ISS Policy Survey Signals Changed Approach to Peer Groups, Pay for Performance Disclosures, Engagement

Proxy advisory firm ISS released its 2013 policy survey this week seeking more substantive company input on executive compensation issues than in years past, reflecting pressure from companies and investors seeking a more holistic review of company pay practices.  ISS publishes the survey every year asking for input from a variety of stakeholders as part of its annual policy development process.  However, the questions relating to executive compensation in this year's survey are much more substantial and targeted at hot button issues than in previous years, addressing:

• Peer group selection;
• Pay for performance disclosures including alternative measures of pay such as "realized" or "realizable" pay;
• Performance metrics;
• Golden parachutes; and
  
• Sustainability-related compensation metrics.
  

The survey reflects the impact of say on pay and the scrutiny that the ISS analytical model is receiving from stakeholders, as well as competitive pressures from rival proxy advisor Glass Lewis, which has recently made significant changes to its own peer selection methodology in partnership with data provider Equilar.  To this end, the questions also address ISS's engagement with issuers, even to the point of asking whether companies are interested in participating in roundtable discussions on changes in ISS policies, something that historically has been by invitation only.  The 2013 policy survey is available online via ISS's website; ISS states that “your individual survey responses will not be shared with anyone outside of ISS and will be used only by the ISS Policy Board for policy formulation purposes.”  The survey will be open for responses until August 17, 2012, and our Center On Executive Compensation is currently surveying its Subscribers and will submit its own response to the questions, with a focus on its concerns with the ISS pay for performance analysis.