ISS Policy Survey Focuses on Board Diversity, Director Overboarding, and Performance Metrics

July 26, 2019
by Ani Huang

ISS's newy-released 2019-2020 policy survey focuses on board and director accountability, including board gender diversity and director overboarding, as well as the potential use of Economic Value Added (EVA) in ISS's quantitative pay for performance evaluations.

The annual survey, which helps inform ISS policy development, is briefer than in previous years, reflecting investor and issuer feedback that the surveys had become too long and unwieldy, resulting in a lower response rate. Key inquiries include:

• Board Diversity:  ISS seeks views on the importance of board diversity globally, as well as mitigating factors that should be considered before voting against the nominating committee chair at U.S. companies with all-male boards (a policy that will take effect in 2020);
  
  
• Overboarding:  In light of recent strengthening of investor prohibitions on directors serving on too many boards ("overboarding"), ISS seeks to understand whether investor and issuer attitudes on what constitutes overboarding have changed over the past few years for active as well as retired executives; and 
  
  
• Economic Value Added:  Following its acquisition of EVA Dimensions, ISS has been exploring ways to include EVA as a metric in the quantitative pay for performance evaluation it conducts for each company.  EVA, which measures economic profit and capital productivity, is not commonly used among companies as an incentive plan metric, but ISS now plans to incorporate it into the financial screening used to assess companies “on the edge” between Low and Medium levels of concern.

Companies may respond to the survey here; responses will be accepted until 5 p.m. Eastern Time on August 9, 2019.  As always, the Association’s Center On Executive Compensation will also be responding and will be gathering feedback from Center Subscribers on the questions asked and other relevant topics.