PUBLICATIONS & WHITE PAPERS
Navigating the Emissions Landscape: Uneven Paths to Decarbonization
OCTOBER 3, 2024
Greenhouse gas emissions and corporate efforts to reduce them have become central to the climate change discussion in recent years. As corporate disclosures on climate and emissions gain prominence, including through regulatory mandates, the focus is now shifting towards tangible actions and measurable outcomes in climate mitigation and decarbonization. While climate adaptation remains a critical part of the equation, GHG emissions reduction targets have emerged as a key tool for addressing climate challenges.
ISS-Corporate analyzed global corporate disclosure data on GHG emission and reduction targets, evaluating the current levels of transparency, exposure, and sector-specific commitments toward decarbonization.
Climate Shareholder Proposals: A More Sophisticated Discourse
OCTOBER 1, 2024
Shareholder proposals offer a glimpse into investor and market sentiment on key corporate governance issues, including how companies are managing environmental and social impacts, risks, and opportunities. The topic of climate features prominently in shareholder proposal campaigns, as it remains a key priority for policymakers, investors, and corporate boards. ISS-Corporate analyzed shareholder proposals and voting results data from the past decade to discern key trends in voting patterns among investors as well as the underlying dynamics that may affect voting in relation to climate change-related engagements between companies and their shareholders. The analysis finds that climate-related shareholder proposals continue to rank high on the agenda of shareholder engagements , but these discussions are becoming more nuanced, as corporate disclosures and climate-related practices evolve and continue to improve. At the same time, investors appear to be taking a more targeted approach in dealing with these topics from a stewardship and voting perspective.
Governance QualityScore as an Indicator of Risk and Investor Sentiment
SEPTEMBER 23, 2024
Many market observers and investors believe that signs of poor corporate governance may be an effective risk indicator, providing early warning signs of other brewing problems. ISS’ Governance QualityScore (GQS), a decile ranking system based on a holistic assessment of companies’ governance practices, including board structure, compensation, shareholder rights, and audit, helps to quantify this risk. A score of 1 indicates the strongest governance practices (lower risk) while 10 suggests higher risk.
In this report, we examine four different gauges of market sentiment and compare them with GQS ratings. The first two – short interest ratios and credit ratings – are commonly accepted measures of perceived risk, while the other two are indicators of investor discontent as measured by vote support on director election and Say-on-Pay (SOP).
Tax Transparency: A Key Element of Sustainability Reporting
SEPTEMBER 19, 2024
Taxation plays a vital role in achieving the UN Sustainable Development Goals (SDGs), and serves as a key mechanism through which organizations contribute to society, public services, economic development, and social welfare in the countries that they operate in.
Corporates are increasingly under pressure to demonstrate how their tax strategy and practices align with their stated sustainability visions and strategies. Over the years, several large U.S. companies have received shareholder proposals requesting for greater tax transparency, and we continue to see these types of proposals in 2024, signaling that the topic remains of interest to shareholders and other stakeholders.
Total Shareholder Return Gains Popularity in Australia While Bringing Greater Scrutiny of Its Imperfections
SEPTEMBER 4, 2024
Total Shareholder Return (TSR) is an increasingly popular metric for determining long-term incentive (LTI) plans at Australian companies. While the measurement is viewed favorably by many institutional investors as an objective measurement of shareholder value creation, some of its flaws are raising questions among shareholders. An increasing number of ASX100 companies are adopting financial measures that are linked to shareholder returns, such as earnings per share (EPS), return on capital employed (ROCE) and return on equity (ROE), and TSR appears to be the most popular choice. However, simply using TSR as a highly weighted performance condition in an LTI program does not guarantee support from the investment community. Factors associated with the TSR condition, such as the vesting schedule, the peer groups selected, the presence of a positive TSR gateway or the length of the performance periods may arouse criticism and prove a challenge to attract shareholder support.
Materiality Assessments: Expectations and Best Practices
SEPTEMBER 3, 2024
Over the past decade, the business world has made significant strides in establishing standardized and methodical approaches for corporates developing their sustainability strategies and relevant disclosures. Today, a materiality assessment for identifying and prioritizing key issues has become a basic expectation among stakeholders, with certain jurisdictions beginning to require companies to conduct such assessments according to prescribed standards, including assurance requirements.
Anti-Greenwashing Regulations Emerge in Canada and the EU
SEPTEMBER 2, 2024
In recent months, Canada and the European Union have forged ahead in passing new legislation aimed at reducing false or misleading environmental claims, a practice commonly referred to as greenwashing. Anti-greenwashing regulations aim to fundamentally improve increased consumer trust, supporting the green transition, and standardizing claims.
Australian Corporates Lag U.S., European Peers in Climate Disclosure
AUGUST 28, 2024
With the update of Australia’s Sustainable Finance Roadmap in June 2024, Australian corporates are facing tough new rules on climate disclosures as the country aligns itself more closely with global standards related to climate and sustainability goals.
Managing Cyber Risk: Breach Risk Trends in Public Companies
AUGUST 7, 2024
In the two years to January 2024, almost 700 cyber incidents were reported among Russell 3000 companies in the U.S., impacting more than 10% of the firms. One-third of those involved the compromise of a supplier or other third party, and the study also identified substantial third-party aggregate risk concentration across Russell 3000 firms.
Navigating New Air Pollution Regulations: From Compliance to Integrated Strategy
AUGUST 5, 2024
In this report, ISS-Corporate breaks down the new regulatory standards and reviews how they are applied and the steps that companies must take to comply with them. The report also provides analysis on how companies are currently performing in terms of disclosing their emissions and examining the potential benefits of developing a comprehensive Environmental Justice plan.
Are Super Majority Votes Headed for Extinction?
JULY 31, 2024
Shareholder proposals to eliminate supermajority vote requirements are soaring among the biggest listed U.S. companies, a sign that investors feel more well-represented in businesses that make decisions based on a simple majority. The percentage of S&P 500 companies still employing supermajority rules has declined to just over one third, meaning those retaining the practice increasingly look like outliers and may face more scrutiny and pressure to change.
Responsible Business Conduct: Meeting the Challenge of Increasing Regulations
JULY 25, 2024
As new corporate sustainability regulations come into force around the world, companies are grappling to broaden the scope of their environmental and social strategies to comply with the new requirements. This requires them to identify, understand, and report on a variety of risks related to responsible business conduct.
The EU CSRD and the Corporate Sustainability Due Diligence Directive (CSDDD) are perhaps the most comprehensive regulatory efforts currently addressing responsible corporate behavior. As shown in the table below, ISS-Corporate mapped out key themes covered under the NBR methodology and how they connect to the key disclosure areas per the European Sustainability Reporting Standards (ESRS) under the CSRD.
July 2024 | Sustainable Finance Market Highlights
JULY 25, 2024
The first half of 2024 registered a total volume of $768bn in green, social, and sustainability (GSS+) bond and loan issuances, with bonds making up almost two thirds of that figure, according to Environmental Finance (EF data).
Within the bond market, green deals still account for the vast majority of issuance (more than 70%), followed by social and sustainability issuances, as highlighted by the Climate Bond Initiative (CBI).
Canada Pushes Forward with Sustainability Disclosure Standards
JUNE 14, 2024
The Canadian Sustainability Standards Board (CSSB) is moving to establish sustainability disclosure standards for Canadian companies. On March 13, 2024, CSSB published two exposure drafts for the Canadian Sustainability Disclosure Standards (CSDS) – CSDS 1 and CSDS 2 – and announced the opening of a public consultation period during which it will collect feedback on the proposed Standards for the Canadian. Following the end of the 90-day consultation period on June 10, 2024, CSSB will aim to finalize the standards by the end of the fourth quarter of 2024, marking another milestone towards the adoption of sustainability disclosure standards in Canada.
Board Independence in the US: Delaware and a Close Look at Independence
JUNE 11, 2024
- A Delaware judge’s decision to void $55.8 billion in compensation for Elon Musk was a noteworthy event for shareholders and corporate issuers, not only regarding compensation, but also the complexities around evaluating director independence.
- Traditional measurements used by major exchanges and proxy advisors seem to show that board independence in the U.S. is robust, but some less obvious non-independent traits may lurk beneath the surface.
- Our research indicates that Delaware courts could more frequently consider non-traditional/non-financial factors in evaluating board independence, process, and fair dealings with shareholders than widely believed.
Mandatory Climate Disclosure in South Korea
MAY 31, 2024
Mandatory sustainability disclosure has become a reality in South Korea, as the Korea Sustainability Standards Board (KSSB) published the Exposure Draft of the ‘Korean Sustainability Disclosure Standards’ on May 2. While the exact scope and timing of the initiative are yet to be unveiled, starting from 2026, climate-related disclosures will become mandatory.
Japan Shareholder Proposal Landscape 2024: Shareholder Proposals to Focus on Capital Efficiency Long Term Value Creation
MAY 27, 2024
Japan’s corporate governance is evolving, influenced by increasing shareholder activism and initiatives by regulators and the Tokyo Stock Exchange (TSE) to attract global investment. The upcoming proxy season is expected to see a rise in shareholder proposals, with a focus on board independence, capital allocation and environmental issues.
This report looks at the trends in Japanese corporate governance, where there is a growing emphasis on shareholder proposals and capital efficiency. We examine what this means for the upcoming proxy season and the challenges faced by Japanese companies in meeting investor expectations, offering insights into the ongoing transformation and its implications for issuers.
Pro-ESG Shareholder Proposals Regaining Momentum in 2024
MAY 22, 2024
Governance is back on focus this proxy season, with both the volume and support on proposals aiming to enhance shareholder rights and companies’ governance practices gaining steam. Environmental and social proposals are showing a sign of reversing trend of declining support from the 2021 peak, while anti-ESG proposals are gaining volume but not support.
We reviewed proposals submitted for Russell 3000 company AGMs held between Jan. 1 and May 31 for each year since 2020 to shed light on how investors were bringing up their concerns ahead of the May 23 peak U.S. AGM date, which topics carry the greatest currency, and their level of success.
News and Controversies: How Do Companies Monitor Stakeholder Grievances?
MAY 13, 2024
While responsible business conduct has long been a focus for activists, special interest groups and the socially responsible investment movement, in recent years, more stakeholders are recognizing the importance of global norms for responsible business conduct to prevent and mitigate adverse impact. Governments around the world are demanding more comprehensive disclosures from companies and their investors, creating a feedback loop that increases the focus on these topics.
Monitoring the implementation of responsible business conduct standards across a company’s own operations and along the value chain can prove difficult. For the past several decades, corporate sustainability has been shaped by a variety of global standard-setting initiatives. Many voluntary frameworks are now being incorporated into regulation at the national or regional level. Legal frameworks largely focus on disclosure, yet a growing number of regulatory initiatives also introduce sustainability due diligence obligations.
Mapping TCFD to the IFRS S2 on Climate Disclosures
MAY 6, 2024
The inaugural IFRS Sustainability Disclosure Standards were released by the International Sustainability Standards Board (ISSB) in mid-2023, designed to establish a global baseline for corporate disclosures. They are set to be adopted across several jurisdictions in the next few years. The new rules have garnered global support from 64 jurisdictions to date, with 19 national regulators already consulting on adoption of the recommendations under jurisdictional law.
Whilst based on TCFD, IFRS S2 significantly expands the scope and detail of disclosures required. To assess the concrete implications of this progression, ISS-Corporate performed a detailed cross-standard analysis, asking two key questions: What are the additional disclosures required under IFRS S2? And how well do exemplary climate reports align with IFRS S2?
Sustainability Disclosures in Asia-Pacific: Accelerated Transition to New Standards
APRIL 25, 2024
ISS-Corporate reviewed the level of alignment of corporate disclosures in major Asia-Pacific markets with established frameworks – the Global Reporting Initiative (GRI), the Sustainability Accounting Standards Board standards, and the Taskforce on Climate-related Financial Disclosures (TCFD) recommendations – to identify which countries and sectors are better prepared to meet the more ambitious requirements of CSRD and the IFRS Sustainability Disclosure Standards.
ISS-Corporate Acquires Sustainability Reporting Software Provider, Celsia: Executive Insights
APRIL 24, 2024
ISS-Corporate, a leading provider of compensation, governance, cyber risk monitoring, and sustainability offerings to help companies improve shareholder value and reduce risk, earlier this month announced the acquisition of Celsia, an Oslo-based provider of SaaS solutions for corporate sustainability reporting. Marija Kramer and Petter Reistad outline how this strategic development will advance ISS-Corporate’s position as a holistic provider of sustainability offerings to corporates.
April 2024 | Sustainable Finance Market Highlights
APRIL 17, 2024
The first quarter of 2024 registered a total volume of $285bn in GSS+ bond and loan issuances, showing signals of recovery compared to the last quarter of 2023, according to Environmental Finance (EF data).
With this addition, the market has now surpassed $4 trillion (EF data). This encouraging start of the year has been fueled by a rise in transition issuances, which are expected to become one of the key themes in the sustainable finance world, as highlighted by Nordea among others (Nordea).
Women on FTSE 350 Boards Make Gains in Line With Tougher U.K. Gender Diversity Requirements
APRIL 12, 2024
Companies in the U.K. and Ireland face heightened expectations from investors for gender diversity in line with the issue’s growing importance for companies. An increasing number of companies have developed their diversity goals in line with their enhanced ESG programs, and some have even linked their executives’ variable pay with meeting their own diversity objectives. While furthering diversity, equity and inclusion used to be optional for companies, it is now a primary requirement that applies to most listed companies.
Regulatory Development in Hong Kong: Elimination of Hong Kong H Class Meetings Sparks Minority Rights Concerns
APRIL 11, 2024
A decision by Chinese financial regulators to cancel separate meetings for a class of shareholders on the Hong Kong stock exchange has sparked concerns among some large institutional investors that the change may weaken minority investor rights.
In this report, ISS-Corporate examines the background, reaction, and implications of removing the class meeting requirement in Hong Kong’s securities market.
Goal Setting in Annual Incentives: CEO Target Goals Reflect Growth Ambitions
APRIL 4, 2024
The majority of target goals set for S&P 1500 CEOs were higher in 2022 than a year earlier when the same metrics were used in annual incentive awards. On the surface, that’s an encouraging outcome as we generally expect companies to grow over time, setting increasingly challenging goals for management teams. But do those goals increase every time previous targets were achieved? And what happens the following year – are the higher goals achieved? Part one of our three-part series examined recent payout levels for annual incentive awards while part two focused on goal level achievement for earnings metrics. In this third and final installment, we take a deeper look at the goal setting process in 2022 and explore the connections between goals and actual outcomes over the span of 2021 and 2022.
Gender Pay Equity: Assessing Corporate Transparency and Performance
APRIL 2, 2024
In recognition of the recently observed Women’s History Month in March and the United Nations-recognized International Women’s Day (March 8), ISS-Corporate reviews the state of pay equity practices based on corporate disclosures, with a focus on gender. The analysis includes an overview of legislation and shareholder initiatives that influence gender pay gap disclosures, while also sharing a review of disclosure data across geographic regions, as well as quantitative gender pay gap figures for publicly held companies.
Addressing Impacts: EU Rules Cement Long-Standing Due Diligence Commitments
MARCH 22, 2024
The adoption of the EU’s Corporate Sustainability Due Diligence Directive (CSDDD) signals broad consensus on the importance of robust controls to prevent adverse impacts of business activities on people and the environment. Notwithstanding significant concessions on the ambitious proposal presented by the European Commission over two years ago, this regulation will drive the harmonization of sustainability due diligence obligations in the EU and beyond.
AI and Board Of Directors Oversight: AI Governance Appears on Corporate Radar
MARCH 21, 2024
Artificial intelligence (AI), the use of technology to execute or simulate processes that would otherwise require human intelligence, is quickly evolving. Companies have begun to use the rapidly expanding technology to help achieve efficiency, increase competitive advantages, and enhance engagement with stakeholders. Early adopters are implementing AI in a variety of ways, such as sales/marketing, product development, and legal.
Reflecting the rising importance of AI’s impact on businesses, some companies are recruiting directors with AI expertise and establishing board-level oversight. To assess how boards may evolve to manage and oversee this new area of potential risks and opportunities, ISS-Corporate examined S&P 500 company DEF 14As filed from September 2022 through September 2023 for mentions of board oversight and director skills related to AI.
Special Grants: Who Gets Them and How Much?
MARCH 19, 2024
Special grants — equity awards made outside of regular annual compensation — can be an effective compensation vehicle but can also generate investor concern if they are perceived as excessive or unjustified. These grants may take the form of new hire or promotion awards, one-time retention awards or one-time incentives, and are often rationalized as helping to attract, retain and incentivize executives.
In this report, ISS-Corporate analyzes non-cash special grants awarded to CEOs in the U.S. in fiscal year 2022 to shed light on how they are used in compensation packages and whether the controversy surrounding their use is merited.
A Global Baseline? How to Navigate Interoperability Across Sustainability Reporting Rules
MARCH 11, 2024
Sustainability reporting rules developed by the International Sustainability Standards Board (ISSB) for the IFRS Sustainability Disclosure Standards are set to be adopted across jurisdictions in the next few years, establishing a global baseline for corporate disclosures. This represents an opportunity for companies to harmonize their sustainability data in a complex regulatory environment. Adopting these new standards as early as possible and understanding their interoperability with other regulations are crucial considerations for sustainability leaders.
SEC Adopts Climate Disclosure Rule: Key Takeaways for Corporates
MARCH 8, 2024
On Wednesday, March 6, the U.S. Securities and Exchange Commission (SEC) approved a rule that will require climate-related disclosures for many public companies.
The SEC’s climate rule mandates certain standardized climate-related disclosures from registrants, many of which depend on a “materiality” assessment. The final rule contains several substantive changes from the proposed rule, which was first released almost two years ago. Some of the high-profile changes include the removal of all requirements pertaining to Scope 3 emission reporting, the narrowing of Scopes 1 & 2 disclosure requirements to only larger registrants and only when material, the narrowing of several prescriptive board- and management-related climate oversight disclosures, and the removal of certain line-item disclosure requirements.
2024 U.S. Proxy Season Preview: Governance Back on Agenda While Sustainability Recedes
FEBRUARY 29, 2024
The 2024 proxy season opened with two explosive court cases: a landmark Delaware court ruling that vacated Elon Musk’s pay and ExxonMobil’s court challenge to exclude a shareholder proposal on greenhouse gas emissions reduction from the proxy. These court cases highlight the emerging tensions between corporates and their shareholders. While calls for more robust governance and board accountability are growing, pressure against Environmental & Social considerations is increasing. Both investors and issuers will need to navigate these sometimes-competing trends carefully and evaluate the impact their actions may have on various constituencies as issuers prepare their proxies and shareholders cast their votes.
ISS-Corporate has examined key themes, trends, and notable shareholder proposals that are likely to shape the discourse during the proxy season.
January 2024 | Sustainable Finance Market Highlights
JANUARY 23, 2024
Q4 2023 saw $227bn of GSS+ bond issuances, bringing the final volume for 2023 to about $785bn, according to ICMA (Quarterly Report).
The figure means the market fell short of the total for 2022, which amounted to $925bn in issuances.
Looking at 2024, a variety of forecasts have been released, and expectations in general remain positive following a 2023 marked by high inflation and general market uncertainty. Market growth is expected to be fueled by EU issuers, with the EU Commission announcing it intends to issue €75 billion worth of bonds in the first half of 2024, primarily to finance the NGEU program (Environmental Finance). The trends seen in 2023 will continue despite geopolitical challenges, and green bonds will still be the most common format, according to Crédit Agricole CIB ESG Fixed Income Research.
People Problems: The Human Element of Cyber Risk
JANUARY 17, 2024
The recent high-profile cyberattacks on MGM Resorts International and Caesars Entertainment underscored the role of human failure in exposing a company’s IT systems to bad actors. Recent research shows that about three quarters of cyber incidents involve some sort of human misstep.
In this report, ISS-Corporate explores the connections between human skills, staffing, and cyber outcomes to identify vulnerabilities and help determine the likelihood that a particular company will face a major breach.
Market Turbulence: Volatile Years Underscore the Importance of Relative TSR
JANUARY 10, 2024
Over the last few years, a multitude of historic events have contributed to economic turbulence that has unevenly impacted stock price performance across different market segments. Understanding industry and market trends and the key drivers of valuations over the period is crucial in evaluating a company’s performance against its most relevant industry peers and making informed decisions on executive compensation. In this paper, ISS-Corporate breaks down the key factors that are contributing to market volatility and dives into key trends affecting TSR.
Navigating California Senate Bills 261 and 253 and the Evolving Landscape of Climate Disclosure
JANUARY 8, 2024
California continues to be at the forefront of environmental regulation, enacting the Climate-Related Financial Risk Act (SB261) and the Climate Corporate Data Accountability Act (SB 253) in October 2023. The new legislation adds to a broader global trend of stricter and more extensive climate disclosure requirements for companies.
In this paper, ISS-Corporate breaks down the new regulation and looks at what type of companies and industries are currently the best prepared to meet the new standards. We also take a look at the steps that companies should take to get ready for evolving disclosure requirements in both the U.S. and Europe.
COP28: Businesses Step Up in Global Climate Debate
DECEMBER 20, 2023
COP28, this year’s annual United Nations climate summit, was marked by a surge in corporate participation, with business and private sector representatives significantly outnumbering government delegates. This shift underscores the growing role of the private sector in shaping the goals, targets and agreements that set the path toward net zero.
What Falling MSoP Support Says About Investor Expectations
DECEMBER 13, 2023
Shareholder support for Management Say-on-Pay (MSoP) proposals has declined steadily since 2019 even though U.S. company performance, as measured by Total Shareholder Return, consistently improved.
ISS-Corporate analyzed the relationship between MSoP votes and TSR, CEO compensation, and other pay components over from the beginning of 2019 to July of this year to uncover the possible causes of this rising investor discontent. We looked at the components of pay packages, including how much is based on performance, the mix between stock and cash awards and the total amount of compensation.
Earnings Goal Achievement in Annual Incentives: Are Target Goals for CEOs Too Soft?
DECEMBER 5, 2023
More than two-thirds of U.S. CEOs achieved or exceeded their target goals and earnings goals in 2022, with one out of four reaching their maximum goal levels. While these achievement rates result in handsome rewards for executives, consistently elevated rates of achievement raise questions about the rigor of the goal-setting process and may set a dangerous precedent for future payout expectations. In this second installment of our 3-part series, ISS-Corporate examines goal achievement in short-term (or annual) incentive awards as a whole and by metric groups. We also take a closer look at earnings metrics, which are the most prevalent group of financial metrics, and note industry-specific nuances.
Glacial Progress for Ethnically Diverse Boards in Canada
NOVEMBER 21, 2023
Underrepresented ethnic groups have all made progress in obtaining board seats in Canada over the last five years; unfortunately, the pace is slow. At the current rate, it would take 10 years for overall board representation of diverse ethnicities to match the country’s demographic makeup.
In this report, ISS-Corporate looked into Institutional Shareholder Services data on Canadian boards from 2019 to 2023 to track the changes in ethnic composition. Our analysis considers on average 229 S&P/TSX 60 and S&P/TSX Composite companies with around 2,200 board seats per year.
Incentivizing What Matters 2.0: A Cross-Continental Review of Sustainability-Linked Executive Incentives
NOVEMBER 8, 2023
The use of sustainability-linked targets in executive compensation schemes continues to spread among U.S. and European companies.
ESG targets represent a growing percentage of overall pay opportunities for executives in both short-term long-term incentives. However, many questions remain over transparency, their effectiveness and how and when they are used.
In this report, ISS-Corporate examined sustainability incentive trends in the U.S. and Europe to show how they have progressed since our previous report in 2021 and to explore common hurdles to building effective performance metrics that align executive incentives with sustainable long-term value creation.
Cyber Governance: Growing Expectations for Information Security Oversight and Accountability
OCTOBER 19, 2023
Information security is increasingly being viewed as a key corporate governance issue within the investment community, and expectations are growing for public issuers to have robust programs and strategies to help mitigate cybersecurity threats. Businesses that fail to adopt such measures risk becoming market laggards and may face increased risk of a material security breach. In this report, ISS-Corporate analyzes trends in cybersecurity governance and finds that while U.S. corporates have shown signs of taking the issue more seriously, progress is mixed.
October 2023 | Sustainable Finance Market Highlights
OCTOBER 16, 2023
Q3 2023 saw $176.5bn in GSS+ bond issuances, bringing the year-to-date volume to $716bn, according to Environmental Finance. While that remains shy of the approximately $200bn issuance volume in the same quarter of 2022, the last three months of the year are expected to bridge this gap and replicate the $910bn total issuance in 2022.
Golden Parachutes Face Investor Scrutiny
OCTOBER 11, 2023
Investor scrutiny of executive “golden parachutes” is on the rise, alongside an increase in the average value of such executive exit packages. Amid challenging economic conditions, shareholders and corporate governance advocates are showing increased interest in curbing excessive CEO and executive financial windfalls upon termination.
In this report, ISS-Corporate found that the third most prevalent shareholder proposal by count this year is “Submit Severance Agreements (Change-in-Control) to a Shareholder Vote,” or, put more simply “say on golden parachutes.” This type of proposal has been increasingly cropping up on companies’ proxy ballots and a handful have even won majority support. There could be more to come.
Hispanics Underrepresented on U.S. Boards Despite Recent Gains
OCTOBER 4, 2023
About 19% of the U.S. population identifies as Hispanic, but the proportion of Hispanics serving on U.S. corporate boards is far lower. While representation has seen substantial growth by percentage over the last five years, the starting point was significantly lower than that seen by other ethnic groups. As we celebrate Hispanic Heritage Month (September 15 – October 15), ISS-Corporate examines the current state and trends of Hispanic and Latin American board representation at U.S. corporations.
MGM Cyber Breach: Rethinking the Odds
SEPTEMBER 22, 2023
MGM Resorts International suffered a major cybersecurity breach that affected everything from electronic hotel room keys to the operations of its casinos and websites. How could such a large, well-resourced and security conscious company fall victim to such damaging attacks and what can the rest of the corporate world learn from it?
Maximizing your chances of staying safe requires that you constantly monitor for risk, discovering your own weaknesses, and keeping track of the odds – both for your own company and your industry. Leveraging the ISS ESG Cyber Risk Score, ISS-Corporate compared the cyber security risk of the gaming sector against the broader market and found that companies in the sector are 30% more likely to incur a significant breach event in the next 12 months.
Annual Incentive Payouts: Are Target Goals Too Modest?
SEPTEMBER 21, 2023
Well-designed performance awards motivate executives to grow their businesses, streamline operations and deliver value to shareholders; but when poorly designed, they serve as cash machines for executives delivering mediocre results. In this report, ISS-Corporate examined the performance of S&P 1500 CEOs against their targets over the last five years to find the similarities and differences between industries and between smaller and larger companies.
What ‘Perks’ Can Tell Us About Executive Compensation
SEPTEMBER 11, 2023
With salary, annual bonuses, and long-term equity grabbing most of the headlines, perquisites, or “perks” are often overlooked as a vital component of an executive’s compensation package. Despite their obscurity, incentives ranging from personal use of company aircrafts to relocation expenses remain widely used tools across the U.S. corporate landscape and can act as a guide to broader trends in executive compensation and the business environment.
2023 Proxy Season Digest
SEPTEMBER 6, 2023
Each year during proxy season, ISS-Corporate analyzes recently collected data from Russell 3000 company filings. This year we focused on director support and diversity, executive compensation, and shareholder proposals. In this season-ending review, we aggregate our findings for a comprehensive lookback on the 2023 proxy season.
Due Diligence: A Core Concept Underpinning the CSRD Framework
SEPTEMBER 1, 2023
The European Sustainability Reporting Standards (ESRS), adopted at the end of July, require companies to comprehensively report on their due diligence processes under the four pillars of governance; strategy; impact, risk and opportunities; metrics and targets.
This covers how companies embed due diligence in governance, strategy, and business models, engage with affected stakeholders, identify and assess negative impacts on people and the environment, take action to address those impacts and track the effectiveness of these effort.
Who are the New Directors? A Look at the Demographic Make up of the Latest Independent Board Directors
AUGUST 28, 2023
Bringing on new board members presents a valuable opportunity for companies to benefit from fresh insights and expertise. In the following analysis, ISS Corporate-examined the current directors across Russell 3000 companies to understand the diverse composition of the most recent group of independent directors.
Investors Press U.S. Boards To Separate Chair, CEO Roles
AUGUST 23, 2023
The first half of 2023 saw a significant increase in the number of shareholder proposals calling for an independent board chair that went to a vote. Support levels for such proposals increased slightly, contrasting with a decline in support for shareholder proposals that went to a vote overall.
In this report, ISS-Corporate examines independent chair proposals, shareholder support levels for such proposals, and the presence of combined chair-CEO roles over the last 10 years to assess evolving trends in the landscape over time. For further insights, download the full report.
Are European Companies Ready for Scope 3 Disclosures?
AUGUST 10, 2023
Under new European Union (EU) sustainability reporting rules, companies will be required to make a deep assessment of their Scope 3 emissions.
The EU’s Corporate Sustainability Reporting Directive (CSRD) calls on companies to disclose information about the integration of climate-related impacts, risks and opportunities into their business strategies. Scope 3 emissions represent the majority of most companies’ GHG emissions.
ESRS: A New Chapter in Sustainability Reporting
JULY 31, 2023
On July 31, 2023, the European Commission adopted the first set of European Sustainability Reporting Standards (ESRS), which require companies to provide comprehensive and robust information about social and environmental impacts, risks and opportunities to a broad group of stakeholders.
In this report, we break down the ESRS’ implications for companies, investors, customers and other stakeholders. We also examine the practical steps that corporates may take to prepare themselves for the new disclosure requirements.
SEC Cybersecurity Rules Set New Hurdles for Public Companies
JULY 28, 2023
On July 26, 2023, The Securities and Exchange Commission adopted new rules requiring public companies to annually disclose their cybersecurity risk management strategies and governance methods, and to promptly disclose material cybersecurity incidents. While the rules mandate only disclosures, they will strongly incent companies to adopt more robust cyber risk assessment and monitoring programs. Companies must provide the broader disclosures about their cyber policies beginning with the annual reports for fiscal years ending on or after December 15, 2023. The rules on reporting cybersecurity incidents will go into effect later this year.
In this report, ISS-Corporate takes a deep dive into how and when the regulations apply and looks at their potential impact on companies and their stakeholders and on the improvement of corporate cybersecurity overall.
Gender Diversity in Canadian Corporations: Rise in Board Seats for Women Hides Scant Progress in Leadership Roles
JULY 26, 2023
Gender diversity on boards and among board leadership positions brings financial and non-financial benefits that go beyond a company’s ESG performance. Canada, like many other countries, has seen women make gains both in terms of total board seats and the percentages they represent on boards.
But that only tells part of the story. Our research shows that those numerical gains are not matched by increases in women holding leadership roles such as the heads of compensation, audit and nominating committees, while female CEOs remain few and far between.
How Metrics Can De-Mystify Third-Party Cyber Risk
JULY 20, 2023
In an increasingly connected and networked corporate world, cyber risk generated by third parties is a growing concern for corporate boards and other stakeholders. Applying the ISS ESG Cyber Risk Score’s Incident Type Likelihood model, ISS-Corporate found that a third-party breach is the “most-likely” type of future cyber incident to impact organizations when compared to all other incident types.
July 2023 | Sustainable Finance Market Highlights
JULY 14, 2023
May 2023 saw $62.3bn of green bond issuances, a rise from $60.3bn in the same month a year earlier, making it the busiest May since the inception of the green debt market in 2007. The growth was driven by the continuing rise of sovereign issuances.
Canada Regulatory Update: New Reporting Requirements on Modern Slavery
JULY 11, 2023
With the adoption of Bill S-211, Canada becomes the latest country to pass legislation requiring companies to assess and report on Modern Slavery risks throughout a company’s supply chain.
Certain government institutions and business entities will be required to report annually on their efforts to prevent or reduce the likelihood of forced labor and child labor playing a part in their supply chains. The first of these reports is due by the end of May 2024. Research by ISS-Corporate shows that many of the companies traded on Canada’s benchmark TSX index have not taken initial steps to proactively implement corporate supplier policies and programs that may mitigate compliance risks with future regulations under the Act.
U.S. CEO Compensation Advantage Grows vs. U.K. Peers
JULY 4, 2023
The pay gap between CEOs in the S&P 500 and U.K.’s FTSE 100 widened from 2018 to 2022, with the growing advantage for U.S. chiefs largely driven by long-term incentive plans (LTIPs) and corresponding pay opportunity levels for S&P 500 companies. Corporate growth, both in terms of market value and revenue, was significantly higher on the U.S. side of the Atlantic during the period. In this analysis, ISS-Corporate highlights several key differences in CEO compensation between the U.S. and the U.K.
For Corporate Boards, Cyber Risk is ESG Risk
JUNE 6, 2023
In this interview with IQ 360, Doug Clare, Managing Director and Head of Cyber Strategy at ISS-Corporate, talks about how third-party risk management, cybersecurity and all the pillars of ESG are becoming ever more interconnected. “This year I noticed a conspicuous change in focus: suddenly, everyone from the keynote speakers to executives meeting in private suites was talking about the full scope of Environmental, Social and Governance (ESG) issues, which are becoming an increasing priority for investors and board members” said Clare.
What the New Disclosures Say About Pay vs Performance
MAY 2023
The Securities and Exchange Commission last year implemented new rules to help stakeholders track the relationship between a company’s performance, as measured by total shareholder return, and executive compensation. ISS-Corporate examines disclosures made since the rule took effect in October 2022 to see how closely pay and performance were aligned.
U.S. Shareholder Proposals Jump to a New Record in 2023
MAY 2023
In this report, ISS-Corporate reviewed proposals submitted for Russell 3000 company AGMs held between Jan. 1 and May 31 for each year since 2019 to shed light on how investors were bringing up their concerns ahead of the May 25 peak U.S. AGM date, which topics carry the greatest currency, and their level of success.
Relative TSR: Measuring Performance in a Tough Market
MAY 2023
In this report, ISS-Corporate analyzed relative TSR metrics across the S&P 500 to review how companies weathered the storm compared with their peers. We found that less than half (40 percent) of companies maintained the same relative positioning between December 2021 and December 2022, but, as always, high-level aggregate statistics don’t tell the full story.
Climate Data Gaps: Are Corporates Prepared for Incoming Regulation?
MAY 2023
In this report, ISS-Corporate analyzed relative TSR metrics across the S&P 500 to review how companies weathered the storm compared with their peers. We found that less than half (40 percent) of companies maintained the same relative positioning between December 2021 and December 2022, but, as always, high-level aggregate statistics don’t tell the full story.
Regulators Target Modern Slavery, Environmental Abuses in Supply Chains
APRIL 2023
In this report, ISS-Corporate examined the rapidly evolving corporate sustainability landscape, including national and international regulatory regimes, and how they influence the level of due diligence practiced by companies.
ESG Disclosure Trends in Europe: Climate, Labor Lead Improvements
APRIL 2023
In this report, ISS-Corporate examined European corporate disclosures from 2022 to identify which areas showed the greatest and least improvement.
Women Taking More Board Seats, But Progress Mixed
APRIL 2023
To mark Women’s History Month in March, ISS-Corporate examined the latest trends in gender diversity among U.S. public company (Russell 3000) boards and C-suites. We tracked the progress, from 2020 to the beginning of 2023, of female representation on boards, the proportion of women in leadership roles, the percentage of women CEOs, chairs, lead directors, and named executive officers.
ESG Disclosure Trends in Canada: Climate Reporting Leads the Way
APRIL 2023
In this report, ISS-Corporate reviewed and analyzed ISS Environmental & Social QualityScore data covering companies in Canada’s S&P/TSX Composite Index to identify the most notable environmental and social disclosure improvements in Canada for 2022 and compare disclosures from the end of last year with the end of 2021.
ESG Disclosure Trends in the U.S.: Transparency Continues to Improve
APRIL 5, 2023
In this report, ISS-Corporate reviewed and analyzed ISS Environmental & Social QualityScore data covering companies in the Russell 3000 Index to identify the most notable environmental and social disclosure improvements in the U.S. for 2022.
April 2023 | Sustainable Finance: Market Highlights
APRIL 1, 2023
Sustainable bond issuances rose significantly in the first quarter of this year, as a surge in sovereign issues helped boost volumes by 23% compared with Q1 2022. Green Use of Proceed issuances remained dominant.
Gender Diversity Grows on Asian Boards But Still Lags the West
MARCH 3, 2023
Diversity in the board room enables a broader range of perspectives and approaches to the decision-making process. Among numerous discussions on board diversity in the investment community, gender continued to be a focal point in 2022.
Russell 3000 Boards Becoming More Diverse
FEBRUARY 22, 2023
ISS-Corporate took a look at the diversity trend in the Russell 3000 over five years, with a special focus on Black/African American directors in recognition of Black History Month.
EU Female director quotas are coming: Is Europe ready?
FEBRUARY 13, 2023
By July 2026, all large, publicly-listed companies in the European Union will have to meet new quotas for the percentage of women holding directorship roles. While some countries are already close to reaching those levels, on average, others have a long way to go in just a few years.
Dual Class Share Structures: The European Experience
FEBRUARY 6, 2023
This paper surveying dual class share structures in Europe follows an earlier piece looking at similar structures in the U.S.
Shareholder Resolutions in Review: Fossil Fuel Lending and Underwriting
JANUARY 20, 2023
This report examines proposals focused on bank policies regarding the financing of new fossil fuel exploration.
Shareholder Resolutions in Review: Racial and Gender Pay Gaps
JANUARY 20, 2023
In this review, we focus on the results for resolutions on racial and gender pay gap disclosures. Voting results are based on filings by companies through the end of October.
Biodiversity COP15: Key Takeaways for Companies
JANUARY 18, 2023
The proceedings at 2022’s Biodiversity COP15 were closely watched by ISS and reports have been prepared by the ISS ESG & ISS-Corporate business units. In this paper, ISS-Corporate examines the key takeaways for companies.
SEC Seeks to Clarify Universal Proxy Card Rules
JANUARY 12, 2023
The Securities and Exchange Commission has provided new guidance for companies and dissident shareholders on the use of universal proxy cards, about which a number of questions have been raised since they were introduced for all contested director elections after Aug. 31, 2022.
January 2023 | Sustainable Finance: Market Highlights
JANUARY 1, 2023
Last year was the first since 2011 during which green, social, sustainability and sustainability-linked (GSSS) bond volumes decreased, according to Environmental Finance. Unquestionably, the prior two years were exceptional. The COVID pandemic pushed many issuers, especially financial institutions and sub-sovereign and agencies (SSAs), to raise funds for supporting the real economy, and favorable market conditions kept capital costs low, fueling impressive YoY growth for issuances.
SEC Strategic Plan 2022-2026: Keeping up with Evolving Risks
DECEMBER 15, 2022
The Securities and Exchange Commission (SEC) set out a new strategic plan that seeks to address evolving market risks through a re-examination of its rules and enforcement tools and the extension of its reach beyond simple securities.
Dual Class Share Structures: Is the Sun Setting Too Slowly?
DECEMBER 13, 2022
Dual class share structures have been traditionally used to protect newly public companies from hostile takeovers or other forms of interference.
Governments Stall, Corporates Forge Ahead: Key Takeaways for Companies from COP27
DECEMBER 1, 2022
The Conference of the Parties (COP) climate change meetings have taken place for the last 20 years, and now represent the largest annual conference held by the United Nations.
Cybersecurity Disclosures: What Progress Has Been Made?
NOVEMBER 14, 2022
In this new report, ISS-Corporate assesses data on the Governance Quality Scores (GQS) of companies against a series of 11 cyber security GQS questions.
Taking Off: The Role of Carbon Offsets in Corporate Climate Strategy
NOVEMBER 7, 2022
In this paper, ISS-Corporate examines the history of carbon offsets, the properties of an effective implementation of a carbon offset program, and role of carbon offsets in achieving Net-Zero ambitions.
Feet on the Accelerator: Fewer Companies Willing to Relinquish Power to Advance Equity Vesting
OCTOBER 28, 2022
In recent years companies have become more reluctant to place meaningful limitations on corporate boards’ authority to accelerate the vesting of outstanding equity awards.
ESG and C: Does Cybersecurity Deserve Its Own Pillar in ESG Frameworks?
OCTOBER 26, 2022
In this new report, ISS-Corporate examines the links between cybersecurity and other ESG issues. We also explore how companies can address these risks and respond to rising stakeholder concern, for example through the use of cyber-risk ratings.
Shareholder Resolutions in Review: Labor Issues
OCTOBER 26, 2022
In this snapshot, we examine the results for resolutions on labor and workforce equity issues. Voting results are based on filings by companies through the end of the year.
Keeping Up With The Rules: Cybersecurity Incident Reporting Regulation Across Markets
OCTOBER 17, 2022
In this report, ISS-Corporate breaks down the varying rules and proposed regulations from key market regulators to help companies navigate this shifting landscape.
Corporate Equity Plans: Where Shareholder Comfort Meets Administrator Flexibility
OCTOBER 13, 2022
A well-managed corporate equity plan is always a balance between assuring shareholders that their interests are protected and giving management the flexibility it needs to serve the interests of all stakeholders, such as attracting and retaining top talent. The ISS Equity Plan Scorecard (EPSC), now in its eighth year, considers equity governance and how administrators achieve both these priorities.
SEC Cybersecurity Disclosure Rules: What’s Coming and Who’s Reacting
OCTOBER 4, 2022
In this new paper, ISS-Corporate examines the SEC’s proposed rules, comments made on the new proposed rules, and companies progress on cybersecurity oversight and governance.
October 2022 | Sustainable Finance: Market Highlights
OCTOBER 1, 2022
The SPO team delivered over 30 external reviews in the third quarter, including some innovative transactions.
SAY-ON-PAY: How Responsive Companies Can Win Back Shareholder Support
SEPTEMBER 29, 2022
In this paper, ISS-Corporate examines how compensation committees reacted to low shareholder support on say-on-pay and how their response impacted support in the following year.
The Rise of Say on Climate Proposals
SEPTEMBER 20, 2022
In this paper, ISS-Corporate examines current trends in climate-related proposals, including the growing number of those advanced by corporate management.
Proxy Season Digest 2022
SEPTEMBER 19, 2022
In this three-part report, ISS-Corporate advisors analyzed key data, trends, and charts on Executive Compensation, Governance, and Shareholder Proposals.
Clawback Policies: Evolving Market Norms and SEC Rules
SEPTEMBER 13, 2022
The Securities and Exchange Commission is poised to revise its rules on so-called clawbacks: the process of recovering incentive compensation from current and former executives when a company is forced to make a material restatement of its accounts.
SEC Adopts Final Rules on Pay versus Performance Disclosures
AUGUST 31, 2022
After a long wait, on August 25 the Securities and Exchange Commission (the “SEC” or the “Commission”) voted 3:2 to issue final rules implementing another mandate of the 2010 Dodd-Frank Act, which directed the agency to improve disclosure on the relationship between executive pay and financial performance.
Australia’s Net Zero Strategies
AUGUST 26, 2022
In this whitepaper, ISS-Corporate’ ESG experts examine the climate strategies adopted by Australia and how a net zero target trickles down from the national level to the market level.
China’s Net Zero Strategies
AUGUST 26, 2022
In this whitepaper, ISS-Corporate’ ESG experts examine the climate strategies adopted by China and how a net zero target trickles down from the national level to the market level.
Shareholder Resolutions in Review: Civil Rights Audit
AUGUST 24, 2022
More shareholder resolutions were filed in the 2022 proxy season than in the previous year, with approximately 932 environmental, social, and governance shareholder proposals submitted at U.S. companies so far, compared to 903 proposals submitted in 2021, according to ISS Voting Analytics data.
SEC Climate Disclosure Comments Reveal Diversity of Views
AUGUST 19, 2022
ISS-Corporate analysis shows that while there was overwhelming investor support for climate disclosure regulation in general, comments diverge significantly on the recommended regulatory path ahead.
S&P 500 Dilution: One Size Doesn’t Fit All
AUGUST 2, 2022
In this report, ISS-Corporate reviews dilution across industries and explores how it varies depending on how much compensation is typically paid in equity rather than cash.
ISSB Advances Drive Towards Global Sustainability Reporting Standards
JULY 28, 2022
In this new report, ISS-Corporate reviews the emergence of ISSB and how its proposed standards are shaping the future of sustainability reporting for corporate issuers.
July 2022 | Sustainable Finance: Market Highlights
JULY 1, 2022
Turning to regulation and market standards development, the ICMA announced a series of updates and new tools during the latest Green Bond Principles Annual General Meeting.
Shareholder Resolutions in Review: Political Spending
JUNE 23, 2022
Shareholder resolutions filed in the 2022 proxy season included several different types of proposals focused on political spending by corporations, reflecting investor concerns that support of certain candidates and causes may be inconsistent with the stated values of the company.
Shareholder Resolutions in Review: Lobbying Disclosures
JUNE 21, 2022
Shareholder resolutions filed in the 2022 proxy season reflect continuing investor concern over lobbying activities and whether they are consistent with a company’s public positions and aligned with shareholder interests.
SEC Brazil Dam Lawsuit Puts ESG Disclosures in Focus
JUNE 1, 2022
A recently announced U.S. Securities and Exchange Commission (SEC) lawsuit over the collapse of the Brumadinho dam in Brazil underscores a sharper focus by regulators on the quality and timeliness of corporate sustainability disclosures.
Season Snapshots: Japan TOPIX 500
MAY 25, 2022
With the 2022 proxy season under way, ISS-Corporate has examined a number of key governance factors for selected regional indices to review what happened in the 2021 proxy season.
SEC Extends Climate Rules Comment Period as Complaints Abound
MAY 20, 2022
The Securities and Exchange Commission (SEC) extended the public comment period on proposed rules for climate-related disclosures for investors by about a month to June 17. The move may not be enough to quell complaints from various parties about the length and complexity of the financial regulator’s review process.
S&P 500 CEO Pay Proposals Face Growing Investor Disapproval
MAY 18, 2022
Despite the lack of pay increases, investors rejected compensation proposals in Say-on-Pay votes at a historic rate during the 2021 proxy season, with a record 20 companies in the S&P 500 failing to secure majority support for their proposals.
Share Pledges Lose Popularity as Companies Clamp Down
MAY 10, 2022
Many institutional investors have long criticized share pledging by company insiders as a practice that can expose them to significant governance risks. While this has prompted a large number U.S. companies to ban or restrict the activity, it remains an option for many owners and executives.
U.S. CEOs Widen Pay Gap With CFOs
MAY 5, 2022
Pay levels for CFOs are a matter of careful consideration for compensation committees, especially as large internal pay differentials may be indicative of potential succession-planning issues. In this report, we conduct a detailed comparison between U.S company CFO and CEO pay by index and by industry.
Corporates and Nature: Going Beyond Climate
MAY 4, 2022
As nature’s relevance to business becomes more apparent, the need for a standardized disclosure framework becomes more pronounced, especially for investors who seek to make decisions about capital allocation based on a clear understanding of a company’s impacts on nature and its nature-dependent operations.
New SEC Climate Change Risk Disclosure Regulations
APRIL 6, 2022
On March 21, 2022, the U.S. Securities and Exchange Commission (SEC) proposed new disclosure regulations for U.S.-listed companies introducing climate-related disclosure requirements.
April 2022 | Sustainable Finance: Market Highlights
APRIL 1, 2022
Regarding regulation, the EU Platform on Sustainable Finance presented its final Social Taxonomy Report at the end of February. The initial approach, based on vertical and horizontal dimensions, has been replaced by a more traditional stakeholder-based structure, focused on workers, end-users and communities. The next step in the document’s development will include the definition of “minimum social safeguard” the prioritization of objectives and sub-objectives and the definitions of “substantial contribution” and “do no significant harm” (DNSH) criteria.
Women’s History Month: Female Chairs
MARCH 31, 2022
In the fifth of a series of short insights looking at the role of women in corporate America, we focus on the number of female chairs, including only those chairs who are not also the CEO, across the US’ main indexes since 2019.
Season Snapshots: FTSE 100 Index
MARCH 29, 2022
With the 2022 proxy season underway, ISS-Corporate has examined a number of key governance factors for selected regional indices to review what happened in the 2021 AGM season. The latest in the series covers 100 companies in the British index, the FTSE 100. Like the others, it focuses on shareholder proposals, director elections, Say on Pay results, and changes in CEO pay.
Women’s History Month: Women on Boards
MARCH 25, 2022
In the fourth of a series of short insights looking at the role of women in corporate America, we focus on the growth in the number of women on boards across different industries since 2019.
Women’s History Month: Female CEOs
MARCH 21, 2022
In the second of a series of short insights looking at the role of women in corporate America, we focus on the number of female CEOs across the main US indexes since 2019.
Season Snapshots: Canada S&P/TSX
MARCH 14, 2022
With the 2022 proxy season underway, ISS-Corporate has examined a number of key governance factors for selected regional indices to review what happened in the 2021 proxy season. The third in the series covers the 235 companies in Canada’s S&P/TSX Composite Index, and looks at shareholder proposals, director elections, Say on Pay results, and changes in CEO pay. This follows the second in the series, which covered the S&P500.
Season Snapshots: U.S. S&P 500
MARCH 14, 2022
With the proxy season underway, ISS-Corporate examined key governance factors that defined the 2021 season for selected regional indices. The second report in the series covers the S&P 500, with a look at director elections, shareholder proposals and executive compensation. This follows the first in the series which covered the Korean KOSPI.
Data Snapshot: Board and Workforce Racial Diversity
FEBRUARY 28, 2022
During Black History Month in February each year, the United States and Canada acknowledge the accomplishments and contributions of the African diaspora. This observance also serves as an opportunity to reflect on additional work to be done to achieve further inclusion and social equity. This data snapshot report reviews developments in disclosure among U.S. corporations that signal levels of racial and ethnic diversity and inclusivity at boards, executive teams, and the general workforce. The review of relevant trends also includes a special section on supply chain diversity.
Season Snapshots: Korea KOSPI
FEBRUARY 24, 2022
As the 2022 proxy season approaches, ISS-Corporate looks back at director elections and related controversies that defined 2021 and examines the increasing focus on ESG and sustainable investment issues among companies in the Korea Composite Stock Price Index.
Incentivizing What Matters: Designing Meaningful ESG Metrics for Executive Compensation
FEBRUARY 18, 2022
As companies begin incorporate sustainability into their strategies, designing executive compensation plans with meaningful Environmental, Social, and Governance (ESG) performance metrics requires a thorough approach involving materiality assessment, multi-stakeholder engagement, ESG strategy development, impact assessment and data analysis.
January 2022 | Sustainable Finance: Market Highlights
JANUARY 1, 2022
The success of our clients reflects the overall dynamism of the market, which reached almost $1 trillion in annual issuances (according to ICMA on Environmental Finance data), with green bonds representing about 50% of the overall market volume, and sustainability-linked bonds corresponding to just under 10% of overall issuances. The $1 trillion threshold seems destined to be exceeded once and for all in 2022, with many market players forecasting higher volume this year.
Characterized to Fail? Examining the Role of Board Demographics in Say on Pay Outcomes
DECEMBER 10, 2021
Proxy season 2021 was quite a year for failed management Say on Pay votes, so ISS-Corporate decided to examine a number of measures for board demographics to see: Did boards which performed poorly on Say on Pay votes have any particular characteristics?
ISS-Corporate Client Bulletin | Accounting for Spring-loaded Compensation
DECEMBER 6, 2021
The Securities and Exchange Commission (SEC) issued a Staff Legal Bulletin (SLB) the week of November 29th that clarifies prior advice to companies about accounting for ‘spring-loaded,’ stock-based compensation, which is defined as share-based awards made while a company is in possession of material, non-public information.
This memo is part of ISS-Corporate Client Bulletin series designed to keep you abreast of the latest trends and developments affecting governance and sustainability at corporations.
Within Range: How to Establish Your Short-Term Incentive Pay Goals
NOVEMBER 22, 2021
Aligning executive compensation with shareholders’ interests is one of the most important mandates compensation committee members are tasked with annually. Developing an appropriate pay package that carries a significant portion of “at-risk” compensation is critical to motivate and incentivize executives to achieve meaningful growth targets under short- and long-term incentive programs.
ISS-Corporate Client Bulletin | Introducing the Universal Proxy Card
NOVEMBER 17, 2021
The Securities and Exchange Commission (SEC) announced on November 17, 2021 that it would be introducing the universal proxy card for all contested director elections after August 31, 2022. Principally, a universal proxy card would require all directors in a contested election, both a company’s own nominees and any shareholder or dissident nominated directors, to be listed on a single proxy voting card, whether physical or electronic.
This memo is part of ISS-Corporate Client Bulletin series designed to keep you abreast of the latest trends and developments affecting governance and sustainability at corporations.
ISS-Corporate Client Bulletin | Turning Back the Clock on Shareholder Proposal No-Actions
NOVEMBER 10, 2021
In his statement announcing the latest Securities and Exchange Commission (SEC) Staff Legal Bulletin (SLB) on shareholder proposals, agency Chairman Gary Gensler made it clear that the Commission is returning to its former and less permissive position as it applies to granting “no-action” relief to companies seeking to exclude certain shareholder proposals.
This memo is part of ISS-Corporate Client Bulletin series designed to keep you abreast of the latest trends and developments affecting governance and sustainability at corporations.
ISS-Corporate Client Bulletin | Executive Compensation Clawbacks: Comment Period Reopened
NOVEMBER 3, 2021
Properly constituted compensation clawback policies have the “opportunity to strengthen the transparency and quality of corporate financial statements as well as the accountability of corporate executives to their investors,” said Securities and Exchange Commission (SEC) chair Gary Gensler in his statement1 of support for the reopening2 of the comment period on this long-awaited rule.
This memo is part of ISS-Corporate Client Bulletin series designed to keep you abreast of the latest trends and developments affecting governance and sustainability at corporations.
Cybersecurity Awareness Month 3-Part Series: Cybersecurity Disclosures, Industry Risk Analysis, and Corporate Board Oversight
NOVEMBER 2, 2021
Released in honor of Cybersecurity Awareness Month, ISS-Corporate put together a 3-part infographic series exploring how companies and boards are managing and mitigating cybersecurity risk.
ISS-Corporate Client Bulletin | Gauging the Impact of Proposed Changes to the NYSE’s Vote Counting Standard
OCTOBER 18, 2021
Last month, the New York Stock Exchange (NYSE) proposed a change to its approach to vote counting for management proposals related to issuing new shares and for shareholder approval of equity compensation plans. More recently, the U.S. Securities and Exchange Commission (SEC) took up the proposed rule1 and submitted it for comments from financial market participants. Read the latest insights from ISS-Corporate on this topic.
This is the first in a series of ISS-Corporate client memorandums designed to keep you abreast of the latest trends and developments affecting governance and sustainability at corporations.
Peer Groups and CEO Pay Positioning
OCTOBER 14, 2021
Last year, ISS-Corporate published the paper Strategies in Peer Group Selection During COVID-19, which provided guidance around compensation peer groups during a period of significant uncertainty.
October 2021 | Sustainable Finance: Market Highlights
OCTOBER 1, 2021
According to the Climate Bonds Initiative, the total volumes for Green, Social, Sustainability, and Sustainability-linked (GSSS) bonds reached USD 496.1bn in the first half of 2021, representing 59% year-on-year growth from the equivalent period in 2020, and this trend seems to have continued in the third quarter of 2021.
Incentivizing What Matters: Designing Meaningful ESG Metrics for Executive Compensation
SEPTEMBER 30, 2021
Environmental, Social, and Governance (ESG) considerations are impacting various facets of what investors and companies do, and this impact now includes executive compensation. Companies are beginning to incorporate sustainability into their corporate strategy and rethink the way executives are being incentivized.
Corporate Climate Action Series: Climate Policies & Risk Mitigation, GHG Emissions Reduction Goals and Biodiversity
SEPTEMBER 21, 2021
As part of our Corporate Climate Action series, released in honor of Climate Week, we examine how well companies are implementing ESG goals relating to Climate Policies, GHG Emissions Reduction and Biodiversity.
TCFD Alignment: The Shift To Mandatory Reporting
SEPTEMBER 16, 2021
The complex nature of climate change will have far-reaching implications across all corners of the economy. As more data and scientific information becomes available on the rapidly worsening effect climate change is having on the planet, companies need to realise the implications of their actions. A large number of companies are playing catch-up and need to quickly incorporate climate change into their business strategies.
The Case for Companies Taking Climate Action
AUGUST 10, 2021
As the planet reaches a tipping point in its climate history, investors, regulators, customers, and other key stakeholder groups are placing increasing importance on companies disclosing, measuring, and setting reduction goals for Greenhouse Gas (GHG) emissions. In ISS Corporate Solution’s latest Sustainability Bulletin, our advisors examine why climate action is at a critical turning point and outline what tools and resources are available to help companies navigate their climate action responses.
2021 Proxy Season Digest: Shareholder Proposal Engagement
AUGUST 16, 2021
The 2021 Proxy Season Digest is a series of reports reviewing data and insights from the 2021 Proxy Season. In the third and final installment, our advisors compiled key data and trends on shareholder proposal engagement.
2021 Proxy Season Digest: Executive Compensation
AUGUST 9, 2021
The 2021 Proxy Season Digest is a series of reports reviewing data and insights from the 2021 Proxy Season. In the second installment, our advisors compiled key Executive Compensation charts and takeaways.
2021 Proxy Season Digest: Governance
JULY 28, 2021
The 2021 Proxy Season Digest is a series of reports with statistics and insights looking back on the 2021 Proxy Season. In this first installment, our advisors compiled Governance-focused charts and key takeaways.
July 2021 | Sustainable Finance: Market Highlights
JULY 1, 2021
The second quarter of 2021 saw continued growth in green, social, sustainability, and sustainability linked (GSSS) issuances, as projected earlier in the year. In particular, sustainability linked loans have gained greater prominence alongside more complex derivatives and leveraged finance products.
Measuring Drivers of Capital Efficiency and Value Creation
MAY 3, 2021
For many companies, the difference between strong and average performance can be traced to capital efficiency. This paper examines two key sectors that are known to be capital intensive and cyclical: chemicals and semiconductors.
Materiality: Defining, Assessing, and Getting Started
APRIL 20, 2021
Materiality serves as a core guide for strategic planning by enabling companies to understand and execute on relevant goals associated with environmental and social impact for its business and stakeholders. This paper identifies how Materiality Assessments allow companies to fully examine the environmental and social impacts to their unique business model and operations.
April 2021 | Sustainable Finance: Market Highlights
APRIL 1, 2021
The start of 2021 has been highly intense for the green, social, sustainability and sustainability-linked (GSSS) market and the trends we observed in the second half of 2020 in rising issuances actualized. This significant increase relates to both market size and number of issuances.
2021 Equity Plan Outlook
FEBRUARY 26, 2021
The year 2020 presented uncertainties due to COVID-19. Many companies made their equity plans right on the cusp of stock prices plummeting in response to the pandemic. Analyzing equity plan data from 2020 and earlier, this paper identifies recent trends and considers what the 2021 proxy season may look like.
When Options Are Under Water
OCTOBER 28, 2020
With the increased volatility of the stock market, many companies are facing a similar question to what survivors of the 1990’s Dot Com Bubble had to face, “How do we keep our employees around now that their equity is down and their options are worthless?”
Bang For Your Buck – Are Realizable Pay Disclosures Earning Their Return on Investment for S&P 500 Companies?
OCTOBER 26, 2020
“Realizable” pay assessments are often included in the Compensation Discussion & Analysis (“CD&A”) section of the proxy filing to provide a more accurate view of the actual value of compensation delivered to an executive, as opposed to the pay data disclosed in the Summary Compensation Table which does not take into account the impact of recent share price movements on an executive’s compensation package.
2020 US Equity Compensation Plans
OCTOBER 26, 2020
This report discusses the current state of equity compensation plans as well as the trends and different practices in different industries.
Incentivizing Diversity
SEPTEMBER 22, 2020
One topic on comp committee agendas may be something that has not traditionally been an element of executive compensation: Diversity. With many companies asking us about how to measure diversity, given the heightened awareness around diversity and its impact on company and shareholders, our advisory team wrote a paper outlining how some companies are thinking about it.
Increased ESG Sensitivity in Hong Kong: A Review of the Recent Trends and Market Landscape
JULY 1, 2020
Interest in ESG is growing rapidly and has gained traction amongst corporations, individuals, investors, and institutions. This paper is intended to provide corporate issuers with some background regarding the imminent regulatory changes in Hong Kong (HK) and an overview of the recent trends in responsible investment and strategies focusing on ESG risks.
Rightsizing the EVA Way in the COVID Economy
JUNE 11, 2020
COVID-19 will markedly change business. It’s an unprecedented force of economic disruption that is slashing demand and imposing new workplace habits, sourcing strategies, and consumer behaviors. Companies are only beginning to size up and respond to the new world we are facing.
Strong EVA Fundamentals Outperform in Market Corrections
JUNE 11, 2020
Given the market volatility caused by the COVID-19 pandemic, this paper examines the Economic Value Added (EVA) fundamentals of companies within the S&P 500, S&P 1500, and Russell 3000 indices to identify if there are certain fundamental characteristics or indicators that separate companies that are delivering stronger total shareholder returns compared to peers.
Strategies in Peer Group Selection During A Pandemic
MAY 18, 2020
The COVID-19 crisis has upended companies’ pay programs and forced many to re-evaluate decisions on executive and director compensation. A key tool used in executive pay decisions, the compensation peer group, takes on additional importance during this time. ISS-Corporate has identified key peer group strategies to consider in these challenging times.
Gauging the Impact of COVID-19 on Market Expectations Through the EVA Lens
MAY 4, 2020
In the wake of a dramatic slump in equities which witnessed the S&P 500 fall from an all-time high into bear market territory (>20% decline) in a record 16 trading days, this white paper takes a look at profit expectations through the Economic Value Added (“EVA”) lens.
Impact of COVID-19 on Relative TSR Plans
APRIL 27, 2020
As the COVID-19 pandemic wreaks havoc on incentive plans, ISS-Corporate took a closer look at existing relative total shareholder return (TSR) metrics at S&P 500 companies to review how companies’ relative performance has been impacted over the first quarter of 2020.
The Impact of COVID-19 on Australian Issuers
APRIL 27, 2020
Companies are facing unprecedented disruption and novel challenges because of COVID 19. This is evolving on a weekly if not daily basis, but here is how we see this global pandemic impacting Australian issuers and how ISS-Corporate can help through these uncertain times.
The Impact of COVID-19 on Incentive Compensation – EMEA
APRIL 24, 2020
Companies are facing unprecedented disruption and novel challenges because of COVID 19. This is evolving on a weekly if not daily basis, but here is how we see this global pandemic impacting incentive compensation in EMEA and what companies can do about it.
Annual General Meetings & COVID-19
MARCH 31, 2020
In response to the COVID-19 pandemic, securities regulators in several countries have published guidance that affords publicly listed companies greater flexibility regarding the type of annual general meeting (AGM) they can hold as well as when it can be held.
The Impact of COVID-19 on Incentive Plans
MARCH 30, 2020
Companies are facing unprecedented disruption and novel challenges because of COVID 19 and we wanted to let you know what we’re hearing from many of our clients. This is evolving on a weekly if not daily basis, but here is how we see this global pandemic impacting incentive compensation as of today – March 27, 2020 – and what companies can do about it.
The Top Three European Trends to Watch in 2020
FEBRUARY 24, 2020
The governance playbook is undergoing a major revision. Download the report to know the three corporate governance trends to follow inside Europe’s publicly-listed companies in 2020.
2019 Canadian Post-Season Review
DECEMBER 6, 2019
This 2019 Canadian Post-Season Summary reviews:
Board gender diversity
Voluntary say-on-pay proposals
Shareholder activist targets
Corporate governance at cannabis companies
Relevance of climate change
2019 US Equity Compensation Plans Overview and Trends
OCTOBER 28, 2019
Companies use equity compensation plans to pay their employees, officers, non-employee directors, and other service providers by giving them equity ownership at the company. Equity compensation is common in both public and private companies. Companies view equity compensation as an effective way of incentivizing plan participants while attracting high-quality employees, encouraging retention, motivating sustained performance, and aligning employees’ interests with those of shareholders.
Director Overboarding – Global Trends, Definitions, and Impact
AUGUST 9, 2019
In the 2019 proxy season, “overboarding” became a center-stage issue for many companies and investors. Several large asset managers, including Vanguard, BlackRock, and LGIM, enhanced their voting guidelines to apply stricter criteria, while some directors serving on multiple public company boards faced significant opposition to their elections. The idea that directors should not serve on too many boards has been a key consideration for investors for many years.
Use EVA to Improve Your Board’s Financial IQ
AUGUST 7, 2019
A board literate in economic value can gain an enormous advantage in moving beyond compliance and the accounting numbers to fulfill the greater duty of working with management to deliver shareholder value.
Early Review of 2019 US Proxy Season Vote Results
JUNE 18, 2019
As the busiest part of the 2019 U.S. proxy season is behind us, we take an early look at the vote results of annual general meetings convened from January to May. As of this report, approximately 70 percent of Russell 3000 annual general meetings expected during the calendar year have already taken place, and the figure will rise to close to 90 percent of all calendar-year annual meetings by the end of June. In our review of the vote results for the 1,812 Russell 3000 2019 annual general meetings that took place from January to May and are available in the ISS database, this paper identifies major trends.
The Seven Venial Sins of Executive Compensation
JUNE 4, 2019
Compensation disclosures have grown significantly over the last decade (mostly for the better), and they continue to evolve with the ongoing engagement between companies and shareholders. Certain compensation practices are known for raising investor concerns, leading to difficult conversations between investors and boards and higher levels of investor opposition of executive pay programs.
2019 U.S. Executive Compensation Trends
APRIL 30, 2019
As we enter the peak of proxy season, we review executive compensation trends in the U.S. based on executive pay disclosures so far this year.
Excerpts from ISS U.S. E&S Proxy Season Preview Report
APRIL 22, 2019
This document is an excerpted portion of ISS’ full report, “2019 U.S. Environmental and Social Issues Proxy Season Preview,” which provided the following early insights:
Proposals on political activities increase
Climate change remains a top concern
Human rights issues proposals continue to surge
Shareholders remain concerned about pharmaceutical risks
ESG Considerations for Taiwan-listed Corporates
MARCH 27, 2019
In March this year ISS-Corporate partnered with the Taiwan Depositary & Clearing Corporation (TDCC) in the launch of their Investor Relations platform event. The theme explored how ESG and digital solutions transform investor relations and corporate sustainability practices. In this document, we highlight the upcoming ESG demands on Taiwan’s listed corporates and the capabilities of managing ESG risk through ISS-Corporate’ dynamic platform solutions. Please contact us for further information.
Using EVA in Pay-for-Performance Analysis
MARCH 25, 2019
ISS Analytics recently published a white paper outlining how EVA may be able to help support Pay-for-Performance analysis. This article covers:
Why EVA May Help with Pay-for-Performance Analysis
Introduction to EVA: Measuring Economic Performance
The Link Between EVA and TSR
Introduction to the EVA Measures: The Four Key Ratios
How EVA Can Support Pay-for-Performance Analysis
Using EVA in Pay-for-Performance Analysis
MARCH 25, 2019
Looking at some of the key takeaways from the ISS 2018 Proxy Season Review, 2018 was a year of increasing shareholder dissent shown in votes against directors. Shareholder votes against remuneration reports spiked to a historical high with 26 companies in the S&P ASX300 index recording a “strike.”
An Interview with the ISS US Compensation Team
MARCH 13, 2019
ISS compensation experts, Liz Williams and Rachel Hedrick provide insights on key compensation topics to watch in 2019. They share their perspectives on pay in an uncertain market, the impact of the repeal of 162(m) on equity compensation plans proposals, performance-metric selections, CEO pay ratio disclosures, new shareholder proposal types, and the ISS policy on director compensation.
An Early Look at 2019 US Shareholder Proposals
MARCH 12, 2019
In the U.S., shareholder proposal filings have historically played an important role in advancing corporate governance and in highlighting key risks related to environmental and social issues.
Insights into Value Creation: Using EVA to Measure Performance
FEBRUARY 24, 2019
In this article, we explore the specific challenges market participants face when using traditional accounting metrics to assess performance, as well as the limitations those metrics place on corporate leadership in informing and guiding proper capital allocation and decision making. In addition, we present a potential solution and alternative framework called Economic Value Added (EVA.)
Corporate Governance & Compensation in Europe 2019
JANUARY 30, 2019
As the AGM season approaches and concerns over drafting remuneration disclosures increase, how do you improve the chances that your proposals will be well-received by shareholders?
Overcoming Common Objections to Making CD&A Changes
JANUARY 28, 2019
Companies often say that shareholders just did not understand their pay disclosure well enough to vote in favor of the pay program, but a key purpose of the Compensation Discussion and Analysis (CD&A) is to have shareholders fully understand how the pay program works.
This paper outlines four common traps companies fall into when thinking about their compensation disclosures.
Top 10 Corporate Governance Topics to Watch in 2019
JANUARY 16, 2019
As the world greets the New Year, investors and companies may take a moment to reflect on key corporate governance priorities in light of a potentially more challenging business environment in the year ahead.