ISS's newly released updated Governance QualityScore adds 17 new factors that are applicable to the US (and other markets in certain instances), and applies three existing factors to the US market for the first time. Each factor is accompanied by the associated question number in the Methodology Guide, which provides additional detail.
Board Structure
- What is the level of disclosure of the company's board and executive aggregate diversity data? (Q413)
- What was the greatest percentage of vote support for diversity, equity, and inclusion shareholder proposals at the most recent annual meeting? (Q414)
- Does the company have a board gender diversity policy with a target? (Q415)
- Does the company have an executive gender diversity policy with a target? (Q416)
- Does the company have a gender diversity statement for the board and/or executives? (Q424)
- Does the board exhibit diversity based on aggregate disclosure? (Q425)
- Do executives exhibit diversity based on aggregate disclosure? (Q426)
- Do executive or senior level officials and managers exhibit ethnic and racial diversity? (Q430)
- Do executive or senior level officials and managers exhibit gender diversity? (Q431)
Compensation
- What is the level of disclosure on climate-related performance measures for the short-term or any long-term incentive plan for executives? (Q420)
- What is the disclosed ratio of CEO total compensation to the median total compensation of all employees? (Q422)
- What is the degree of alignment between the CEO's pay and the company's financial performance over the past three years, relative to peers (FPA)? (Q423)
- What percentage of the CEO's equity pay mix by value is performance-conditioned? (Q432)
- What is the company's three-year average adjusted burn rate? (Q433)
Shareholder Rights
- What was the greatest percentage of vote support for climate-related shareholder proposals at the most recent annual meeting? (Q419)
Audit & Risk
- Has the company publicly disclosed an EEO-1 report in the last 3 years? (Q428)
- How long ago was the most recent EEO-1 report disclosure? (Q429)
In addition to the new factors, certain existing factors previously applicable in other regions were expanded to the US:
- What is the quorum for director meetings? (Q215)
- Does the company disclose a performance measure for stock option plans for executives? (Q122)
- Does the company disclose a performance measure for restricted share or stock award plans for executives? (Q123)
The summary of the updates included in the Methodology Guide (page 5) indicates that none of the new factors will be scored, whereas ISS’s release indicates that the new factors won’t be scored until the fourth quarter or 2023.
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