In late March, S&P Dow Jones Indices and MSCI Inc. announced changes to the Global Industry Classification Standard structure, which will go into effect next year and shake up the codes for various companies, including those in retail, data processing, bank, REIT and transport industries. A new FW Cook blog covers the main changes to the GICS classifications. This excerpt explains the potential impacts to certain ISS assessments:
– Say on Pay: peer group construction used to measure relative CEO pay and performance under ISS’ CEO pay-for-performance test, which is a key factor in ISS’ vote recommendation for Say on Pay.
– Non-Employee Director Compensation: industry sector used to identify “excessive” non-employee director pay levels, which may affect ISS’ vote recommendations for director elections.
– Equity Plan Scorecard (EPSC): industry grouping used for shareholder value transfer and burn rate comparisons in ISS’ review of equity stock plan proposals.
– QualityScore: industry grouping used in ISS’ QualityScore model, which monitors governance-related risk across four pillars: Audit & Risk Oversight, Board Structure, Compensation and Shareholder Rights.
These GICS changes will go into effect after close of business on March 17, 2023 — but given that the months are just flying by, 2023 will be upon us soon. We’ll stay tuned to see whether any ISS FAQs come out to address these upcoming changes. Visit our “Peer Groups” Practice Area for more info.
— Emily Sacks-Wilner, CompensationStandards.com May 2, 2022
