2024 updates to ISS’s compensation voting policies and equity plan scorecard 

Proxy advisor Institutional Shareholder Services (ISS) has updated its compensation policy FAQs, pay-for-performance mechanics white paper and Equity Plan Scorecard (EPSC) for the 2024 proxy season. There are no changes to the three primary quantitative pay-for-performance screens for 2024, but slight changes were made to the secondary screen. Other compensation updates address how to respond to an adverse say-on-pay (SOP) recommendation, adjustments to incentive plan results (including the use of non-GAAP metrics) and distinguishing problematic change-in-control (CIC) severance payments (e.g., single trigger or modified single trigger) from “bona fide” transaction awards. The EPSC updates move some of the weight ISS places on the plan cost and grant practices pillars to the plan features pillar and make normal annual adjustments to the burn rate benchmarks. The updates are effective for meetings held on or after February 1, 2024.

Separately, ISS added compensation factors on non-CEO executive severance and CIC agreements to its Governance QualityScore, and Glass Lewis updated its voting policies. (See Glass Lewis’s 2024 voting policy updates address clawbacks and stock ownership guidelines; ISS issues QualityScore updates.) ISS has not yet updated its non-compensation policies and procedures FAQs.