March 5, 2015

ISS’ Equity Plan Scorecard: 3 New FAQs Added

A few days ago, ISS released the following three new FAQs to its “Equity Plan Scorecard FAQs” (so there were 20 FAQs before; now there are 23):

FAQ #11: Are there additional factors that could result in a recommendation on an equity plan proposal that differs from the EPSC “score” recommendation, including proposals with “bundled” amendments?

Yes. Plans that seek approval solely to qualify awards as tax deductible compensation under Internal Revenue Code Section 162(m), for example, will generally receive a positive recommendation as long as all members of the plan’s administrating committee are determined to be independent directors, per ISS’ standards. In addition, plans being amended without a request for additional shares or another modification deemed to increase potential cost (e.g., extension of the plan term) may receive a recommendation based on the overall impact of the amendments regardless of the EPSC score – i.e., whether they are deemed, on balance, to be beneficial or detrimental to shareholders’ interests.

FAQ #22: How will ISS assess a plan’s minimum vesting requirement for EPSC purposes?

In order to receive EPSC points for a minimum vesting requirement, the plan should mandate a vesting period of at least one year which should apply to no less than 95 percent of the shares authorized for grant.

FAQ #23: How does the treatment of performance-based awards affect determination of whether a plan provides for automatic single-trigger accelerated vesting upon a change in control?

ISS will deem performance-based awards as being subject to automatic accelerated vesting upon a CIC, unless (1) the amount considered payable/vested is linked to the degree of performance attainment as of the CIC date, and/or (2) the amount to be paid/vested is pro-rated based on the time elapsed in the performance period as of the CIC date.

15 Cool Things About GE’s 2015 Form 10-K

This 1-minute video describes how General Electric overhauled its Form 10-K this year to make it investor friendly (here’s a hard copy of the slides in the video):

A View on Proxy Access

In this podcast, Matt Orsagh of the CFA Institute discusses proxy access, including:

– Can you summarize the key results of the CFA Institute’s 2014 research on proxy access?
– Given that proxy access is no longer a back burner issue, does the CFA Institute still believe that SEC rulemaking mandating proxy access is warranted or necessary?
– Does the CFA Institute’s position on proxy access take into account the diverse investor and issuer communities, and associated disparate views on proxy access?
– Does the CFA Institute support private ordering?
– What should investors and companies do now in light of the SEC’s suspension of views on the application of 14a-8(i)(9)?

Also see this blog by Mike Gettelman about how a management proxy access proposal would trigger a preliminary proxy statement filing…

– Broc Romanek