January 25, 2018

ISS Launches “Corporate Due Diligence Profiles”: Another Governance Rating?

When I first heard that ISS was launching “Corporate Due Diligence Profiles,” my kneejerk reaction was that they were just rebranding the governance rating product that they have renamed a number of times over the years (eg. CGQ, GRId, QuickScore). But “Corporate Profile Products” is much more than a numerical rating applied to your governance profile. This blog by Davis Polk’s Ning Chiu explains – here’s an excerpt:

We understand from ISS that the product was designed to meet investor demands in reviewing companies for possible shareholder engagement and seeking more insight on individual directors. While the overall data is not new, as the report aggregates information primarily from prior ISS reports and QualityScore into new formats, companies will likely want to be aware of they are being perceived by investors.

Companies may be interested in particular in the 50+ page sample report (you need to fill in a form to receive the report), which shows:

– Historical vote recommendations by ISS on all annual meeting matters and vote results.
– A simple director skills matrix chart based on company disclosure, which interestingly highlights the director skills disclosed by another board where the director sits that is not disclosed in the company’s proxy statement. Companies may want to review how other companies’ describe the skills and qualifications of their directors.
– The QualityScore analysis measuring a company’s governance and compensation practices against the peer group selected by the company, and the industry peer group. Red flags note deviations from “best practices.” Companies may not always be aware of the QualityScore standards. Recent QualityScore updates reflect that for board diversity, as one example, a company must have three women directors serving on its board to qualify for meeting best practices. Two women on a ten-member board would earn a company a red flag. On tenure, a red flag would highlight a company with more than a third of board members who have served over nine years.
– A page devoted to each director, including that director’s election history at other companies where the director serves, as well as the TSR of those companies over the length of the director’s tenure.

Life as a Proxy Designer

In this 14-minute podcast, Labrador’s Molly Doran discusses her exciting career, including:

1. How did you wind up getting into the regulated communication industry?
2. What do you tell people that you do when you first meet them?
3. What are the hot topics that you’re grabbling with now?
4. What are the hardest parts of your job?
5. How is it working with the French?
6. What are the best parts of your job?
7. What advice would you give to someone new in your field?
8. What types of changes do you see coming in the near term for proxy design?

More on “The Mentor Blog”

We continue to post new items daily on our blog – “The Mentor Blog” – for members. Members can sign up to get that blog pushed out to them via email whenever there is a new entry by simply inputting their email. Here’s some of the newer entries:

– Wanna Earn Big $$$? Change Your Company’s Name
– Q&A With Keith Higgins
– FCPA: Is a Follow-On Lawsuit an End-Run Around?
– Auditor Liability: Auditors May Now Be Forced to Look for Fraud
– Revenue Recognition: Lessons from “Early Adopter” Comments
– Disgorgement: Tax Reform’s Impact on Deductibility

Broc Romanek