ISS 2021 pay for performance assessment 

Institutional Shareholder Services (ISS) has updated its approach to evaluating US companies’ CEO pay and performance alignment under its 2021 US Proxy Voting Guidelines. The pay-for-performance assessment is a key driver of the proxy adviser’s recommendations on say on pay (SOP) and other proxy voting issues. If the assessment would result in a negative voting recommendation but there’s no SOP proposal on the proxy ballot (e.g., where the company has adopted a biennial or triennial SOP vote), ISS will recommend against members of the compensation committee or potentially the full board. And a negative outcome may affect ISS’s voting recommendation for a company’s equity plan proposal if there’s one on the ballot. This article describes the quantitative tests and qualitative factors ISS uses in the assessment.