February 28, 2013

ISS Policy: Don’t Share Final Reports & ID/PWs

Thanks to a “heads up” from a Society of Corporate Secretaries alert, here is some information about an ISS policy aimed at preventing the sharing of ISS reports. Here is the notice received from ISS by larger companies:

As many of you are aware, ISS allows companies to access the ISS proxy analysis on their specific company free of charge through an online platform, called Governance Analytics. If you do not already have a log in, you can request one.

You may also be aware that in the case of large cap companies (SP500), ISS will provide a draft of its proxy analysis for the purpose of fact-checking prior to publishing its final analysis and recommendations for institutional investor clients. ISS encourages companies to review the draft analysis thoroughly and to consult with their advisors where necessary to ensure accuracy of company-specific data in the report. Draft analyses can be shared with advisors as appropriate.

This year, in response to increasing unauthorized sharing of login credentials and copies of final proxy analyses (which are protected by copyright), ISS began explicitly prohibiting companies from sharing database login credentials and copies of their final proxy analyses with corporate advisory firms. ISS proxy analyses are the work product of ISS and are protected by copyright. Advisory firms wishing to access ISS analyses or various governance databases can do so by subscribing through ISS Corporate Services (ICS).

And as noted by Davis Polk’s Ning Chiu in this blog, companies can now obtain their ISS QuickScores via ISS’ data verification site. QuickScores will also be provided on ISS proxy research reports – and beginning the second week of March, on Yahoo! Finance pages.

2nd & 3rd Say-on-Pay Failure of the Year

As noted in this Form 8-K, Digital Generation failed to gain majority support for its say-on-pay with only 39% voting in favor (hat tip to Karla Bos of ING Funds) – and and as noted in this Form 8-K, Nuance Communications also failed to gain majority support for its say-on-pay (hat tip to Jim Kroll of Towers Watson).

Poll Results: How Many Companies Will Receive a “Failed” Say-on-Pay Vote in ’13?

There are 20 panels on executive pay disclosure! There is a 75-minute Q&A session with ISS – and one also with Glass Lewis! Reminder that next week is the deadline for the “Early Bird Discount” – 33% off! – for our pair of executive pay conferences in DC and video webcast: “Tackling Your 2014 Compensation Disclosures: The Proxy Disclosure Conference” & “Say-on-Pay Workshop Conference: 10th Annual Executive Compensation Conference.”

Here are poll results in which readers predicted the number of say-on-pay votes that fail to garner majority support this year (here are results of last year’s predictions):

– 10 or fewer failures – 7%
– 11-20 – 5%
– 21-30 – 15%
– 31-40 – 10%
– 41-50 – 22%
– 51-75 – 27%
– More than 75 – 15%

I just posted a “Quick Survey on Separating 401(k) Summary Plan Descriptions & Prospectuses” and what folks are doing in the wake of potential securities law liability for ERISA plan fiduciaries where a 401(k) Plan that offers a “Company Stock Fund” investment choice incorporates SEC filings by reference (and the filings later turn out to be inaccurate). Please participate – all responses are anonymous.

– Broc Romanek