October 31, 2016
On October 31, 2016, Institutional Shareholder Services announced that the data verification period has opened for QualityScore, its new name for QuickScore. During the data verification period, companies may access and update the underlying data that ISS uses to calculate its QualityScore governance ratings. Companies should verify their data and provide feedback before the data verification window closes on November 11, 2016 at 8:00 p.m. ET.
Click here for more information about verifying your QualityScore data.
Key Dates on ISS Calendar:
ISS also published its updated ISS QualityScore Technical document, available here. For U.S. public companies, fifteen new governance factors were added, with a focus on board structure and shareholder rights, including four newly weighted proxy access questions. In reviewing their data, companies should pay particular attention to the accuracy of the information relating to the new factors.
New Factors: Board Structure
- What proportion of non-executive directors has been on the board less than 6 years?
- Does the board have any mechanisms to encourage director refreshment? (non-scored)
- Does the company disclose the existence of a formal CEO and key executive officer succession plan?
- What is the proportion of women on the board?
- Has the board adequately responded to low support for a management proposal?
New Factors: Shareholder Rights and Takeover Defenses
- Does the company have a fee shifting provision?
- Does the company have an exclusive venue/forum provision?
- Does the company have a representative claim limitation or other significant litigation rights limitations?
- Can the board materially modify the company’s capital structure without shareholder approval?
- What is the ownership threshold for proxy access? (now scored)
- What is the ownership duration threshold for proxy access? (now scored)
- What is the cap on shareholder nominees to fill board seats from proxy access? (now scored)
- What is the aggregation limit on shareholders to form a nominating group for proxy access? (now scored)
New Factor: Compensation
- Does the company employ at least one metric that compares its performance to a benchmark or peer group (relative performance)?
New Factor: Audit and Risk Oversight
- What is the tenure of the external auditor?
Finally, ISS indicated that it has made adjustments to its QualityScore scoring methodology to address evolving corporate governance expectations. These adjustments and the new factors could result in changes to a company’s QualityScore. Additional information about these revisions should be available in the coming weeks.If you have any questions on this matter, please do not hesitate to contact the authors, Lyuba Goltser and Reid Powell, speak to your regular contact at Weil, Gotshal & Manges LLP or to any member of Weil’s Public Company Advisory Group