ISS Issues Modest Policy Updates For 2014

On November 21, ISS issued its proxy voting policy updates for 2014, including some modest changes to its policies regarding executive compensation.

• First, in response to investor feedback that its 2013 policy was too strict, ISS will now make recommendations on director nominees of companies that fail to implement majority-supported shareholder proposals on a "case by case" basis, and will also take into account the board's explanation for failing to implement a proposal as a factor in the recommendation. Although most compensation-related proposals fail to garner majority support, a clawback proposal at McKesson Corporation won majority support earlier this year.
• Second, to reduce the emphasis on one-year TSR under the "relative alignment" prong of its "pay-for-performance" methodoogy for evaluating CEO pay, ISS will now compare CEO pay rank vs. TSR rank within a company's peer group over a trailing three-year period alone, instead of (as previously) over