no new factors or factor score adjustments.
Finally, ISS clarifies the information it expects a company to disclose if it intends to terminate an existing equity plan (canceling any remaining shares reserved for awards under the plan) when shareholders approve a proposed new equity plan, if the company wants ISS to excluded the remaining shares reserved under the prior plan from the SVT analysis,.
-Mike Melbinger, CompensationStandards.com December 29, 2020
