C-Suite Compensation Center: ISS Issues Draft 2019 Voting Policy Updates

Just a quick note that late last week ISS made available for public comment nine discreet voting policies for potential application in 2019. Only one of the draft voting policies addresses compensation, and it addresses the Financial Performance Assessment Methodology under the Pay-for-Performance Model.

Background

Beginning in 2018, ISS introduced the Financial Performance Assessment ("FPA") as part of its secondary pay-for-performance screen. The purpose of FPA was to provide a broader picture of an issuer's performance in instances where the issuer didn't fare well on the primary screen (i.e., the primary pay-for-performance screen relies upon total shareholder return). Currently, this secondary screen is based on unadjusted GAAP accounting data (e.g., return on equity, return on assets, return on invested capital, revenue growth, etc.).