Download - Overview and Updates - ISS
![Page 1: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/1.jpg)
www.issgovernance.com©2016ISS|InstitutionalShareholderServicesNovember2016
OverviewandUpdates
Published:November2016
![Page 2: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/2.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 2of159©2016ISS|InstitutionalShareholderServices
TABLEOFCONTENTS
Overview...............................................................................................................................................................................................4
Coverage................................................................................................................................................................................................5
SummaryofUpdates........................................................................................................................................................................7
ScoringMethodology.............................................................................................................................................................10
ISSGovernanceQualityScoreFactorCriteria......................................................................................................................11
BoardStructurePillar....................................................................................................................................................................12
BoardComposition.................................................................................................................................................................12
CompositionofCommittees................................................................................................................................................18
BoardPractices.........................................................................................................................................................................26
BoardPolicies............................................................................................................................................................................32
RelatedPartyTransactions.................................................................................................................................................34
BoardControversies...............................................................................................................................................................36
Compensation/RemunerationPillar.......................................................................................................................................38
PayforPerformance...............................................................................................................................................................38
Non-PerformanceBasedPay..............................................................................................................................................41
UseofEquity..............................................................................................................................................................................42
EquityRiskMitigation...........................................................................................................................................................45
Non-ExecutivePay..................................................................................................................................................................50
CommunicationsandDisclosure......................................................................................................................................51
Termination...............................................................................................................................................................................54
Controversies............................................................................................................................................................................58
ShareholderRights&TakeoverDefenses.............................................................................................................................59
![Page 3: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/3.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 3of159©2016ISS|InstitutionalShareholderServices
One-Share,One-Vote..............................................................................................................................................................59
TakeoverDefenses..................................................................................................................................................................64
Meeting&VotingRelatedIssues.......................................................................................................................................70
OtherShareholderRightsIssues.......................................................................................................................................79
Audit&RiskOversight..................................................................................................................................................................80
ExternalAuditor.......................................................................................................................................................................80
AuditandAccountingControversies..............................................................................................................................82
OtherAuditissues...................................................................................................................................................................85
AppendixI:Event-drivenDataUpdates................................................................................................................................86
AppendixII:QualityScoreFactorMethodologyandRegionApplicability.............................................................88
AppendixIII:Region-specificFactorMethodology........................................................................................................120
Addendum.......................................................................................................................................................................................154
![Page 4: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/4.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 4of159©2016ISS|InstitutionalShareholderServices
OverviewQualityScoreisadata-drivenscoringandscreeningsolutiondesignedtohelpinstitutionalinvestorsmonitorportfoliocompanygovernance.Atanoverallcompanylevel,aswellasthatrelatingtoBoardStructure,Compensation,ShareholderRights,andAudit&RiskOversight,scoresprovideanindicationofrelativegovernancequalitysupportedbyfactor-leveldata.Thatdata,inturn,iscriticaltotheresearchprocess,whilehistoricalscoresanddataprovidegreatercontextandtrendinganalysistounderstandacompany’sapproachtogovernanceovertime.OriginallybrandedasISSQuickScore,thesolutionhasbeenrenamedasISSQualityScoretobetterreflectthemannerinwhichinvestorsusethesequalitativefactorstosupporttheircompanyanalysis.
Withthecontinuedandgrowingfocusoninvestorstewardshipandengagement,alongsidetheglobalconvergenceofstandardsandbestpractices,governanceplaysanincreasinglyprominentroleininvestmentdecisions.Asanextra-financialdatascreeningsolution,theISSGovernanceQualityScoremethodologydeliversseveralkeybenefits.
Employsrobustgovernancedataandattributes.Governanceattributesarecategorizedunderfourpillars:BoardStructure,ShareholderRights&TakeoverDefenses,Compensation/Remuneration,andAudit&RiskOversight.QualityScorerestsontheanalysisofmorethan220governancefactorsacrossthecoverageuniversewhich,inturn,issupportedbyarobustdataset.QualityScoreanalyzesnotonlyadversepracticesatacompany,butalsohighlightsmitigatingfactorsthathelptellafullerstory.TheunderlyingQualityScoredatasetisupdatedonanongoingbasisascompanydisclosuresarefiled,providingthemosttimelydataavailableinthemarketplace.1
LeveragesISS’globalfootprintandindustryleadership.ISSGovernanceQualityScoreleveragesISS’industryleadingglobalfootprint,whichincludesdeeplegalandlanguageexpertiseacrosskeyglobalcapitalmarkets,includingmanyofthosewithintheQualityScoreuniverse.Factorsusedtoassessrisk-relatedconcernsforagivencompanyineachmarketarebasedonthesameprinciplesthatformthefoundationofISS’globalbenchmarkvotingpolicy.Developedthroughanextensive,transparent,andinclusiveprocess,thesepoliciesreflectbestpracticesacrossjurisdictions,aswellastheviewsofinstitutionalinvestors,issuers,andgovernancepractitionersworldwide.TheQualityScorefactormethodologyisalignedwithISS’benchmarkproxyvotingpolicytoensureitisup-to-dateandtailoredtoaddressappropriatevariationsingovernancepracticesacrossglobalcapitalmarkets.(FormoreonISSbenchmarkpoliciesandtheirformulation,visitwww.issgovernance.com/policy.)
Presentsat-a-glancegovernancerankingsrelativetoindexandregion.ISSGovernanceQualityScorefeaturescompany-leveldecilescores,presentedasintegersfrom1through10,plusunderlyingpillarscoresusingthesamescalethattogetherprovideaclearunderstandingofthedriversofacompany’sgovernancerisk.Ascoreinthe1stdecileindicateshigherqualityandrelativelylowergovernancerisk,and,conversely,ascoreinthe10thdecileindicatesrelativelylowerqualityandhighergovernancerisk.Thesescoresprovideanat-a-glanceviewof
----------------------1PleaseseeAppendixIformorediscussionofevent-drivenupdates.
![Page 5: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/5.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 5of159©2016ISS|InstitutionalShareholderServices
eachcompany’sgovernanceriskrelativetotheirindexandregion.Theindividualfactorbreakdowntakesaregionalapproachinevaluatingandscoringcompanies,toallowforcompany-levelcomparisonswithinmarketswherecorporategovernancepracticesaresimilar.
CoverageQualityScoreglobalcoveragecomprisesapproximately5,600publiclytradedcompaniesin30markets,includingconstituentsofthefollowingmajorindices:Russell3000,S&P/TSXComposite,STOXX600,NZX15,ASX200,andlocalEuropeanmarketindicesincludingtheU.K.FTSEAll-Share(ex-investmenttrusts.)QualityScorealsoincludeswidelyheldcompaniesinISS’coverageuniverseforBrazil,China,HongKong,IndiaandJapan.Theterm"widelyheld"referstocompaniesthatISSdesignatesassuchbasedontheirmembershipinamajorindexand/orthenumberofISSclientsholdingthesecurities.
QSRegion Country Coverage
Canada Canada S&P/TSXCompositeIndex
CanadaSmallCap Canada CompaniesoutsidetheS&P/TSXCompositeIndex
LatinAmerica Brazil Widelyheldcompaniesinthemarket
US-R3K UnitedStates Russell3000
US-S&P500 UnitedStates S&P500
Table1:Americascoverage
QSRegion Country Coverage
AsiaPac China Widelyheldcompaniesinthemarket
AsiaPac HongKong Widelyheldcompaniesinthemarket
AsiaPac Singapore StraitsTimesIndex(STI)
Australasia Australia ASX200
Australasia NewZealand NZX15
India India Widelyheldcompaniesinthemarket
Japan Japan Widelyheldcompaniesinthemarket
SouthKorea SouthKorea KOSPI100
Table2:Asia-Pacificcoverage
![Page 6: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/6.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 6of159©2016ISS|InstitutionalShareholderServices
QSRegion Country Coverage
-European(multiple)
STOXX600
Africa SouthAfrica FTSEJSE-40/JSE-MidCap
Anglo Ireland ISEQ20
Anglo UnitedKingdom FTSEAll-Share(ex-investmenttrusts)
Germanic Austria ATX20
Germanic Germany DAX30/MDAX50/SDAX50/TecDAX
Germanic Switzerland SMI20/SMIM30
Nordic Denmark OMXCopenhagen20
Nordic Finland OMXHelsinki25
Nordic Norway OBX
Nordic Sweden OMXStockholm30
Russia Russia RTS50
SouthernEurope Greece FTSEATHEXLargeCapIndex25
SouthernEurope Italy FTSE-MIB/FTSE-Midcap
SouthernEurope Portugal PSI20
SouthernEurope Spain IBEX35
WesternEurope Belgium BEL20
WesternEurope France WidelyheldcompanieswithintheCACAlltradable
WesternEurope Luxembourg LuxX
WesternEurope Netherlands AEX25/AMX25
Table3:EMEAcoverage
![Page 7: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/7.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 7of159©2016ISS|InstitutionalShareholderServices
SummaryofUpdatesTheISSQualityScoreannualmethodologyreviewensurestheapproachremainscloselyalignedwiththeISS’benchmarkvotingpolicies,whichinturnreflectdevelopmentsinregulatoryandmarketpractice.AsofNovember2016,theQualityScoremethodologyincludesseveralkeyupdatesandinvolvesselectedadjustmentstofactorweightsandscoring.
Highlightsoffactor-levelchangesincludedinthisreleaseinclude:
NewFactorsasofNovember2016:
Board
› Proportionofwomendirectorsinallregions(Q354);› TwoadditionalfactorsonboardrefreshmentforU.S.regions(Q355andQ349);
› Proportionofnon-executivedirectorsontheboardforlessthansixyears(Q355);› Anyothermechanismstoencouragedirectorrefreshment(Q349);
› AppointmentofLeadDirectororavenuesforeffectivecollaborationamongindependentdirectors,managementandstatutoryauditorsinJapan(Q367);
› RegularlyholdingmeetingsofindependentdirectorinJapan(Q366);› ConfirmationofaformalCEOandkeyexecutiveofficerssuccessionplan(U.S.)andtheadoptionofa
mechanismtoappropriatelymonitorandsuperviseCEOsuccessionplanning(Japan)(Q348,andQ368);› MaterialfailuresofgovernanceintheU.S.(Q345);and› AdequateresponsebytheboardtolowsupportforcertainmanagementproposalsintheU.S.(Q350).
Compensation
› Existenceofperformance-basedpayorotherincentivesforexecutivesinJapan(Q375);› DisclosureofapolicyonexecutiveremunerationandcomputationbasisforpayinJapan(Q376);and› Employmentofatleastonemetricthatcomparesthecompany’sperformancetoabenchmarkorpeer
groupintheU.S.(Q353).
Audit&RiskOversight
› TenureoftheexternalauditorintheU.S.andAngloregions.(Q347);and› DisclosureofapolicyonevaluatingthecompetenceandindependenceoftheexternalauditorinJapan
(Q365).
ShareholderRights
› TheexistenceofclassshareswithfullormultiplevotingrightsinJapan(Q369);› ThenumberofdaysbeforeageneralmeetingforpublicationofproxymaterialsinJapan(Q371);› TheprovisionofEnglish-languageproxymaterialsinJapan(Q373);› Disclosureofcross-shareholdingvotingandrelatedpoliciesinJapan(Q370);
![Page 8: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/8.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 8of159©2016ISS|InstitutionalShareholderServices
› WhetherthecompanycollaborateswithintermediariestoaccommodatebeneficialownersseekingtoattendshareholdermeetingsinJapan(Q372);
› WhetherthecompanyparticipatesinanelectronicvotingplatforminJapan(Q374);› Exclusivevenue/forumprovisionintheU.S.(Q351);› FeeshiftingprovisionintheU.S.(Q363);› RepresentativeclaimlimitationorothersignificantlitigationrightsintheU.S.(Q364);› ProxyaccessbylawprovisionsintheU.S.,including:
› Ownershipthresholds(Q359);› Ownershipdurationthresholds(Q360);› Caponshareholdernomineestofillboardseats(Q361);› Aggregationlimitsonshareholderstoformanominatinggroup(Q362);
› WhetherthecompanycanclassifyitsboardwithoutshareholderapprovalintheU.S.(Q77);› WhethershareholdershavetherighttoamendthebylawsintheU.S.(Q89);and› WhetherthecompanycanmateriallymodifyitscapitalstructurewithoutshareholderapprovalintheU.S.
(Q352).
ApplicationofExistingFactorstoNewMarkets/Regions:
Board
› ProportionofdirectorswithlengthytenureinAustraliaandNewZealand(Q13);› ClassificationofthechairmanoftheboardinJapan(Q14);› IdentificationofaSeniorIndependentDirectororIndependentLeadDirectorinChina(Q16);› IndependencelevelofthenominationcommitteeinJapan(Q19);› ExecutivesonthenominationcommitteeinChina(Q306);› ClassificationofthechairmanofthenominationcommitteeinChina,SouthKoreaandJapan(Q23);› IndependenceleveloftheremunerationcommitteeinJapan(Q25);› ExecutivesontheremunerationcommitteeinChina(Q27);› ClassificationofthechairmanoftheremunerationcommitteeinChinaandJapan(Q28);› IndependenceleveloftheauditcommitteeinJapan(Q31);› ExecutivesontheauditcommitteeinChina(Q33);› ClassificationofthechairmanoftheauditcommitteeinChinaandJapan(Q34);› DirectorsservingonanexcessivenumberofoutsideboardsinChina(Q309);› ExecutivesservingonasignificantnumberofoutsideboardsintheU.K.andIreland(Q36);› CEOsservingonasignificantnumberofoutsideboardsintheU.K.andIreland(Q37);› Numberofnon-executivedirectorsservingonasignificantnumberofoutsideboardsintheU.K.andIreland
(Q38);› ChairmanoftheboardservingonasignificantnumberofoutsideboardsintheU.K.andIreland(Q39);› DisclosureoftheattendancerecordofeachdirectorinHongKong,SingaporeandIndia(Q337);› Percentageofdirectorsattending75percentofboardandcommitteemeetingsinJapan(Q44);› Directorsattending75percentofboardandcommitteemeetingswithorwithoutavalidexcuseintheU.K.
andIreland(Q45);› DisclosureofapolicyrequiringanannualperformanceevaluationoftheboardinJapan(Q41);and› CEOinvolvedinmaterialrelated-partytransactionsinChina(Q216).
![Page 9: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/9.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 9of159©2016ISS|InstitutionalShareholderServices
Compensation
› SizeoftheCEO's1-yearpay,asamultipleofthemedianpayforcompanypeersinallEuropeanregions(Q228);
› Degreeofalignmentbetweenthecompany'stotalshareholderreturn(TSR)andchangeinCEOpayoverthepastfiveyearsinallEuropeanregions(Q229);
› Degreeofalignmentbetweenthecompany'sannualized3-yearpaypercentilerank,relativetopeers,andits3-yearannualizedTSRrank,relativetopeersinallEuropeanregions(Q329);
› Whetherornotthecompanyhasanequity-basedcompensationplaninJapan(Q322);› MaximumdilutionlevelperyearinHongKongandChina(Q128);› Directorseligibletoreceivegrants/awardsundertheplaninvolvedinitsadministrationinChinaandIndia
(Q325);› Disclosureofdetailsofindividualexecutives’remunerationinJapan(Q112);› Disclosureofaperformancemeasurefortheshort-termincentiveplan(forexecutives)inSingaporeand
China(Q113);› Disclosureofperformancemeasuresforstockoptionplans(forexecutives)inChinaandIndia(Q122);› Disclosureofperformancemeasuresforrestrictedshares(forexecutives)inChina(Q123);› Disclosureofperformancemeasuresforotherlong-termplans(forexecutives)inChina(Q125);and› Voluntaryadoptionofamanagement'sayonpay'advisoryvoteresolutionforthemostrecentannual
meetinginSouthAfrica(Q166).
ShareholderRights
› AuthorizationoftheboardtoissueblankcheckpreferredstockinSouthKorea(Q83);› NumberofboardvacanciesinJapan(Q262);› CumulativevotingfordirectorsinHongKongandSingapore(Q338);› LatefilingsofproxymaterialsinHongKongandSingapore(Q335);› DilutionlimitofgeneralmandatetoissuesharesinChina(Q318);› DiscountlimitofgeneralmandatetoissuesharesinChinaandIndia(Q319);› DilutionlimitofthegeneralmandatetoissuerepurchasedsharesinChina(Q320);and› AggregatedilutionlimitofsharesissuanceandresissuancemandatesinChina(Q321).
Audit&RiskOversight
› RestatementoffinancialsinthepasttwoyearsinSouthKorea(Q3);› Non-timelyfinancialdisclosureinthepasttwoyearsinSouthKorea(Q4);› LatefilingsoftheannualreportforthemostrecentfiscalyearinSouthKorea(Q302);› InitiationofenforcementactionbyaregulatorinthepasttwoyearsinHongKong,SingaporeandIndia
(Q200);› Investigationsinitiatedbyaregulatoragainstthecompany,anyofitsdirectorsorexecutivesinSouthKorea
andIndia(Q201);and
![Page 10: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/10.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 10of159©2016ISS|InstitutionalShareholderServices
› NumberoffinancialexpertsontheauditcommitteeinChina(Q6).
FactorsNoLongerApplicablebyMarkets/Regions:
› Non-timelyfinancialdisclosureinthepasttwoyearsinChina(Q4);› Percentageofdirectorsattending75percentofboardandcommitteemeetingsintheU.K.andIreland
(Q44);› LowestsupportratefordirectorsatthelastannualmeetinginJapan(Q310);› AnnualdirectorelectionsinChina(Q77);› EmploymentofaU.S.-typeboardcommitteestructureinJapan(Q291);› TakeoverdefenseprovisionsorshareholdingstructuresthathinderhostiletakeoverinJapan(Q317);› Levelofdisclosureonperformancemeasuresforthelatestactiveorproposedlong-termincentiveplanin
ChinaandIndia(Q246);› Disclosurethemetricsusedtoevaluateperformance-basedcompensationinthemostrecentYuhoFilingsin
Japan(Q326);› Disclosureofnumericalfiguresrelatedtoperformance-basedcompensationinJapan(Q327);› IdentificationofaproblematicpaypracticeorpolicythatraiseconcernsinChina(Q301);› DisclosureofthesetupofacompensationcommitteeinthemostreventYuhofilingsinJapan(Q307);and› Disclosureofwhetherornotthecompensationcommitteeiscomprisedofamajorityofoutsidedirectors
(Q308).
AppendixIIincludesacompletelistingofallQualityScorefactorsalongsidetheirmarketapplicability.
AppendixIIIshowsfactorlistingsbymarketandregion.TherationaleandguidelinesforallQualityScorefactorsaredetailedbelow.
ScoringMethodology
ISSGovernanceQualityScoreisderivedfromascoringmethodologythatisbuiltandtestedbyISS’globalteamofgovernanceexperts,andfocusesonquantitativeandqualitativeaspectsofgovernanceincludingtheanalysisthatsupportsISSvotingpoliciesandvotingrecommendations,withafocusontheglobalgovernancebestpracticesineachregion.Ascoreinthe1stdecileindicatesrelativelyhigherqualityandrelativelylowergovernancerisk,and,conversely,ascoreinthe10thdecileindicatesrelativelylowerqualityandhighergovernancerisk.ThemethodologyisupdatedinNovember2016forselectadjustmentstothefactorweightsandscoring.
The1-10scoreisarelativemeasurebasedontherawscorecalculationsoftheothercompaniesintherelativeindexorregion.Thisprocessisconductedateachpillarandattheoverallscorelevels.Eachpillaraswellastheoverallscoregeneratesanindependentrangeofscoresandtheresultingdecilerankings.Forexample,rawscoresforS&P500U.S.companiesarerankedandgroupedintodeciles,withthefirstdecile(designatedwitha
![Page 11: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/11.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 11of159©2016ISS|InstitutionalShareholderServices
“1”)beingindicativeofahigherrawscoreandlowergovernancerisk.Seethehypotheticalexampleinthetablebelow.
RatingCategory RawPoints GovernanceQualityScore
Board 23.3 8
Audit 56.9 7
ShareholderRights 28.3 5
Compensation 19.2 10
Total 127.7 8
TheAudit&RiskOversightpillardecilescoringdiffersfromtheotherpillars.WhiletheQualityScoremethodologyisreviewedonanongoingbasistostrengthentheanalysisofgovernancerisk,therearealimitednumberofprevalentriskfactorsorcontroversiesintheAuditandRiskOversightpillar.Consequently,QualityScoredoesnotassigna1-10rankforcompanieswherepracticesaresimilaror“forcerank”toensurecompaniesareineachofthe1-10decilescores.InmostoftheQualityScoreregions,theAuditscoresarelimitedtoafewrelevantdecilesonly.
ISSGovernanceQualityScoreFactorCriteriaTherearemorethan220factorsanalyzedunderISSGovernanceQualityScore,withthespecificfactorsunderanalysisvaryingbyregion.Thefollowingsectiondetailsthequestionsanalyzedandrationaleforinclusioninthefactormethodology.TheparentheticalnumberassociatedwitheachquestionistheISSquestionidentificationnumber,anditishighlightedforeasyreferencethroughouttheQualityScoredocumentationandproducttools.
ThecompleteQualityScoremethodologyandmarketapplicabilityisdetailedinAppendicesIIandIII.
![Page 12: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/12.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 12of159©2016ISS|InstitutionalShareholderServices
BoardStructurePillar
BoardComposition
Howmanydirectorsserveontheboard?(Q9)› Ingeneral,theinvestmentcommunityexpectsthatboardsshouldnotbesolargethattheybecome
inefficientandhinderdecision-making.Generally,boardsshouldnothavefewerthansixmembersormorethan15members.Aboardofbetweennineand12boardmembersisconsideredideal.
› Thisquestionwillconsiderthetotalnumberofdirectorsontheboardorwhethernoinformationisdisclosed.
› Thisfactorhasazero-weightimpactonthescoringmodelforU.S.companiesandisincludedforinformationalpurposesonly.
MarketApplicability:Allregions
Whatisthenumberofwomenontheboard?(Q304)› Thisquestionwillevaluatethenumberofwomenontheboard.Accordingtosomeacademicandother
studies,increasingthenumberofwomenonboardsofdirectorscorrelateswithbetterlong-termfinancialperformance.Suchfindingscouldhaveasignificanteffectonthenominationofwomenascorporateofficersanddirectors.
› AccordingtoISS’2014policysurvey,amajorityofallrespondentsindicatethattheyconsideroveralldiversity(includingbutnotlimitedtogender)ontheboardwhenevaluatingboards.2
› Thisfactorisscoredinallregions.
Marketapplicability:Allregions
Whatistheproportionofwomenontheboard?(Q354)› Thisquestionwillevaluatetheproportionofwomenontheboard.Accordingtosomeacademicandother
studies,increasingthenumberofwomenonboardsofdirectorscorrelateswithbetterlong-termfinancialperformance.Suchfindingscouldhaveasignificanteffectonthenominationofwomenascorporateofficersanddirectors.
› AccordingtoISS’2014policysurvey,amajorityofallrespondentsindicatethattheyconsideroveralldiversity(includingbutnotlimitedtogender)ontheboardwhenevaluatingboards.
› Thisfactorisscoredinallregions.
----------------------2http://www.issgovernance.com/file/publications/ISS2014-2015PolicySurveyResultsReport.pdf
![Page 13: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/13.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 13of159©2016ISS|InstitutionalShareholderServices
Marketapplicability:Allregions,exceptAustralasia
WhatpercentageoftheboardisindependentaccordingtoISS’classification?(Q10)› Theproportionofindependentdirectorsonaboardisviewedbymanyascriticaltofirmperformance.For
instance,aworkingpaperwhichevaluatedthelinkagebetweenboardcompositionandcompanyproductivityfoundapositiverelationshipbetweenthepercentageofoutsidersonso-calledmonitoringcommittees(i.e.,audit,compensation,andnominatingcommittees)andthefactorsassociatedwiththebenefitsofmonitoring.Thesefactorsincludedthefirm’soutstandingdebtandfreecashflow(Klein).AnotherstudyfoundasignificantcorrelationbetweenboardindependenceandfirmperformanceasmeasuredbyReturnonAssets(Elgaied&Rachdi2008).Otherresearchersfoundapositivelinkbetweenenhancedfirmvalueandboardswhichhaveauditcommitteesthatarecomposedofamajorityofindependentfinance-traineddirectors(Chan&Li2008).
› Directorswithtiestomanagementmaybelesswillingandabletoeffectivelyevaluateandscrutinizecompanystrategyandperformance.Furthermore,boardswithoutadequateindependencefrommanagementmayhaveinherentconflictsofinterest.QualityScorewillconsiderthepercentageofindependentdirectors(asdefinedbyISS)onacompany‘sboard,orwhethernoinformationisgiven.ISS‘definitionofindependenceisspecifiedonISS'votingpolicyguidelines,availableontheISSPolicyGateway.PleaseseeAppendixIconcerningscoringthisquestionwhennewdirectorsareappointedtotheboardbetweenshareholdermeetings.Inmanymarkets,aboardlackingamajorityofindependentmemberswillraisesignificantconcerns.
› InordertodistinguishbetweenrecommendationsforFTSE350andISEQ20companiesandothercompanieswithintheAngloRegion,percentagesofindependentmemberswillbeanalysedfortheconstituentsoftheabovementionedindices,andnumbersofindependentmemberswillbeanalysedfornon-constituents.
› FortheBrazilianmarket,adistinctionwillbemadebetweenconstituentsofthevariouslistingsegmentstotakeintoaccountdifferentbestpracticerecommendations.Aminimumof30%boardindependenceforNovoMercadoandNivel2companiesisexpected,andaminimumof1independentdirectorisexpectedforcompaniestradedundertheotherlistingsegments.
› FortheCanadianmarket,QualityScorewillnotpenalizeamajorityownedcompanywhereboardindependencelevelisbelow50percent;aslongasthecompanyqualifiesformajoritycontrolledexemption.Amajorityownedcompanyisdefinedforthepurposeofthispolicyasacompanycontrolledbyashareholderorgroupofshareholderswhotogetherhaveaneconomicownershipinterestunderasingleclasscommonsharecapitalstructurethatiscommensuratewiththeirvotingentitlementof50percentormoreoftheoutstandingcommonshares.SuchcompanyisdeemedtoenjoymajoritycontrolledexemptionifitmeetscertainindependenceandgovernancecriteriaasoutlinedintheCanadaProxyVotingGuidelines.
MarketApplicability:Allregions
![Page 14: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/14.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 14of159©2016ISS|InstitutionalShareholderServices
Ifthecompanyiscontrolled,whatpercentageoftheboardisindependentunderISS’standards?(Q203)› Inanumberofmarketswherecompanieshaveacontrollingshareholder,ISSappliesdifferentminimum
standardsofindependentrepresentationontheboard.ISSacceptsthatindependencebelow50percentisstandardinsomemarkets.
› PleaseseeAppendixIconcerningscoringthisquestionwhennewdirectorsareappointedtotheboardbetweenshareholdermeetings.
MarketApplicability:W.Europe,S.Europe
Whatpercentageofthedirectorselectedbyshareholdersareindependent?(Q11)› Bestpracticesuggeststhatatleasthalfoftheshareholder-electedboardshouldbeindependentofthe
company,ofwhichatleasttwomembersshouldbeindependentofmajorshareholders.Incaseswherethereareemployeerepresentatives,ISS’policycallsforatleasthalftheshareholder-electedboardmemberstobeindependentandforatleastone-thirdofthetotalboard(includingemployeerepresentatives)tobeindependent.PleaseseeAppendixIconcerningscoringthisquestionwhennewdirectorsareappointedtotheboardbetweenshareholdermeetings.Aboardlackingamajorityofindependentmemberswillraisesignificantconcerns.
MarketApplicability:Nordic,W.Europe
Isthereanoutsidedirectorontheboard?(Q289)› JapangovernmentrevisedtheCompaniesAct,whichessentiallygivesfirmslittlealternativebuttoappoint
outsidedirectors.Thelegislation,statesthatlargecompaniesmustexplainthedownsidesofappointingoutsidedirectorstoshareholdersiftheyoptnottoacquireany.Similarly,thenonbindingcorporategovernancecode,whichwasdraftedbyapanelofexpertsundertheFinancialServicesAgencyandtheTSE,urgescompanieslistedinthefirstandsecondsectionsofthecountry’sstockexchangestohaveatleasttwooutsidedirectors.
MarketApplicability:Japan
Whatpercentageoftheboardiscomposedofoutsidedirectors?(Q282)› Japaneseboardsareoftendominatedbycompanyinsiders,andthoughanoutsidedirectormaylack
independence,ameaningfulpresenceofoutsidedirectorsontheboardcouldenhancetheboard’smonitoringandoversightabilities.
MarketApplicability:Japan
![Page 15: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/15.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 15of159©2016ISS|InstitutionalShareholderServices
Whatistheindependentstatutoryauditor’scomposition?(Q281)› TheboardofstatutoryauditorsinJapanisresponsibleformonitoringthecompany’sfinancialreportingand
auditingpracticesaswellastheboardofdirectors’compliance.Therefore,theboardofstatutoryauditorsshouldhavehighlevelofindependencetoensureaccurateandreliablefinancialdisclosureandadherencetothelawbydirectors.QualityScorewillmeasuretheproportionofindependentstatutoryauditorsaccordingtoISSpolicy.QualityScore
MarketApplicability:Japan
Whatproportionofnon-executivedirectorsontheboardhaslengthytenure?(Q13)› Limitingdirectortenureallowsnewdirectorstotheboardtobringfreshperspectives.Anexcessivetenureis
consideredtopotentiallycompromiseadirector'sindependenceandassuchQualityScorewillconsiderthenon-executivedirectorswheretenureishigherthantherecommendedlocalbestpractice.ISSrecognizesthattherearedivergentviewsonthissubject.Whileanewdirectormaybemorelikelytobackdownfromapowerfulchiefexecutive,adirectorwhohasbeenwiththecompanyforalongtimecouldeasilyhaveloyaltiestothecompanyoveritsmanagement.However,directorswhohavesatontheboardinconjunctionwiththesamemanagementteammayreasonablybeexpectedtosupportthatmanagementteam'sdecisionsmorewillingly.Ingeneral,ISSbelievesthatabalancedboardthatisdiverseinrelevantviewpointsandexperienceisideal.
› Asmallnumberoflong-tenureddirectorsdoesnotnegativelyimpactthegovernanceriskrating.Thisquestionwillconsideralldirectorsexceptexecutives.AffiliatedDirectorsandOutsideDirectors,asclassifiedbyISS,areincluded.
MarketApplicability:AsiaPacific,U.S.,Canada,Russia,India,Australasia
Whatproportionofnon-executivedirectorshasbeenontheboardlessthan6years?(Q355)› Theskills,capabilities,andperspectivesneededintheboardroomcontinuallyevolve.Forinstance,overthe
pastseveralyears,manyboardshaverecognizedtheneedforincreasedtechnologyfluencyamongtheirranks,specificallyfocusingontheboard’sabilitytooverseecybersecurityriskmanagementandassessitseffectiveness.Butthegapsaren’tlimitedtocybersecurity;otherboardshaverecognizedtheneedtoenhanceshareholderengagementskills,financialriskmanagementskills,andmore.Theskillsandcapabilitiesrequiredtoperformkeyboardresponsibilitieswilllikelycontinuetoevolveovertime.
› Inaddition,manyperceiveariskof“groupthink”intheboardroom,particularlyamonglargeblocsofdirectorswhohaveservedtogetherforlongperiods,whichmaythreatentoimpairboardeffectivenessandevenmaymaskindividualdirectorskillsandcapabilities.
![Page 16: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/16.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 16of159©2016ISS|InstitutionalShareholderServices
› Thisfactor,inconcertwithrelatedboardcompositionfactors,isdesignedtobalanceboardrefreshment,boardstability,andtheimportanceofsomelong-tenureddirectorstoacompany’ssuccess.Thefactordoesnotencourage(byawardingadditionalcredit)forexcessivelevelsofrefreshment.
› Thefactorawardsincreasingcreditforincreasingproportionsoftheboardrepresentedbydirectorswithlessthansixyearsoftenureasofthemostrecentannualmeeting,withnoadditionalcreditgrantedforproportionsinexcessofone-third.
› Thisquestionwillconsideralldirectorsexceptexecutives.AffiliatedDirectorsandOutsideDirectors,asclassifiedbyISS,areincluded.
MarketApplicability:U.S.
Istheboardchairindependent?(Q14)› Anindependentchairmanoftheboardisbroadlyconsideredbestpractice.Asnotedina2009policybrief
publishedbyYaleUniversity'sMillsteinCenterforCorporateGovernanceandPerformance,the,"independentchaircurbsconflictsofinterest,promotesoversightofrisk,managestherelationshipbetweentheboardandCEO,servesasaconduitforregularcommunicationwithshareowners,andisalogicalnextstepinthedevelopmentofanindependentboard."
› SpecificallyinCanada,NationalPolicy58-201CorporateGovernanceGuidelinesrecommendsthatthechairoftheboardshouldbeanindependentdirector.Wherethisisnotappropriate,anindependentdirectorshouldbeappointedtoactas"leaddirector."However,eitheranindependentchairoranindependentleaddirectorshouldactastheeffectiveleaderoftheboardandensurethattheboard'sagendawillenableittosuccessfullycarryoutitsduties.
› ThisquestionwillconsidertheclassificationofthechairmanoftheboardaccordingtoISSpolicy,outliningwhetherhe/sheisindependent,anaffiliatedoutsider,anexecutive,theChairman,aninsiderdirectorotherthanChairman/President/CEO,oraformerorcurrentPresident/CEO,ofthecompany.
› InJapan,adistinctionwillbemadebetweenthechairmanoftheboard(��gicho)andthechairmanofthecompany(��kaicho)3.Thisquestionwillconsiderwhetherthechairmanoftheboardisaninsideroranoutsidedirectorbasedonthecompany’scorporategovernancereport.
MarketApplicability:Allregions.
Hasthecompanyidentifiedasenior(lead)independentdirector?(Q16)› Aleadindependentdirectorprovidesanimportantleadershipfunctionforaboardwithacombined
CEO/chairstructure.Aneffectiveleaddirector’sfunctionsgenerallyinclude,butarenotlimitedto,the
----------------------3InJapan,thechairmanofthecompany(kaicho)issomeonewhoisatthehelmofthecompany(whoisoftenaformerCEOofthecompany),butdoesnotalwayschairtheboard.EvenwhenacompanyhasthechairmanofthecompanyasadistinctroleseparatefromtheCEO,sucharolemaybesymbolicorhonoraryposition,andtheCEOmaystillchairtheboard.FromtheperspectiveoftheseparationofCEOandchair,itismoreappropriateinJapantoexaminetheseparationofCEOandthechairmanoftheboard(gicho).
![Page 17: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/17.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 17of159©2016ISS|InstitutionalShareholderServices
following:presidesatallmeetingsoftheboardatwhichthechairmanisnotpresent,includingexecutivesessionsoftheindependentdirectors;servesasliaisonbetweenthechairmanandtheindependentdirectors;approvesinformationsenttotheboard;approvesmeetingagendasfortheboard;approvesmeetingschedulestoassurethatthereissufficienttimefordiscussionofallagendaItems;hastheauthoritytocallmeetingsoftheindependentdirectors;andifrequestedbymajorshareholders,ensuresthatheisavailableforconsultationanddirectcommunication.
› Thisquestionaddresseswhetherthereisaleadindependentdirectorwithclearlydelineatedandcomprehensiveduties.FortheU.S.:aleadindependentdirectororapresidingdirectorwillbeconsideredifonedirectorservesinthatcapacityforatleastoneyear.Apositionthatrotatesamongmembersoftheboardwithintheyearwillnotbeconsidered.
› Thepresenceofaleadindependentdirectorwillmitigatetosomedegreeconcernsraisedbyanon-independentchairorcombinedCEO-chairstructure.Theabsenceofaleadindependentdirectorwillraiseasmalladditionaldegreeofconcern;anon-independentleaddirectorslightlyless.Inthecasewherethereisanindependentchair(andthusnoleadindependentdirector),thisquestionwillnotbeapplicable.
MarketApplicability:U.S.,Canada,Anglo,AsiaPacific,W.Europe,S.Europe,Germanic,Russia,India
HasthecompanyappointedaLeadIndependentDirectororestablishedotherwaysofeffectivecollaborationbetweenindependentdirectorsandmanagementandstatutoryauditors?(Q367)
› Theleaddirectorservesasanindependentchiefamongallboardmembersandtherebyhelpsensureboardrelationsrunsmoothly.Leaddirectorsdrivehigh-performanceboards.Leaddirectorsmayimproveboardperformancebyfacilitatingboarddiscussions,byhelpingdirectorsreachconsensus,andbykeepingboardmattersontrack.
› TheJapaneseCorporateGovernanceCoderecognizestheimportanceofleadindependentdirectorsandbelievesthatitspresencecouldhelpfaciliateoversightandcollaborationamongdifferentgoverningbodies.However,theCodealsoallowscompaniestoachievesimilaroversightmechanismthroughotherunspecifiedmeans,andcompaniesarenotrequiredtodisclosewhetherithasaleadindependentdirectorornot.Therefore,thisquestionwillexaminethecompliancewiththeprovisionsoftheCode4-8-2.
Marketapplicability:Japan
Whatisthetermofmandateproposedforsupervisoryboardmembers(atthelatestgeneralmeeting)?(Q17)
› Directortermlengthscanaffecttheabilityofshareholderstoissueregularopinionsaboutthecompositionoftheboard.Ingeneral,aone-yearmandateisconsideredbestpractices,butISSrecognizesthatmarketpracticeinsomemarketsisforathree-yearterm,andwillnotpenalizeacompanyifthedirectormandateisforthreeyearsorless.
MarketApplicability:W.Europe,Nordic,S.Europe
![Page 18: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/18.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 18of159©2016ISS|InstitutionalShareholderServices
Whatpercentageoftheboardconsistsofimmediatefamilymembersofmajorityshareholders,executives,andformerexecutives(withinthepastfiveyears)?(Q205)
› Thisquestionelaboratesonthegeneralissueofboardindependenceandaddresseswhethermembersoftheboardarerelated(pertheSECdefinitionoffamilymembership)toanycurrentorformerofficers(fiveyearcooling-offperiod)orsignificantshareholdersofthecompany.
› PleaseseeAppendixIconcerningscoringthisquestionwhennewdirectorsareappointedtotheboardbetweenshareholdermeetings.Thisfactorhasazero-weightimpactonthescoringmodelandisincludedforinformationalpurposesonly.
MarketApplicability:U.S.,LatinAmerica,Russia
Whatpercentageoftheboardconsistsofformerorcurrentemployeesofthecompany?(Q206)› Thisquestionelaboratesonthegeneralquestionofboardindependenceandaddresseswhethermembers
oftheboardareformeremployeesofthecompany.ThedefinitionofformeremployeesfollowsISS‘classificationofdirectors,whichappliesacooling-offperiodoffiveyearsforexecutivesotherthantheCEO.UndercurrentISSpolicy,aformerCEOwillalwaysbeconsideredaffiliated(moreinformationisavailableviatheISSPolicyGateway).
› PleaseseeAppendixIconcerningscoringthisquestionwhennewdirectorsareappointedtotheboardbetweenshareholdermeetings.
› Thisfactorhasazero-weightimpactonthescoringmodelandisincludedforinformationalpurposesonly.
MarketApplicability:U.S.,LatinAmerica,Russia
CompositionofCommittees
WhatpercentageofnominatingcommitteemembersareindependentbasedonISS’standards?(Q19)› Mostnominatingcommitteesareresponsiblefordevelopingapolicyonthesizeandcompositionofthe
boardandforidentifyingandapprovingnomineesforvacantpositionsontheboardofdirectors.ThecommitteeshouldhavethebenefitoftheCEO’sinvolvementintheselectionprocess,buttheresponsibilityforselectionofboardnomineesshouldbethatofindependentdirectors.
› PleaseseeAppendixIconcerningscoringthisquestionwhennewdirectorsareappointedtotheboardbetweenshareholdermeetings.Nominationcommitteeswithlessthanindependentmembershipasrecommendedbylocalbestpracticewillraiseincreasinglevelsofconcern.
› QualityScorewillconsider:thepercentageofindependentmembers(i.e.,asdefinedbyISS'proxyvotingguidelines);ifnoinformationisgiven;ifnocommitteeexists;orifthereisnoclearnominationprocess.
› ForJapan,QualityScorewilladditionallyconsiderwhetherthecommitteeisaformalnominatingcommitteeapplicabletocompanieswiththree-committeestructureoravoluntaryadvisorynominatingcommittee,and
![Page 19: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/19.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 19of159©2016ISS|InstitutionalShareholderServices
willconsiderthepercentageofoutsidedirectorsonthecommitteebasedonthecompany’scorporategovernancereport.
› FortheCanadianmarket,QualityScorewillnotpenalizeamajorityownedcompanywherenominatingcommitteeindependencelevelisbelow50percent;aslongasthecompanyqualifiesformajoritycontrolledexemption.Amajorityownedcompanyisdefinedforthepurposeofthispolicyasacompanycontrolledbyashareholderorgroupofshareholderswhotogetherhaveaneconomicownershipinterestunderasingleclasscommonsharecapitalstructurethatiscommensuratewiththeirvotingentitlementof50percentormoreoftheoutstandingcommonshares.SuchcompanyisdeemedtoenjoymajoritycontrolledexemptionifitmeetscertainindependenceandgovernancecriteriaasoutlinedintheCanadaProxyVotingGuidelines.
MarketApplicability:U.S.,Canada,W.Europe,Germanic,Anglo,S.Europe,AsiaPacific,Australasia,Africa,Russia,S.Korea,India,Japan
Arethereexecutivesonthenominatingcommittee?(Q306)› Thisquestionwillconsiderwhetherthereareanycompanyexecutivesonthenominatingcommittee.Most
nominatingcommitteesareresponsiblefordevelopingapolicyonthesizeandcompositionoftheboardandforidentifyingandapprovingnomineesforvacantpositionsontheboardofdirectors.ThecommitteeshouldhavethebenefitoftheCEO’sviewsinitsselectionprocess,buttheresponsibilityforselectionofboardnomineesshouldbethatofindependentdirectors.
Marketapplicability:AsiaPacific,Africa,Russia,India
Isthechairofthenominatingcommitteeindependent?(Q23)› Mostnominatingcommitteesareresponsiblefordevelopingapolicyonthesizeandcompositionofthe
boardandforidentifyingandapprovingnomineesforvacantpositionsontheboardofdirectors.ThecommitteeshouldhavethebenefitoftheCEO’sinvolvementintheselectionprocess,buttheresponsibilityforselectionofboardnomineesshouldbethatofindependentdirectors.
› QualityScorewillconsiderwhetherthecommitteechairisanexecutive,affiliatednon-executive,insider,outsider,non-directorcommitteememberorindependent.GovernanceQualityScorealsowillconsiderwhetherthereis,asdisclosedexplicitlybythecompany,achairaswellasacommittee.
MarketApplicability:W.Europe,Germanic,Australasia,S.Europe,AsiaPacific,Russia,India,SouthKorea,Japan
![Page 20: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/20.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 20of159©2016ISS|InstitutionalShareholderServices
Doesthecompanymaintainaformalnominatingcommittee?(Q207)› Companiesshouldconsidersettingupanominationcommitteeresponsibleforthefuturecompositionof
theboardofdirectors.
MarketApplicability:Nordic,LatinAmerica
Arethereanyboardmembersonthenominatingcommittee?(Q208)› InsomeNordicmarkets,nominatingcommitteesarecomposedprimarilyofshareholderrepresentatives,
notontheboard,owingtotheveryconcentratedownershipstructure.Withinthiscontext,havinganycurrentboardmembersonthecommitteeconstitutesapotentialconflictofinterest.
MarketApplicability:Nordic
Istheremorethanoneboardmemberwhoisdependentonmajorshareholdersonthenominatingcommittee?(Q210)
› Nominatingcommitteesareformedprimarilyofshareholderrepresentatives,notontheboard,owingtotheveryconcentratedownershipstructureinsomeNordicmarkets.Withinthiscontext,havinganexcessivenumberofboardmembersonthecommitteeconstitutesaconflictofinterest.
MarketApplicability:Nordic
Whatisthenumberofnominationcommitteemembers?(Q211)› ParalleltotheU.K.coderequirementsonremunerationandauditcommittees,bestpracticesuggestshaving
aminimumofthreenon-executiveboardmemberssittingonthenominationcommitteetohaveameaningfulquorum.
MarketApplicability:Anglo,S.Europe
Doesthecompanymaintainaformalremunerationcommittee?(Q330)› Theremunerationcommitteemakesrecommendationsandsetsguidelinesforthecompensationof
executivesofthecompany.Companiesshouldconsidersettinguparemunerationcommitteeassistingtheboardofdirectorsinsettingremunerationforkeymanagementaswellastheboard,
› QualityScorewillconsiderwhetherthecompanyhassetupaformalremunerationcommittee.
MarketApplicability:LatinAmerica
![Page 21: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/21.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 21of159©2016ISS|InstitutionalShareholderServices
WhatpercentageofthecompensationcommitteeisindependentunderISS’standards?(Q25)› Thecompensationcommitteemakesrecommendationsandsetsguidelinesforthecompensationof
executivesofthecompany.Bestpracticedictatesthatthepanelshouldbecomposedsolelyofindependentdirectors.
› QualityScorewillconsider:thepercentageofindependentmembers(asdefinedbyISS'proxyvotingguidelines);ifnoinformationisgiven;ifnocommitteeexists;orifthereisnoclearnominationprocess.
› PleaseseeAppendixIconcerningscoringthisquestionwhennewdirectorsareappointedtotheboardbetweenshareholdermeetings.Compensationcommitteeswithlessindependentmembershipasrecommendedbylocalbestpracticeraisesconcernofgovernancerisk.
› ForJapan,QualityScorewilladditionallyconsiderwhetherthecommitteeisaformalcompensationcommitteeapplicabletocompanieswiththree-committeestructureoravoluntaryadvisorynominatingcommittee,andwillconsiderthepercentageofoutsidedirectorsonthecommitteebasedonthecompany’scorporategovernancereport.
› FortheCanadianmarket,QualityScorewillnotpenalizeamajorityownedcompanywherecompensationcommitteeindependencelevelisbelow50percent;aslongasthecompanyqualifiesformajoritycontrolledexemption.Amajorityownedcompanyisdefinedforthepurposeofthispolicyasacompanycontrolledbyashareholderorgroupofshareholderswhotogetherhaveaneconomicownershipinterestunderasingleclasscommonsharecapitalstructurethatiscommensuratewiththeirvotingentitlementof50percentormoreoftheoutstandingcommonshares.SuchcompanyisdeemedtoenjoymajoritycontrolledexemptionifitmeetscertainindependenceandgovernancecriteriaasoutlinedintheCanadaProxyVotingGuidelines.
MarketApplicability:U.S.,Canada,W.Europe,Germanic,Anglo,S.Europe,AsiaPacific,Australasia,Africa,Russia,S.Korea,India,Japan
Arethereexecutivesonthecompensationcommittee?(Q27)› Thecompensationcommitteemakesrecommendationsandsetsguidelinesforthecompensationof
executivesofthecompany.Bestpracticedictatesthatthepanelshouldbecomposedsolelyofindependentdirectors.Whenexecutivesarememberofthecompensationcommittee,thereisaconflictofinterest.
› Thisquestionwillconsiderwhetherthereareanyexecutivesonthecompensationcommittee.
MarketApplicability:W.Europe,Germanic,Nordic,S.Europe,AsiaPacific,Australasia,Africa,India
Isthechairofthecompensationcommitteeindependent?Q28)› Thecompensationcommitteemakesrecommendationsandsetsguidelinesforthecompensationof
executivesofthecompany.Bestpracticedictatesthatthechairshouldbeanindependentdirector.
![Page 22: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/22.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 22of159©2016ISS|InstitutionalShareholderServices
› QualityScorewillconsiderwhetherthecommitteechairisanexecutive,affiliatednon-executive,insider,outsider,non-directorcommitteememberorindependent.GovernanceQualityScorealsowillconsiderwhetherthereis,asdisclosedexplicitlybythecompany,achairaswellasacommittee.
MarketApplicability:W.Europe,Germanic,Anglo,S.Europe,AsiaPacific,Australasia,Africa,Russia,India,SouthKorea,Japan
Isthechairoftheboardofdirectorsamemberofthecompensationcommittee?(Q29)› Thecompensationcommitteemakesrecommendationsandsetsguidelinesforthecompensationof
executivesofthecompany.Bestpracticedictatesthatthepanelshouldbecomposedsolelyofindependentdirectors.Inparticular,thechairoftheboardmaybeamemberofthiscommitteeifhe/shewasconsideredindependentonappointmentaschairman.
› TheUKcorporategovernancecodesays:“Theboardshouldestablisharemunerationcommitteeofatleastthree,orinthecaseofsmallercompaniestwo,independentnon-executivedirectors.Inadditionthecompanychairmanmayalsobeamemberof,butnotchair,thecommitteeifheorshewasconsideredindependentonappointmentaschair.Theremunerationcommitteeshouldmakeavailableitstermsofreference,explainingitsroleandtheauthoritydelegatedtoitbytheboard.Whereremunerationconsultantsareappointed,theyshouldbeidentifiedintheannualreportandastatementmadeastowhethertheyhaveanyotherconnectionwiththecompany.”
MarketApplicability:Anglo
Whatisthenumberofremunerationcommitteemembers?(Q212)› TheU.K.Coderecommendsthatthereshouldbeatleastthreenon-executiveboardmemberssittingon
eachremunerationcommittee,allofwhomshouldbeindependent.ThisguidelinewillbeimplementedforFTSE350andISEQ20companies.Forcompanieswhicharenotconsituentsofsaidindices,thebestpracticestandardissetattwomembers.
› InSpain,Recommendation49providesthat:“ThemajorityofNominationCommitteemembers–orNominationandRemunerationCommitteemembersasthecasemaybe–shouldbeindependentdirectors.”InItaly,Principle6.P.3providesthat:“6.P.3.TheBoardofDirectorsshallestablishamongitsmembersaremunerationcommittee,madeupofindependentdirectors.Alternatively,thecommitteemaybemadeupofnon-executivedirectors,themajorityofwhichtobeindependent;inthiscase,thechairmanofthecommitteeisselectedamongtheindependentdirectors.”
› Answerswillconsiderwhetherthecompanyhasaremunerationcommittee,thenumberofmembersonthecompensationcommittee,whetherthecompositionofthecommitteehasbeendisclosed,and,ifso,thecompositionofthecommittee.
MarketApplicability:Anglo,S.Europe
![Page 23: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/23.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 23of159©2016ISS|InstitutionalShareholderServices
Doesthecompanymaintainaformalauditcommittee?(Q331)› WhilesomecompaniesmaintainastatutoryAuditCommittee,underBrazilianCorporateLaw,most
companieshaveaFiscalCouncil,whichisacorporatebodyindependentofmanagementandacompany’sexternalauditorsthatoperatesonapermanentornon-permanentbasis.TheFiscalCouncilisgenerallynotequivalenttoaU.S.auditcommittee;itsprimaryresponsibilityistomonitormanagement’sactivities,reviewthefinancialstatements,andreportitsfindingstotheshareholders.
› UndertheBrazilianCorporateLaw,theFiscalCouncilmaynotcontainmemberswhoaremembersoftheBoardofDirectorsortheexecutivecommittee,orwhoareemployeesofthecompanyoracontrolledentity,oraspouseorrelativeofanymemberofmanagement.
› WhilesomecompaniesmaintainastatutoryAuditCommitteeinadditiontoaFiscalCouncil,theformerisnotarequirement.UnderRule10A-3(c)(3)oftheU.S.SecuritiesExchangeAct,certainnon-U.S.issuersareexemptfromtheauditcommitteerequirementsofSection303AoftheNYSEListedCompanyManualiftheyestablish,accordingtotheirlocallaworregulations,anotherbodythatactsasanauditcommittee.
› QualityScorewillconsiderwhetherthecompanyhassetupaformalauditcommittee,andwhetherallofitsmembersarealsomembersoftheboardofdirectors.
MarketApplicability:LatinAmerica
Doesthecompanymaintainaformalfiscalcouncil?(Q332)› UnderBrazilianCorporateLaw,theFiscalCouncilisacorporatebodyindependentofmanagementanda
company’sexternalauditorsthatoperatesonapermanentornon-permanentbasis.ThefiscalcouncilisgenerallynotequivalenttoaU.S.auditcommittee;itsprimaryresponsibilityistomonitormanagement’sactivities,reviewthefinancialstatements,andreportitsfindingstotheshareholders.
› UndertheBrazilianCorporateLaw,thefiscalcouncilmaynotcontainmemberswhoaremembersoftheBoardofDirectorsortheexecutivecommittee,orwhoareemployeesofthecompanyoracontrolledentity,oraspouseorrelativeofanymemberofmanagement.
› Whilesomecompaniesmaintainastatutoryauditcommitteeinadditiontoafiscalcouncil,theformerisnotarequirement.UnderRule10A-3(c)(3)oftheExchangeAct,non-U.S.issuersareexemptfromtheauditcommitteerequirementsofSection303AoftheNYSEListedCompanyManualiftheyestablish,accordingtotheirlocallaworregulations,anotherbodythatactsasanauditcommittee.
QualityScorewillconsiderwhetherthecompanyhassetupafiscalcouncil,andwhetheritoperatesonapermanentornon-permanentbasis.
MarketApplicability:LatinAmerica
![Page 24: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/24.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 24of159©2016ISS|InstitutionalShareholderServices
WhatpercentageoftheauditcommitteeisindependentunderISS’standards?(Q31)› Likeotherkeyboardcommittees,auditpanels/committeesshouldincludeonlyindependentnon-executives
toreducetheriskofconflictofinterestwithregardtothecompany’saccounts.› QualityScorewillconsider:thepercentageofindependentmembersasdefinedbyISS'policyguidelines;if
noinformationisgiven;orifnocommitteeexists.› PleaseseeAppendixIconcerningscoringthisquestionwhennewdirectorsareappointedtotheboard
betweenshareholdermeetings.› Auditcommitteeswithlessindependentmembershipasrecommendedbylocalbestpracticeraisesthe
concernofgovernancerisk.› FortheCanadianmarket,QualityScorewillnotpenalizeamajorityownedcompanywhereauditcommittee
independencelevelisbelow50percent;aslongasthecompanyqualifiesformajoritycontrolledexemption.Amajorityownedcompanyisdefinedforthepurposeofthispolicyasacompanycontrolledbyashareholderorgroupofshareholderswhotogetherhaveaneconomicownershipinterestunderasingleclasscommonsharecapitalstructurethatiscommensuratewiththeirvotingentitlementof50percentormoreoftheoutstandingcommonshares.SuchcompanyisdeemedtoenjoymajoritycontrolledexemptionifitmeetscertainindependenceandgovernancecriteriaasoutlinedintheCanadaProxyVotingGuidelines.
MarketApplicability:U.S.,Canada,W.Europe,Germanic,Anglo,S.Europe,AsiaPacific,Australasia,Africa,Russia,S.Korea,India,Japan
Arethereexecutivesontheauditcommittee?(Q33)› Likeotherkeyboardcommittees,auditpanels/committeesshouldincludeonlyindependentnon-
executivestoreducetheriskofconflictofinterestwithregardtothecompany’saccounts.› Answerswillconsiderwhetherthecompanyhasanauditcommittee,thepresenceofexecutiveson
theauditcommittee,whetherthecompositionofthecommitteehasbeendisclosed,andifso,thecompositionofthecommittee.
MarketApplicability:W.Europe,Germanic,Australasia,S.Europe,AsiaPacific,Nordic,India
Isthechairoftheauditcommitteeindependent?(Q34)› Likeotherkeyboardcommittees,auditpanelsshouldideallybecomprisedsolelyofindependentnon-
executivestoensurenopossibilityofconflictofinterestwithregardtothecompany’saccounts.› QualityScorewillconsiderwhetherthecommitteechairisanexecutive,affiliatednon-executive,or
independent.› Answerswillconsidertheclassificationofthechairmanoftheauditcommittee,whetherornotsuch
committeehasbeensetup,andwhetherthecompositionofthecommitteehasbeendisclosed.
![Page 25: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/25.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 25of159©2016ISS|InstitutionalShareholderServices
MarketApplicability:W.Europe,Germanic,Anglo,S.Europe,AsiaPacific,Australasia,India,SouthKorea,Japan
Isthechairoftheboardofdirectorsamemberoftheauditcommittee?(Q35)› BoththeU.K.andtheDutchcodesofbestpracticerecommendthatthechairmanoftheboardshouldnot
beamemberoftheauditcommittee.ThiswiththeexceptionofnonFTSE350orISEQ20companies,whereitisacceptedthatthechairmanoftheboardisamemberofthecommittee,providedhe/sheisnotthechairmanofthecommittee.
› Answerscoverwhether:thechairmanoftheboardisamemberoftheauditcommittee;whetherhe/shechairsthecommittee;ifanauditcommitteehasbeenestablished;andifthecompositionofthecommitteehasbeendisclosed.
MarketApplicability:W.Europe,Anglo
Howmanymembersserveontheauditcommittee?(Q213)› TheU.K.Coderecommendsthatthereshouldbeatleastthreenon-executiveboardmemberssittingon
auditcommittees,allofwhomshouldbeindependent.ThisguidelinewillbeimplementedforFTSE350andISEQ20companies.Forcompanieswhicharenotconsituentsofsaidindices,thebestpracticestandardissetattwomembers.
› InSpain,Recommendation39providesthat:“InadditiontotheAuditCommittee[…],theBoardofDirectorsshouldformacommittee,ortwoseparatecommittees,ofNominationandRemuneration.Therulesgoverningthemake-upandoperationoftheAuditCommitteeandthecommitteeorcommitteesofNominationandRemunerationshouldbesetforthintheboardregulations,andincludethefollowing:[…]b)TheseCommitteesshouldbeformedexclusivelyofexternaldirectorsandhaveaminimumofthreemembers.”InPortugal,article423-B.2ofthecommercialCompanyActprovidesthat“Theauditcommitteeshallbecomposedofthenumberofmembersspecifiedinthearticlesofassociation,withatleastthreeeffectivemembers.”InItaly,Principle4.C.1providesthat:“4.C.1.TheestablishmentandfunctioningofthecommitteesgovernedbytheCodeshallmeetthefollowingcriteria:a)committeesshallbemadeupofatleastthreemembers.”
› Thisquestionwillconsiderthenumberofcommitteemembersontheauditcommittee,whethersuchcommitteehasbeensetupandwhetherthecompositionofthecommitteehasbeendisclosed.
MarketApplicability:Anglo,S.Europe
Whatgovernancestructurehasthecompanyadopted?(Q283)› TherearethreedifferenttypesofboardstructuresinJapan;(1)Japanesetraditionaltwo-tieredboard
structurewithaboardofdirectorsandaboardofstatutoryauditors(����kansayaku-kai);(2)aunitaryboardwiththreecommitteestructure(alsoknownasU.S.styleboard)withaudit,nomination,and
![Page 26: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/26.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 26of159©2016ISS|InstitutionalShareholderServices
compensationcommitteesadoptedbyasmallfractionofJapanesecompanies;and(3)aunitaryboardwithauditcommitteestructure,anewtypeofstructureintroducedin2015.
› Japanesecompaniescanchooseamongthreetypesofgoverningstructures,andthisisascreeningquestionasQualityScorehasalreadyscoredrelavanttopicsinotherquestions.
MarketApplicability:Japan
Hasthecompanydisclosedinformationonkeycommitteeattendance?(Q340)› Directorswhodonotattendasufficientnumberofboardandkeycommitteemeetingsarenotfulfilling
theirobligationtorepresentshareholdersandprovideoversightanddirectiontomanagement.› QualityScorewillconsiderwhetherornotthecompanyhasdisclosedinformationonkeycommittee
attendance.
MarketApplicability:India
BoardPractices
Howmanydirectorsserveonanexcessivenumberofoutsideboards?(Q309)› Thisquestionwillconsiderthenumberofoutsideboardpositionsthatareheldbyeachindividualdirector.
Directorswithanexcessivenumberofboardseatsmaynothavesufficienttimetodevotetotheneedsofindividualboards.Answerswillconsiderthenumberofboardmemberswhoserveonanexcessivenumberofboardpositionsofpubliclytradedcompanies(differentiatingbetweendirectorswhoareactiveCEOsandthosethatarenotactiveCEOs).Excessivenessofoutsideboardpositionsisbasedonmarket-specificISSpolicy,availableontheISSPolicyGateway.
MarketApplicability:AsiaPacific
Dotheexecutivesserveonasignificantnumberofoutsideboards?(Q36)› Anexecutiveroleisapositionofgreatresponsibilityandtimedemands.Sittingonmultipleoutsideboards
maythreatentheabilityoftheexecutivestoattendtothebusinessofhisorherprimaryemployer.› Thisfactorhasazero-weightimpactonthescoringmodelforLatinAmericancompaniesandisincludedfor
informationalpurposesonly.
MarketApplicability:W.Europe,Germanic,Nordic,S.Europe.LatinAmerica,Anglo
DoestheCEOserveonasignificantnumberofoutsideboards?(Q37)
![Page 27: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/27.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 27of159©2016ISS|InstitutionalShareholderServices
› Thechiefexecutiveroleisapositionofgreatresponsibilityandtimedemands.SittingonmultipleoutsideboardsmaythreatentheabilityoftheCEOtoattendtothebusinessofhisorherprimaryemployer.
› QualityScorewillconsiderthetotalnumberofpublicboardseatsheldbytheCEO(includingthecompany),orwhethernoinformationisavailable.Allsubsidiarieswiththeirownpublicly-tradedstockarecountedasindividualboards.
› Excessiveboardmemberships-morethantwooutsideboards(threetotalboards)–raisesgovernanceriskconcern.
› Thisfactorhasazero-weightimpactonthescoringmodelforLatinAmericancompaniesandisincludedforinformationalpurposesonly.
MarketApplicability:U.S.,W.Europe,Germanic,Nordic,S.Europe,AsiaPacific,Australasia,Canada,LatinAmerica,Anglo
Howmanynon-executivesserveonasignificantnumberofoutsideboards?(Q38)› Directorswithanexcessivenumberofboardseatsmaynothavesufficienttimetodevotetotheneedsof
individualboards.› QualityScorewillconsiderthetotalnumberofboardseats(includingthecompany)heldbynon-executives
todetermineiftheyareexcessive,asdefinedbytherespectivemarket,orwhethernoinformationisavailable.ISS‘benchmarkpolicydefinesexcessiveintheU.S.asmorethanfivepubliccompanyboardseats.ForU.S.andCanadiancompanies,alldirectorsareincludedexcepttheCEO.
› Thisfactorhasazero-weightimpactonthescoringmodelforLatinAmericancompaniesandisincludedforinformationalpurposesonly.
MarketApplicability:U.S.,W.Europe,Germanic,Nordic,S.Europe,Australasia,Canada,LatinAmerica,Anglo
Doesthechairserveonasignificantnumberofoutsideboards?(Q39)› Asforothernon-executives,butevenmoresoforthechairmanoftheboard,holdingmultipleoutsideboard
positionsmayrepresentanimpedimenttothedirector'sabilitytodevotesufficienttimetotheneedsofeachcompany.
› Thisfactorhasazero-weightimpactonthescoringmodelforLatinAmericancompaniesandisincludedforinformationalpurposesonly.
MarketApplicability:W.Europe,Germanic,Nordic,S.Europe,Australasia,LatinAmerica,Anglo
Hasthecompanydisclosedtheattendanceofeachdirector?(Q337)
![Page 28: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/28.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 28of159©2016ISS|InstitutionalShareholderServices
› InChina,attendancerecordofonlyindependentdirectorsisrequiredtobedisclosed;however,thebestpracticeistodiscloseattendancerecordofalldirectorsontheboard.
› QualityScorewillconsiderwhetherornotthecompanyhasdisclosedinformationonindividualattendanceofboardandcommitteemeetings.
MarketApplicability:AsiaPacific,India
Whatpercentageofallmeetingswasattendedbyatleast50percentofthesupervisoryboard?(Q43)› Directorswhodonotattendasufficientnumberofboardmeetingsarenotfulfillingtheirobligationto
representshareholdersandprovideoversightanddirectiontomanagement.ThisquestionwasdesignedtoaccountforthespecificdisclosureintheGermanicmarkets.
MarketApplicability:Germanic
Whatpercentageofthedirectorsattendedlessthan75percentoftheboardmeetings?(Q44)› Directorswhodonotattendasufficientnumberofboardmeetingsarenotfulfillingtheirobligationto
representshareholdersandprovideoversightanddirectiontomanagement.› InAustralia,ISSlooksatdirectorattendanceatboardandcommitteemeetingsfortwoconsecutiveyears.› InSouthKoreaandJapan,thisquestionwillonlyexaminetheattendanceofoutsidedirectors,asattendance
recordsofinsidedirectorsarenotrequiredtobedisclosedinthesemarkets.
MarketApplicability:W.Europe,S.Europe,AsiaPacific,Australasia,Africa,S.Korea,India,Japan
Didanydirectorattendlessthan75percentoftheaggregateboardandapplicablekeycommitteemeetingswithoutavalidexcuse?(Q45)
› Directorswhodonotattendasufficientnumberofboardandkeycommitteemeetingsarenotfulfillingtheirobligationtorepresentshareholdersandprovideoversightanddirectiontomanagement.
› QualityScorewillconsiderthenumberofdirectorswhoattendedlessthan75percentoftheaggregateoftheirboardandcommitteemeetings,withconsiderationgiventowhetherthemeetingsweremissedforavalidexcuse(e.g.medicalissue,familyemergencies,ormissingonly1meeting.).InCanada,keycommitteesincludetheAudit,CompensationandNominatingcommittees.ForU.S.companies,thisquestionappliestoallboardandcommmitteemeetingsperSECdisclosurerequirements.
MarketApplicability:U.S.,Canada,Anglo
Howmanydirectorsreceivedwithhold/againstvotesof50percentorgreateratthelastannualmeeting?(Q49)
![Page 29: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/29.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 29of159©2016ISS|InstitutionalShareholderServices
› Significantoppositiontoaboardmembertypicallysignifiesalackofaccountability,responsiveness,independence,and/orcompetenceonthepartofthetargeteddirector,warrantingfurtherevaluation.
› QualityScorewillconsiderthenumberofdirectorswithmajorityoppositionofvotescast4atthelastannualmeeting.FromthedateofpublicationoftheISSproxyresearchreportuntilthemeetingresultsareavailable,thisquestionwillbependingandtheresultwillindicate“meetingresultsinprogress”forthisfactor.
MarketApplicability:U.S.,Canada
Doesthecompanyroutinelyholdindependentdirectormeetingsorhaveothermechanismstofacilitateeffectivecollaborationofindependentdirectors,managementandstatutoryauditors?(Q366)
› Routinesessionsindependentdirectorswherenomanagementispresentisconsideredaneffectivemeanstofosterunderstandingandshareinformationamongindependentdirectors,andhelpenhancetheiroversightability.
› TheJapaneseCorporateGovernanceCode(4-8-1)stipulatesthatinordertoactivelycontributetotheboard,“independentdirectorsshouldendeavortoexchangeinformationanddevelopasharedawarenessamongthemselvesfromanindependentandobjectivestandpoint”andthatroutinelyheldmeetingsconsistingsolelyofindependnetdirectorscouldhelpachievethisobjective.
Marketapplicability:Japan
Whatpercentageofdirectorsreceivedshareholderapprovalratesbelow80%?(Q312)› QualityScorewillconsiderthepercentageofdirectorswhoreceivedlessthan80percentofvotescastatthe
mostrecentshareholdermeeting.› Oppositiontoaboardmembertypicallysignifiesaperceivedlackofaccountability,responsiveness,
independence,and/orcompetenceonthepartofthetargeteddirector,warrantingfurtherevaluation.QualityScorewillconsiderdirectorswhoreceivedlessthan80percentshareholderapproval.ISScollectsmeetingresultsastheyareavailableandthisfactorwillbeupdatedandrecalculatedaccordingly.
› FromthedateofpublicationoftheISSproxyresearchreportuntilthemeetingresultsareavailable,thisquestionwillbependingandtheresultwillindicate“meetingresultsinprogress”forthisfactor.
Marketapplicability:U.S.
DoesthecompanydisclosetheexistenceofaformalCEOandkeyexecutiveofficerssuccessionplan?(Q348)
----------------------4Forvotescast,ISSusesFor/(For+Against).Abstentionsarenotincluded.
![Page 30: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/30.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 30of159©2016ISS|InstitutionalShareholderServices
› Successioneventsdefineperiodsthathavethepotentialtocausesignificantdisruptionanddistractionforcompaniesandfortheirboards,andsometimescanleadtodetrimetalimpactsonshareholdersandthevalueoftheirholdings.Well-craftedandwell-understoodsuccessionplanscanhelpminimizedisruptioninthesescenarios;transitioneventsatcompaniessuchasAppledemonstratehowproperly-plannedsuccessioncaneaseshareholderconcernsandprotectshareholdervalue.
› EstimatesofthefinancialimpactofplannedCEOsuccessionvary.Acknowledgingthedifferencebetweenhavingasuccessionplanandplannedsuccession,therearesomedatapointsthataccentuatethemagnitudeoftheproblem.AccordingtoarecentstudybyStrategy&,“Largecompaniesthatunderwentforcedsuccessionsinrecentyearswouldhavegenerated,onaverage,anestimated$112billionmoreinmarketvalueintheyearbeforeandtheyearaftertheirturnoveriftheirCEOsuccessionhadbeentheresultofplanning.”
› QualityScorewillconsiderwhetheracompanyhasaboard-approved,periodically-evaluatedsuccessionplanfortheCEO,otherseniormanagement,andkeyexecutiveofficers.
MarketApplicability:U.S.
DoesthecompanyhaveamechanismtoappropriatelymonitorandsuperviseitsCEOsuccessionplanning?(Q368)
› Whenproperlyplannedandthoughtfullyexecuted,CEOsuccessionoffersacompanyfarmorethanjustthetransitioningofitstopleader.Itenablesorganizationstoenvisionnewopportunitiesforgrowth,andrealignandstrengthenprocessesandsystemsthroughouttheenterprise.Successionplanningisahumancapitalriskbecauseofitspotentialhighimpactonbusinessperformanceandcontinuity.Makinglong-termandemergencysuccessionplansfortheCEOisafundamentalboardresponsibility,onethatshouldbeaddressedonaregularbasisregardlessofCEO’shealthandtenure.
› WhiletheJapaneseCorporateGovernanceCode(4-1-3)doesnotrequiretheestablishmentofaCEOsuccessionpolicyandcompaniesneednotdisclosewhetherithasaformalCEOsuccessionplanornot,theCoderecommendscompaniestoinstituteamechanismformonitoringandfacilitatingCEOsuccessionplan.
Marketapplicability:Japan
Whatwastheaverageoutsidedirectors'totalcompensationasamultipleofthepeermedian?(Q315)› Thisrelativemeasureexpressestheprioryear’saverageoutsidedirector'spay(basedontotalcompensation
reportedforeachnon-executivedirectorinthecompany’sproxystatement)asamultipleofthemedianpayofitsISS-determinedcomparisongroupforthesameperiod.Thecalculationforthismeasureis:theaverageoutsidedirector'stotalpaydividedbythemedianaverageoutsidedirectortotalpaylevelwithinthecomparatorgroup.
Marketapplicability:U.S.
![Page 31: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/31.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 31of159©2016ISS|InstitutionalShareholderServices
Whatistheaggregatelevelofstockownershipoftheofficersanddirectors,asapercentageofsharesoutstanding?(Q140)
› Bestpracticedictatesthatdirectorsmaintainameaningfullevelofshareownershipbyacertaintimeafterappointmenttobetteraligntheirinterestswiththoseofshareholders.
› QualityScorewillconsiderthetotallevelofholdingsofdirectorsandexecutivesasapercentageofsharesissuedbythecompany.
› ThisfactorhasmovedfromtheCompensationpillarintheEquityRiskMitigationsubcategorytotheBoardpillarintheBoardPracticessubcategory.
› Thisfactorhasazero-weightimpactonthescoringmodelforLatinAmericancompaniesandisincludedforinformationalpurposesonly.
MarketApplicability:W.Europe,Germanic,Anglo,Nordic,S.Europe,Australasia,LatinAmerica,Africa,Russia
Doalldirectorswithmorethanoneyearofserviceownstock(whocanlegally/practicallydoso)?(Q144)
› Similartothestockownershiprationaleabove,alldirectorsshouldmaintainanequitystakeinthecompany.› QualityScorewillconsiderwhetherstockisownedbydirectorswithmorethanoneyearofservice,orifthe
informationisnotdisclosed(basedonbeneficialownership,asreported).Incaseswheredetailsregardingownershiparevagueorotherwisenotdefinitivewithregardtothemandatorynatureoftheownershiprequirementorlevelofholdings,ISSwilldeemtheinformation“notdisclosed.”
› ForU.S.markets,thisquestionwillconsiderthedirectorswhocanpracticallyownshares.Certaindirectors,suchasemployeesorrepresentativesofsignificantshareholdersorinvestmentfirms,maybeprohibitedbyinternalpoliciesfrompersonallyholdingshares(forexample,toavoidtheappearanceorpossibilityof“front-running”).Suchdirectorsareexcludedfromthiscalculation.
› IntheU.S.andCanada,deferredshareunitsarealsoconsideredforthisquestion.
MarketApplicability:U.S.,Canada,AsiaPacific,Australasia,S.Korea,India
Didanyexecutiveordirectorpledgecompanyshares?(Q243)› Theprospectthatanexecutiveordirectormaybeforcedtosellasubstantialamountofsharesposes
significantrisksforothershareholders,whomayseethevalueoftheirsharesdecline.Inaddition,ahighlyleveragedexecutivemaybeincentivizedtoriskierbehavior.
› QualityScorewillconsiderwhethercompanyexecutivesordirectorshavepledgedcompanyshares.ISSwillconsiderpledgingofsharesofaninstitutionorcompanywhereadirectororanexecutivehasabeneficialownership.
› Thisquestioncoversallpledging,evenifnotconsideredproblematic.SignificantpledgingthatrisestoalevelofconcernwillalsobecapturedunderQuestion345asafailureofgovernance.
![Page 32: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/32.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 32of159©2016ISS|InstitutionalShareholderServices
MarketApplicability:U.S.
BoardPolicies
Doesthecompanydiscloseapolicyrequiringanannualperformanceevaluationoftheboard?(Q41)› Evaluatingboardperformanceisawayofmeasuringeffectivecontributionandcommitmentofboard
memberstotheirrole,assessingthewaytheboardoperates,whetherimportantissuesareproperlypreparedaswellaskeycompetencesontheboard.
› Theboard,committeesandeachindividualdirectorshouldberegularlyassessedregardinghis,her,oritseffectivenessandcontribution.Anassessmentshouldconsider(a)inthecaseoftheboardoraboardcommittee,itsmandateorcharter,and(b)inthecaseofanindividualdirector,theapplicablepositiondescription(s),aswellasthecompetenciesandskillseachindividualdirectorisexpectedtobringtotheboard.Evaluatingboardperformanceisawayofmeasuringeffectivecontributionandcommitmentofboardmemberstotheirrole,assessingthewaytheboardoperates,whetherimportantissuesareproperlyprepared,andkeycompetencesontheboard.
› Thisquestionwillevaluatewhetherthecompanyorganizesboardevaluations,aswellasthenatureofsuchevaluation(frequency,individual,outsideassessment).
› IntheU.S.,arobustpolicyiswhenthecompanydisclosesan(1)annualboardperformanceevaluationpolicythatincludes(2)individualdirectorassessmentsand(3)anexternalevaluatoratleasteverythreeyears.Performanceevaluationpoliciesdisclosedordetailedinthecorporategovernanceguidelines,nominating/governancecommitteecharters,ortheproxystatementareevaluatedforthisfactor.
› InJapan,companiesarerecommendedtoconductanannualperformanceevaluationoftheboardinaccordancewiththeCode4-11-3oftheJapanCorporateGovernanceCode.ThisquestioninJapanwillexaminewhetheracompanycomplieswiththeCode4-11-3.
MarketApplicability:U.S.,Canada,W.Europe,Germanic,Anglo,Nordic,S.Europe,Australasia,Russia,Japan
Doesthecompanydiscloseboard/governanceguidelines?(Q46)› NewYorkStockExchangelistedcompaniesarerequiredtopubliclydiscloseboard/corporategovernance
guidelines.Otherexchanges,however,donotyetmandatesuchdisclosure.› QualityScorewillconsiderwhetherthecompanypubliclydisclosesboard/governanceguidelines.When
consideringanswerstothisquestion,GovernanceQualityScorewilllookforguidelinesdisclosedasasingledocumentasopposedtomultipleseparatedocumentscoveringvariouselementsofgovernance.
MarketApplicability:U.S.
Doestheboardhaveanymechanismstoencouragedirectorrefreshment?(Q349)
![Page 33: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/33.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 33of159©2016ISS|InstitutionalShareholderServices
› Boardrefreshmenthascomeintoinvestorfocus,andmanycompanieshaverecognizedtheneedtoimplementmechanismstoencourageboardrefreshment.Whilethegoldstandardisforarigorousannualevaluationofalldirectorstoensureacontinuedmatchoftheirskillsetsagainsttheneedsofthecompany,ISSisdisplaying,forinformationpurposes,otherstructuralmechanismstheboardmayhaveinplacetoencouragerefreshment.
› Themostpopularstyleofmechanismisamandatoryretirementage.AmongS&P500companies,morethan70%currentlysetamandatoryretirementage.However,astheaverageageofboardshasslowlyincreased,sohasthetrendinsettingtheageformandatoryretirement.
› Termlimitshavealsobeenimplementedbysomeboards,buttoamuchsmallerextentthanmandatoryretirementages.However,theremaybeincreasinginterestintermlimits,particularlyassomeboardsreachouttoyoungerdirectorcandidatestofillcriticalboardroomskillandcapabilitygaps.Therehavebeenafewrecenthigh-profileadoptions,includingatGeneralElectric.
› Asotherboardrefreshmentmechanismsgainprominence,theymayalsobeincludedinthisfactor.› Whilewenotethatsomeinvestorshavequestionedselectiveenforcementofrefreshmentmechanismsat
somecompanies(throughtheissuanceofwaiversortheliberalizationofmechanisms),inthisiterationthisfactorfocusesnarrowlyonthepresenceofrefreshment-promotingmechanisms.
› Thisfactorhasazero-weightimpactonthescoringmodelforU.S.companiesandisincludedforinformationalpurposesonly.
MarketApplicability:U.S.
Whatisthequorumfordirectormeetings?(Q215)› Aquorumensuresthatdirectorsmeetingscanonlyconvenewithaminimumnumberofdirectorspresent
eliminatinganydirectorresolutionsthatmaybepassedinameetingwherelessthanhalfofdirectorsarepresent.
MarketApplicability:Canada
Doesthecompanyallowthechairasecondorcastingvoteatdirectormeetingsintheeventofatie?(Q100)
› Acastingorsecondvoteiscontrarytothetenetofone-person,one-vote.› Theabilityofthechairtohaveasecondorcastingvoteontievotesatboardmeetingsisaquestionable
practice.Grantingthechairasecondvoteoncontentiousissuesthatresultinadeadlockedboardcanleadtoconflictsofinterestandpotentialinequalityamongdirectors.
MarketApplicability:Canada,S.Europe
![Page 34: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/34.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 34of159©2016ISS|InstitutionalShareholderServices
Aredirectorssubjecttostockownershipguidelines?(Q143)› Bestpracticedictatesthatdirectorsmaintainameaningfullevelofshareownershipbyacertaintimeafter
appointmenttobetteraligntheirinterestswiththoseofshareholders.Thisquestionisansweredasamultipleofthecashportionoftheannualretainerreceivedbyanon-employeedirector.
› FortheCanadianMarket,ISSclassifiesownershipguidelinesasfollows:› (i)Robust:six-timestheannualcashretainerormore;› (ii)Standard:three-tofive-timesretainer;and,› (iii)Sub-Standard:lessthanthree-timesretainer.
› FortheU.S.Market,theISSclassificationis:› (i)Robust:five-timesthecashportionofthedirectors'baseretainerormore;› (ii)Standard:threeorfourtimesthecashportionofthedirectors'baseretainer;and,› (iii)Sub-Standard:twotimesorbelowthecashportionofthedirectors'baseretainer.
› Therigorofthestockownershipguidelinesisafactor.Incaseswherethedetailsregardingownershiparevagueorotherwisenotdefinitive(e.g.,ownershipis"encouraged"or"stressed")withregardtothemandatorynatureoftheownershiprequirementorlevelofholdings,ISSwilldeemtheinformation“notdisclosed.”ForcompaniesincorporatedinAustraliaandNewZealand,thenormaldisclosureofdirectorownershipguidelinesisequivalenttotheirannualretainer.AnadditionalresponseforAustraliaisforeseentoindicateandtakeintoaccountsignificantholdingsbydirectors.
MarketApplicability:U.S.,Canada,Australasia
Doesthecompanyhaveapolicyprohibitinghedgingofcompanysharesbyemployees?(Q244)› Bestpracticeistoincorporatearobustpolicythatprohibitsalltypesofhedgingtransactionswithin
companies’insidertradingpoliciesorseparateanti-hedgingpolicies.Hedgingagainstlossesincompanysharesbreaksthealignmentbetweenshareholderandexecutivesthatequitygrantsareintendedtobuild.
› QualityScorewillconsiderwhetherthecompanyhasinstitutedapolicythatprohibitshedgingofcompanyshares.Tobeconsidered“robust,”thepolicyshouldprohibitafullrangeoftransactions,includingshort-selling,options,puts,andcalls,aswellasderivativessuchasswaps,forwards,futures;alternatively,arobustpolicywouldstipulatethatno“hedging”ofcompanystockispermitted.Additionally,hedgingpoliciesthathaveapre-clearanceorpre-approvalrequirementwillbeconsideredas“notrobust”.
MarketApplicability:U.S.,Canada,Australasia
RelatedPartyTransactions
DoesthecompanydiscloseinformationonRelatedPartyTransactions?(Q336)
![Page 35: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/35.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 35of159©2016ISS|InstitutionalShareholderServices
› Related-partytransactionscanleadtoconflictsofinterestthatmaycompromiseindependence,particularlyininstanceswhereparticipationortiestotransactionsarenotfullydisclosed.
› QualityScorewillconsiderthelevelofdisclosureonconflictsofinterest.
MarketApplicability:Russia,India
WhatpercentofthedirectorswereinvolvedinmaterialRPTs?(Q50)› Related-partytransactions(RPTs)canleadtoconflictsofinterestthatmaycompromiseindependence,
particularlyininstanceswhereparticipationortiestotransactionsarenotfullydisclosed.› QualityScorewillconsiderthepercentageofdirectorswhoaredirectlyorindirectly(throughemployersand
immediatefamilymembers)involvedinmaterialrelated-partytransactions,orifnoinformationwithwhichtomakeadeterminationisgiven.IntheU.S.,amaterialtransactionalrelationshipisdefinedasonethat:includesgrantstonon-profitorganizations;existsifthecompanymakesannualpaymentsto,orreceivesannualpaymentsfrom,anotherentityexceedingthegreaterof$200,000or5percentoftherecipient‘sgrossrevenues,inthecaseofacompanywhichfollowsNASDAQlistingstandards;orthegreaterof$1,000,000or2percentoftherecipient‘sgrossrevenues,inthecaseofacompanywhichfollowsNYSE/Amexlistingstandards.Inthecaseofacompanywhichfollowsneitheroftheprecedingstandards,ISSwillapplytheNASDAQ-basedmaterialitytest.(Therecipientisthepartyreceivingthefinancialproceedsfromthetransaction.)
› Amaterialprofessionalservicerelationshipisdefinedasonethat:include,butarenotlimitedtothefollowing:investmentbanking/financialadvisoryservices;commercialbanking(beyonddepositservices);investmentservices;insuranceservices;accounting/auditservices;consultingservices;marketingservices;legalservices;propertymanagementservices;realtorservices;lobbyingservices;executivesearchservices;andITconsultingservices;existsifthecompanyoranaffiliateofthecompanymakesannualpaymentsto,orreceivesannualpaymentsfrom,anotherentityinexcessof$10,000peryear.
› NotethatRPTsofadirectorappointedbetweenshareholdermeetingsmaynotbedeterminableunderISSstandards.Insuchcases,scoringrelatedtodirectorRPTswillnotbeaffectedbysuchappointments(i.e.,thecompany'sQSwillcontinuetoreflecttheRPTstatusasofthelastannualmeeting,untilthenextannualmeetingwhenfinaldeterminationsaremade).SpecificallyforCanadiancompanies,anydisclosureundertheRPTsectionwillbeconsideredforthisquestion.
MarketApplicability:U.S.,Canada
DodirectorswithRPTssitonkeyboardcommittees?(Q51)› Theindependenceofthenomination,audit,andcompensationcommitteesisvitaltotheireffective
oversightofthesekeyboardfunctions.Theexistenceoftransactionalrelationshipswiththecompanyhasthepotentialtounderminethisindependence.
![Page 36: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/36.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 36of159©2016ISS|InstitutionalShareholderServices
› QualityScorewillconsiderwhetherdirectorswithmaterialrelated-partytransactions(RPTs)sitonkeycommittees,ifitisnotapplicable,orifinformationwithwhichtomakeadeterminationisnotgiven.SeeaboveforadefinitionofmaterialRPTs.Keycommitteesaredefinedasnomination,audit,andcompensation.
MarketApplicability:U.S.,Canada
Aretherematerialrelated-partytransactionsinvolvingtheCEO?(Q216)› TheCEO’sspecialroleinthecompanydemandsparticularattentiontoavoideventheappearanceofself-
dealing.› QualityScorewillconsiderwhethertheCEOhasengagedinmaterialrelated-partytransactionswiththe
company.
MarketApplicability:U.S.,AsiaPacific
BoardControversies
Hastheboardadequatelyaddressedashareholderresolutionsupportedbyamajorityvote?(Q99)› Directorsshouldberesponsivetothecompany’sowners,particularlyinregardtoshareholderproposals
thatreceiveamajorityofthevotescast.› QualityScorewillconsiderwhethermajoritysupportforshareholderproposalswasevidenced,and,ifso,
whethertheboardhasadequatelyaddressedit.
Factorsthatwillbeconsideredare:
› Disclosedoutreacheffortsbytheboardtoshareholdersinthewakeofthevote;› Rationaleprovidedintheproxystatementforthelevelofimplementation;› Thesubjectmatteroftheproposal;› Thelevelofsupportforandoppositiontotheresolutioninpastmeetings;› Actionstakenbytheboardinresponsetothemajorityvoteanditsengagementwithshareholders;› Thecontinuationoftheunderlyingissueasavotingitemontheballot(aseithershareholderor
managementproposals);and› Otherfactorsasappropriate.
› Ingeneral,ISS’determinationofsufficientboardresponsewillbebasedondisclosureintheproxyforthe
annualmeetingafterthemajorityvotewasreceived.
MarketApplicability:U.S.
![Page 37: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/37.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 37of159©2016ISS|InstitutionalShareholderServices
Hastheboardadequatelyrespondedtolowsupportforamanagementproposal?(Q350)› Certainmanagement-sponsoredballotitemsmaynotbebindingonthecompany,neverthelessitisstill
importantthatcompanieslistentotheirshareholdersonthesevotesandrespondaccordingly.Theseitemsincludedirectorelections,theadvisoryvoteonexecutivecompensation,andthefrequencyofsayonpay.
› Lowsupportfordirectorelectionsisconsideredlessthan50%ofthevotescast.ISSwillexaminewhetherthecompanyadequatelyrespondedtotheunderlyingissuescausingthelowsupportforthenominees.
› Fortheadvisoryvoteonexecutivecompensation(say-on-pay),lessthan70%ofthevotescastisconsideredlowsupport.Thecompany’sdisclosureofitsshareholderoutreachtodeterminethereasonsforthelowsupport,andtheactionstakentoaddresstheissues,arekeyinthisdetermination.
› Adoptionofasayonpayfrequencythatreceivedlowersupportthanthefrequencypreferredbyamajorityorpluralityofshareholdersisexaminedtakingintoaccounttherationaleprovidedbythecompanyforitsadoption,ownershipstructure,andanyhistoryofcompensationconcernsatthecompany.
MarketApplicability:U.S.
HasISS'reviewfoundthattheboardofdirectorshastakenunilateralactionthatmateriallyreducesshareholderrightsorthecompanyhashadothergovernancefailures?(Q345)
› Investorsindicatelittletoleranceforunilateralboardroomadoptionofbylawamendmentsthatdiminishshareholderrights.FactorstakingintoconsiderationintheISSreviewincludetherationale,disclosure,levelofimpairment,trackrecord,andothergovernanceconcerns.
› Unilateralbylaw/charteramendmentsthatareconsideredmaterialinclude,butarenotlimitedto:diminishingshareholderrightstocallaspecialmeeting/actbywrittenconsent,classifyingtheboard,increasingauthorizedcapital,andloweringquorumrequirements,withoutshareholderapproval.
› Adversecharterandbylawprovisionsandclassstructureadoptedbynewlypubliccompaniesarealsosubjecttothisscrutiny.
› Governancefailuresthatareconsideredmaterialinclude,butarenotlimitedto:materialfailuresofgovernance,stewardship,riskoversightorfiduciaryresponsibilitiesatthecompany;failuretoreplacemanagementasappropriate;oregregiousactionsrelatedtoadirector’sserviceonotherboardsthatraisesubstantialdoubtabouthisorherabilitytoeffectivelyoverseemanagementandservethebestinterestsofshareholdersatanycompany.
› Themostcommoncategoriesofgovernancefailuresareexcessivepledgingofsharesandfailuretoopt-outofstatelawsrequiringaclassifiedboard(IndianaandIowa.)
MarketApplicability:U.S.
![Page 38: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/38.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 38of159©2016ISS|InstitutionalShareholderServices
Compensation/RemunerationPillar
PayforPerformance
IsthereacaponCEOannualbonus?(Q114)› BestpracticessuggestcompaniesdisclosebonuscapsforCEOsthataretiedtoafixedand/ordisclosedvalue
suchasbasesalary.› QualityScorewillconsiderthetypeofcap–ifany–isappliedtotheannualbonusgrantedtotheCEO.
MarketApplicability:W.Europe,Germanic,Anglo,Nordic,S.Europe,Australasia
Isthereacaponexecutives'annualbonus?(Q115)› Bestpracticessuggestcompaniesdisclosebonuscapsforexecutivesthataretiedtoafixedand/ordisclosed
valuesuchasbasesalary.› QualityScorewillconsiderthetypeofcap–ifany–isappliedtotheannualbonusgrantedtoexecutives
otherthantheCEO.
MarketApplicability:W.Europe,Germanic,Anglo,Nordic,S.Europe,Australasia
WhatpercentageoftheannualbonusfortheCEOisorcanbedeferred?(Q116)› Deferredcompensationisusedbycompaniestoreducelong-termriskandbetteralignexecutive
compensationwithcompanyperformanceoverthelongterm.Holdbacksordeferralsoncompensationarerecommendedbestpracticeinmanymarkets,particularlyinthewakeofthefinancialcrisisandthesharpenedfocusontyingpaytolong-termcompanyperformance.
› QualityScorewillconsiderwhetheraportionoftheannualbonusgrantedtotheCEOisorcanbedeferred.› ForAustralasiaandAngloitwillbetakenintoaccountwhetherornottheCEOisasignificantshareholder
(representative)orwhetherornotshareholderguidelineshavebeenmet.
MarketApplicability:Canada,W.Europe,Germanic,Anglo,S.Europe,Australasia
Whatpercentageoftheannualbonusforexecutivesisorcanbedeferred?(Q117)› Deferredcompensationisusedbycompaniestoreducelong-termriskandbetteralignexecutive
compensationwithcompanyperformanceoverthelongterm.Holdbacksordeferralsoncompensationare
![Page 39: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/39.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 39of159©2016ISS|InstitutionalShareholderServices
recommendedbestpracticeinmanymarkets,particularlyinthewakeofthefinancialcrisisandthesharpenedfocusontyingpaytolong-termcompanyperformance.
› QualityScorewillconsiderwhetheraportionoftheannualbonusgrantedtoexecutives,otherthantheCEO,isorcanbedeferred.
› ForAustralasiaandAngloitwillbetakenintoaccountwhetherornototherexecutivesaresignificantshareholder(s)(representatives)orwhetherornotshareholderguidelineshavebeenmet.
MarketApplicability:W.Europe,Germanic,Anglo,S.Europe,Australasia
Whatisthedegreeofalignmentbetweenthecompany'scumulative3-yearpaypercentilerank,relativetopeers,andits3-yearcumulativeTSRrank,relativetopeers?(Q226)
› TheprimaryfactorsidentifiedinthePayforPerformancesectionarethequantitativemeasuresthatareorhavebeenincorporatedinISS’evaluationofexecutivecompensationforproxyanalysestoassesscompensation-relatedriskindicators.
› Thismeasureaddressesthequestion:IsthepayopportunitydeliveredtotheCEOcommensuratewiththeperformanceachievedbyshareholders,relativetoacomparablegroupofcompanies,overathree-yearperiod?Thisrelativemeasurecomparesthepercentileranksofacompany’sCEOpayandTSRperformance,relativetoanindustry-and-sizederivedcomparisongroup,overathree-yearperiod.Thismeasurerangesfrom-100(representinghighpayforlowperformance)to100(representinglowpayforhighperformance),withamedianofapproximately0.
› Thisfactorhasazero-weightimpactonthescoringmodelandisincludedforinformationalpurposesonly.
MarketApplicability:U.S.,Canada
Whatisthedegreeofalignmentbetweenthecompany'scumulativeone-yearpaypercentilerank,relativetopeers,anditsone-yearcumulativeTSRrank,relativetopeers?(Q227)
› Thismeasureaddressesthequestion:IsthepayopportunitydeliveredtotheCEOcommensuratewiththeperformanceachievedbyshareholders,relativetoacomparablegroupofcompanies,overaone-yearperiod?Thisrelativemeasurecomparesthepercentileranksofacompany’sCEOpayandTSRperformance,relativetoanindustry-and-sizederivedcomparisongroup,overaone-yearperiod.
› Thisfactorhasazero-weightimpactonthescoringmodelandisincludedforinformationalpurposesonly.
MarketApplicability:U.S.,Canada
WhatisthesizeoftheCEO'sone-yeartotalpay,asamultipleofthemediantotalpayforcompanypeers?(Q228)
› Thisrelativemeasureexpressestheprioryear’sCEOpayasamultipleofthemedianpayofitsISS-determinedcomparisongroupforthesameperiod.Calculatingthismeasureisstraightforward:the
![Page 40: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/40.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 40of159©2016ISS|InstitutionalShareholderServices
company’sone-yearCEOpayisdividedbythemedianpayforthecomparisongroup.Thismeasurerangesgenerallyfrom0(CEOhasnopay)to25timesmedian.ThemediancompanypaiditsCEOclosetoonetimesthemedianofitspeergroup.
MarketApplicability:U.S.,Canada,W.Europe,Germanic,Anglo,S.Europe,Nordic
Whatisthedegreeofalignmentbetweenthecompany'sTSRandchangeinCEOpayoverthepastfiveyears?(Q229)
› ThisabsolutemeasurecomparesthetrendsoftheCEO’sannualpayandthevalueofaninvestmentinthecompanyoverthepriorfive-yearperiod.Themeasureiscalculatedasthedifferencebetweentheslopesofweightedlinearregressionsforpayandforshareholderreturnsoverafive-yearperiod.ThisdifferenceindicatesthedegreetowhichCEOpayhaschangedmoreorlessrapidlythanshareholderreturnsoverthatperiod.
› Thismeasurerangesfromapproximately-100%toapproximately+100%,negativescoresindicatingmisalignment.
MarketApplicability:U.S.,Canada,W.Europe,Germanic,Anglo,S.Europe,Nordic
WhatistheratiooftheCEO'stotalcompensationtothenexthighest-paidactiveexecutive?(Q232)› Internalpayparityratiosamongexecutivesmaybeanindicatorofpotentialsuccession-planningchallenges
withintheorganization,andmayalsosignalthatpaylevelsfortheCEOareexcessive.› QualityScorewillmeasuretheCEO’stotalcompensationasaratioofthenexthighest-paidactiveexecutive's
pay.
MarketApplicability:U.S.
Whatistheperformanceperiodforthelatestactivelong-termincentiveplan(ortheproposedplan)forexecutives?(Q233)
› Incentiveplanswherebylong-termincentivesaregrantedbasedonperformanceshouldhaveaperformanceperiodofatleast24to36monthsinordertocomplywiththelong-termnatureofsuchaplan.
MarketApplicability:W.Europe,Anglo,S.Europe,Australasia,Africa
Whatisthedegreeofalignmentbetweenthecompany'sannualizedthree-yearpaypercentilerank,relativetopeers,anditsthree-yearannualizedTSRrank,relativetopeers?(Q329)
![Page 41: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/41.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 41of159©2016ISS|InstitutionalShareholderServices
ISSannuallyconductsapay-for-performanceanalysistoidentifystrongorsatisfactoryalignmentbetweenpayandperformanceoverasustainedperiod.
Marketapplicability:U.S.andCanada,W.Europe,Germanic,Anglo,S.Europe,Nordic
Non-PerformanceBasedPay
AreanyoftheNEOseligibleformultiyearguaranteedbonuses?(Q156)› MultiyearbonusguaranteesareconsideredproblematicunderISS’ProblematicPayPracticespolicyand
severthepay-for-performancelinkage.
MarketApplicability:U.S.,Canada
Doesthecompanyprovideloanstoexecutives?(Q154)› Intheapplicablemarkets,ISSrecommendsthatloansbemadetoemployeesonlyaspartofabroad-based,
company-wideplantoencourageownershipratherthanbeinggivenonlytoexecutivedirectors.ISSalsocallsforloanswithinterestsetatmarketratestobepaidbackinfulloverareasonablelengthoftime.
› QualityScorewillconsiderwhetherthecompanyhasmadeloanstoanyofitsexecutivesandwhethertheseloansaremadeinthecourseofnormalbusinessactivities.Theloansprovidedtothecompany’sexecutiveofficerswouldaidtheminpurchasingsharesofthecompany.Thisisusuallygivenwithout,orataverylowinterestrate.
MarketApplicability:Canada,W.Europe,Germanic,Anglo,S.Europe,Australasia,Africa,Russia
Ispartofthebonusgrantedortobegrantedguaranteed?(Q118)› Guaranteedbonusestoseniorexecutivesareaproblematicpaypracticebecauseitcouldresultin
disconnectbetweenpayandperformanceandunderminestheincentivizingnatureofsuchawards.
MarketApplicability:Canada,W.Europe,Germanic,Anglo,S.Europe,Australasia,Africa
Didthecompanygrantaone-offrewardtoanyofitsexecutives?(Q159)› One-offrewardsarediscretionarygrantsforexecutivesgrantedforarangeofreasonssuchastransactions,
newcontracts,etc.,oftenoutsidethescopeoftheremunerationpolicy,andnotalwaystiedtoperformance(exceptiftheyareconditionaltoperformanceconditions).
![Page 42: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/42.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 42of159©2016ISS|InstitutionalShareholderServices
› QualityScorewillconsiderwhetherone-offgrantswererewarded,and,ifso,whetherperformanceconditionswereattached,orifnoinformationisgiven.
MarketApplicability:S.Europe,Australasia,Africa
WhatistheratiooftheCEO'snon-performance-basedcompensation(AllOtherCompensation)toBaseSalary?(Q237)
› Highlevelsofaggregateperksandotherpayments,suchaspayments-in-lieuofperks,areaggregatedintheAllOtherCompensationamount.Ifthesearegreaterthanbasesalaryitmayreflectasignificantadditionalcompensationstream.
› QualityScorewillconsidertheratioofallothercompensation–typicallyincorporatingperksandothernon-performance-basedpayments–tobasesalary,todeterminewhethersignificantadditionalcompensationisbeingdeliveredthroughthisconduit.
MarketApplicability:U.S.
UseofEquity
Doesthecompanyhaveanequity-basedcompensationplan?(Q322)› QualityScorewillconsiderwhetherthecompanyhasestablishedanequity-basedcompensationplan.› InJapan,restrictedsharesandotherequity-basedcompensationsaregenerallycategorizedasperformance-
basedcompensation,whichiscoveredunderQ375.ThisquestionwillapplyonlytostockoptionplansinJapanasdisclosedincorporategovernancereports.
Marketapplicability:AsiaPacific,LatinAmerica,Russia,SouthKorea,India,Japan
Doesthecompanyhaveaperformance-basedpayorotherincentivesforitsexecutives?(Q375)› Boardofdirectorsneedstocreateincentivesthataligntheinterestsofexecutiveswiththoseof
shareholderstomakeitinexecutives’bestinteresttodowhat’sintheshareholders’bestinterests.› Performance-basedpay,thoughgaininginpopularity,isnotcommoninJapan,andfixedsalaryandannual
bonusmakeupmostofexecutivepay.Presenceofaperformance-basedpayorotherincentiveplansforexecutivescouldnotonlyprovideincentivesforexecutivestoenhanceshareholdervaluebutalsocouldbeseenasanindicationofpositiveactionstakenbytheboard.
› Informationregardingpresenceofperformance-basedincentivesiscollectedfromcorporategovernancereports.
Marketapplicability:Japan
![Page 43: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/43.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 43of159©2016ISS|InstitutionalShareholderServices
Dothecompany'sactiveequityplansprohibitsharerecyclingforoptions/SARS?(Q129)› Companieswithliberalsharecountingprovisionsreceivemoreutilizationfortheirsharesthanthose
withouttheprovision.Liberaluseoccurswhenoneormoreofthefollowingoccur(i)tenderedsharesinpaymentofanoptionarerecycled,(ii)shareswithheldfortaxesareaddedbackin,(iii)actualstock-settledSARs/sharesdeliveredaretheonlyonescountedagainsttheplanreserve.
› QualityScorewillconsiderwhetherrecyclingofstockoptionsorstockappreciationrightsisprohibitedintheactiveequityplans,orifitisnotapplicabletothecompany.Sourcingoftherelevantinformationwillbefromplandocumentsandwillonlyconsideremployeeplans(excludingplansforoutsidedirectors).
MarketApplicability:U.S.
Dothecompany'sactiveequityplansprohibitoption/SARrepricing?(Q138)› Thisquestionaddresseswhetherthecompensationplandocumentsexpresslyprohibitoptionrepricing
withoutpriorshareholderapproval.Optionrepricingoccurswhencompaniesadjustoutstandingstockoptionstolowertheexerciseprice.Optionexchangeoccurswhenthecompanycancelsunderwateroptionsandre-grantsnewoptions.Optionreplacementsmaybeaccomplishedthroughoptionswaps,optionre-grantsorcash.IntheCanadianmarket,extendingthetermofoutstandingoptionsisalsoconsideredoptionrepricing.
› QualityScorewillconsiderwhetherrepricingofstockoptionsorstockappreciationrightsisprohibitedinthecompany'sactiveequityplans,orifitisnotapplicabletothecompany.Sourcingoftherelevantinformationwillbefromplandocumentsandonlyconsidersemployeeequityplans,notoutsidedirectoronlyplans.
MarketApplicability:U.S.,Canada
Dothecompany'sactiveequityplansprohibitoption/SARcashbuyouts?(Q238)› NASDAQandNewYorkStockExchangerulesstatethatrepricingsaresubjecttoshareholderapprovalunless
the(shareholderapproved)planspecificallystatesotherwise.However,therulesonbothexchangesleavethedooropenforcompaniestoexchangeunderwaterstockoptionsforacashsettlement,withoutseekingshareholderapprovaloftheexchange.
› QualityScorewillconsiderwhethercashbuyoutsofstockoptionsorstockappreciationrightsareprohibitedinthecompany'sactiveequityplansorifitisnotapplicabletothecompany.Sourcingoftherelevantinformationwillbefromplandocumentsandwillonlyconsideremployeeplans(excludingplansforoutsidedirectors).
MarketApplicability:U.S.,Canada
Dothecompany'sactiveequityplanshaveanevergreenprovision?(Q239)
![Page 44: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/44.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 44of159©2016ISS|InstitutionalShareholderServices
› Bestpracticedictatesthatshareholdersapproveeachreplenishmentofsharesavailableforanequitycompensationplan.
› GovernanceQualityScorewillconsiderwhetherthecompany'sactiveequityplanshaveanevergreenprovision,bywhichsharesavailablefortheplanareautomaticallyreplenishedwithoutashareholdervote.
MarketApplicability:U.S.
Dothecompany'sactiveequityplanshavealiberaldefinitionofchange-in-control?(Q240)› Whilechange-in-controlagreementshavetheirplaceinordertoinsulateexecutivesfromlossof
employmentinconjunctionwithachangeincontrol,aliberaldefinitionofchange-in-control(e.g.,atriggerlinkedtoshareholderapprovalofatransaction,ratherthanitsconsummation,oranunapprovedchangeinlessthanasubstantialproportionoftheboard,oracquisitionofalowpercentageofoutstandingcommonstock,suchas15percent)mayresultinawardvestingandpayoutevenifanactualchangeincontroldoesnotoccur.Suchadefinitionmayalsodiscourageoutsidebidsthatcouldbenefitshareholders.
› QualityScorewillconsiderwhetherthecompany'sactiveequityplanshavealiberalchange-in-controldefinition,underwhichexecutivesmaybeentitledtoreceiveacceleratedvestingofequitygrantswithouttheoccurrenceofanactualchangeincontrol.
MarketApplicability:U.S.
Hasthecompanyrepricedoptionsorexchangedthemforshares,optionsorcashwithoutshareholderapproval?(Q139)
› PerISS’policyandcompensationbestpracticesespousedbyinvestors,repricingsshouldbeputtoshareholdervote.
› QualityScorewillconsiderwhethershareholderapprovalwasobtainedintheeventofanyrepricingorexchangesinthelastthreeyears.DespiteanyprovisionsinthePlanallowingrepricing,thisfactoraddressesactualrepricingactivitywithoutpriorshareholderapproval.
MarketApplicability:U.S.,Canada
Whatisthetotalproportionofalloutstandingequitybasedplanstowardthesharecapital?(Q127)› Incentiveplanswherestockoptionsperformancesharesaregrantedtoexecutivesandemployeeswilllead
toadilutionofshareholderinterests.Giventheincentivizingnatureofsuchinstruments,shareholdersgenerallyacceptsuchdilution,providedthedilutionislimited.
› QualityScorewillconsiderthetotalproportionofalloutstandingequitybasedincentivesatcompanylevel.
![Page 45: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/45.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 45of159©2016ISS|InstitutionalShareholderServices
MarketApplicability:W.Europe,Germanic,Anglo,Nordic,S.Europe,AsiaPacific,Australasia,LatinAmerica,Africa,Russia,SouthKorea,India
Isthereamaximumlevelofdilutionperyear?(Q128)› Inlinewiththequestionabove,dilutionduetolong-termincentivescanbecappedonanannualbasis,
whichisconsideredgoodpractice.› QualityScorewillconsiderwhetherthecompanyhascappedthelevelofdilutiononayearlybasis.› Thisfactorhasazero-weightimpactonthescoringmodelforcompaniesintheGermanicregionandis
includedforinformationalpurposesonly.
MarketApplicability:W.Europe,Germanic,Anglo,AsiaPacific
Doesthecompany'sequitygrantrateexceedthemean+1standarddeviationofitsindustry/indexpeers?(Q130)
› Investorsfavorequitygrantsthataligntheinterestsofexecutivesandemployeeswithshareholderswithoutcreatingexcessivedilutioninsharevalue.QualityScorewillevaluateandconsideracompany’sburnrate,whichreferstotheaverageannualrateatwhichstockoptionsandstockawardsaregranted(sometimesreferredtoasshareutilization)relativetotheratethatisonestandarddeviationhigherthanthemeanofthecompany’sapplicableindexandindustry.Formoredetails,seetheISSPolicyGateway.
MarketApplicability:U.S.
Whatarethepricingconditionsforstockoptionsgrantedtoexecutives?(Q136)› Discountedoptionsrepresentanimmediatefinancialgaintothebeneficiaryequaltothemarketpriceminus
thelevelofthediscount.Investorspreferthatoptionsbepricedatnolessthan100percentoftheshares'fairmarketvalue.
› QualityScorewillconsiderpricinganddisclosureofpricinglevels,suchaswhetheradiscountisgiven,thevalueofthediscount,whetherthepriceissetatmarketpriceoratapremium,andifthatpremiumisdisclosed,orifnoinformationisgiven.ForcompaniesinAustraliaandNewZealand,thisisthedifferencebetweenthestrikeprice(exerciseprice)andmarketpriceonthedateofgrant.
MarketApplicability:W.Europe,Germanic,Anglo,Nordic,S.Europe,AsiaPacific,Australasia,LatinAmerica,Africa,SouthKorea,India
EquityRiskMitigation
Doesthecompanydiscloseaclawbackormalusprovision?(Q155)
![Page 46: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/46.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 46of159©2016ISS|InstitutionalShareholderServices
› Thepresenceofclawbackprovisionsmayhelpensurethatrealpayisnotgivenforfictitiousperformance.Clawbacksrefertotheabilityforthecompanytorecoupbonusesorotherincentivecompensationintheeventofafraud,restatementofresults,errors/omissionsorothereventsasmaybedetermined.
› FortheCanadianmarket,thesecouldincluderecoupmentofequityawards(unvestedorvested)aswellasannualincentivebonuses.ISSwillconsideronlypubliclydisclosedclawbackprovisionsthatarealreadyinplace.
› FortheU.S.market,ISSdefinesclawbackasthecompany’sabilitytorecoupperformance-basedawards(includinganycash-basedincentiveawards,ataminimum)intheeventoffraud,restatementofresults,errors/omissionsorotheractivitiesrelatedabove.BestpracticeistoincorporateacompanypolicywhichgoesbeyondtherequirementofSection304oftheSarbanes-OxleyAct.
› ForAustraliaandNewZealandmarkets,thisQualityScoreitemmeasureswhetherthecompanyhasaprovisionstatingthatpaidawards,eitherincashorstock,maybereclaimedorwithdrawn(“clawedback”)incertaincircumstances,suchasfinancialrestatementorexecutivemisconduct.Thisprovisionmaybefoundinthecompany’sshort-termorlong-termincentiveplans.
MarketApplicability:U.S.,Canada,W.Europe,Germanic,Anglo,Nordic,S.Europe,Australasia
Whataretheminimumvestingperiodsmandatedintheplandocumentsforexecutives'stockoptionsorSARSintheequityplans(adopted/amendedinthelastthreeyears)?(Q131)
› Aminimumvestingperiodensuresemployeeretentionandalignmentwithshareholderinterest.› Bestpracticedictatesthatcompaniesthatdisclosesuchinformationunderaplandocumentorfulltextof
theplanprovidemoretransparencyonthevestingrequirementsofstockoptionstobegrantedunderaspecificequityplan.
› ForUSmarket,thisquestionisapplicableforequityincentiveplansthatgrantoptionsorSARsthatwereproposedforshareholderapprovalorfromthemostrecentlyconcludedannualgeneralmeetingofthecompany.Actualvestingtermsofgrantsfoundundertheawardagreementsandcompensationdiscussionandanalysissectionoftheproxystatementarenotconsidered.QualityScoreconsiderstheminimumvestingrequirement,whichisspecifiedinashareholderapprovedequityplan.Incasethecompanyhasmultipleequityplansthatareactive,QualityScorewillconsidertheplanwiththeshortestvestingrequirement.VestingforoptionsandSARsmustapplytoallparticipantsforcredittobegiven.
› Fornon-USmarkets:thisquestionisapplicableforequityincentiveplansthatgrantoptionsorSARsthatwereproposedforshareholderapprovaloramendmentwithinthepastthreeyearsfromthemostrecentlyconcludedannualgeneralmeetingofthecompany.Actualvestingtermsofgrantsfoundundertheawardagreementsandcompensationdiscussionandanalysissectionoftheproxystatementarenotconsidered.QualityScoreconsiderstheminimumvestingrequirement,whichisspecifiedinashareholderapprovedequityplan.Incasethecompanyamended/adoptedmultipleplansinthepastthreeyears,QualityScorewillconsidertheplanwiththeshortestvestingrequirement.
› QualityScorewillconsidertheminimumvestingperiodintermsofnumberofmonthsbeforeanyoptions/SARswouldvest,orifnoinformationisgiven.Sourcingoftherelevantinformationwillbefromplandocumentsratherthanindividualgrantagreementsortheproxystatement.
![Page 47: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/47.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 47of159©2016ISS|InstitutionalShareholderServices
MarketApplicability:AllregionsexceptJapan
Whataretheminimumvestingperiodsmandatedintheplandocumentsforexecutives'restrictedstock(adopted/amendedinthelastthreeyears)?(Q132)
› Aminimumvestingperiodensuresemployeeretentionandalignmentwithshareholderinterest.› Bestpracticedictatesthatcompaniesthatdisclosesuchinformationundertheplandocumentorfulltextof
theplanprovidemoretransparencyonthevestingrequirementsoffullvalueawardstobegrantedunderaspecificequityplan.
› ForUSmarket,thisquestionisapplicableforequityincentiveplansthatgrantstockawardsthatwereproposedforshareholderapprovaloramendmentfromthemostrecentlyconcludedannualgeneralmeetingofthecompany.Actualvestingtermsofestablishedgrantsundertheawardagreementsandcompensationdiscussionandanalysissectionoftheproxystatementarenotconsidered.Onlytheminimumvestingrequirementwhichisspecifiedinashareholderapprovedequityplanwillbecounted.Incasethecompanyhasmultipleequityplansthatareactive,QualityScorewillconsidertheplanwiththeshortestvestingrequirement.Vestingforfull-valueawardsmustapplytoallparticipantsforcredittobegiven.
› Fornon-USmarket,thisquestionisapplicableforequityincentiveplansthatgrantstockawardsthatwereproposedforshareholderapprovaloramendmentwithinthepastthreeyearsfromthemostrecentlyconcludedannualgeneralmeetingofthecompany.Actualvestingtermsofestablishedgrantsundertheawardagreementsandcompensationdiscussionandanalysissectionoftheproxystatementarenotconsidered.Onlytheminimumvestingrequirementwhichisspecifiedinashareholderapprovedequityplanwillbecounted.Incasethecompanyamended/adoptedmultipleplansinthepastthreeyears,ISSwillconsidertheplanwiththeshortestvestingrequirement.
› QualityScorewillconsiderthevestingperiodintermsofnumberofmonths,or,ifthecompanydoesnotgrantrestrictedstockorthequestionisnotapplicable.Sourcingoftherelevantinformationwillbefromplandocumentsratherthanindividualagreementsortheproxystatement.
MarketApplicability:U.S.,Canada,W.Europe,Germanic,Anglo,Nordic,S.Europe,AsiaPacific,Australasia,LatinAmerica,Africa,Russia,India
Whatarethevestingperiodsmandatedintheplandocuments,adopted/amendedinthelastthreeyears,forexecutives'otherlong-termplan?(Q133)
› Aminimumvestingperiodensuresemployeeretentionandalignmentwithshareholderinterest.› QualityScorewillconsiderthevestingperiodintermsofnumberofmonths,or,ifthecompanydoesnot
grantotherlong-termawardsorthequestionisnotapplicable.Sourcingoftherelevantinformationwillbefromplandocumentsortheproxystatement.
MarketApplicability:Canada,W.Europe,Germanic,Anglo,Nordic,S.Europe,AsiaPacific,Australasia,LatinAmerica,Africa,Russia
![Page 48: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/48.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 48of159©2016ISS|InstitutionalShareholderServices
Whatarethevestingperiodsmandatedintheplandocuments,adopted/amendedinthelastthreeyears,forexecutives'Matchingplan?(Q323)
› QualityScorewillconsiderthevestingperiodintermsofnumberofmonths,orifthecompanydoesnotmatchsharesoroptionsorthequestionisnotapplicable.Sourcingoftherelevantinformationwillbefromplandocumentsortheproxystatement.Aminimumvestingperiodensuresemployeeretentionandalignmentwithshareholderinterest.
MarketApplicability:W.Europe
Whatarethevestingperiodsmandatedintheplandocuments,adopted/amendedinthelastthreeyears,forexecutives'deferralplan?(Q324)
› QualityScorewillconsiderthevestingperiodintermsofnumberofmonths,orifthecompanydoesnotdeferthereceiptofsharesoroptionsorthequestionisnotapplicable.Sourcingoftherelevantinformationwillbefromplandocumentsortheproxystatement.Aminimumvestingperiodensuresemployeeretentionandalignmentwithshareholderinterest.
MarketApplicability:W.Europe
Whatistheholdingperiodforstockoptions(forexecutives)?(Q134)› Executivesshouldholdameaningfulportionofthesharesacquiredafterexercise.Ameaningfulportion
wouldgenerallybeviewedas50percentormoreofnetshares(afterpayingtaxliabilities)heldor25percentofgrossshares.
› Researchpointstosuperiorfinancialperformancewhenofficeranddirectorstockownershipfallswithinacertainrange.Thesearerequirementstoretainownershipofaportionofsharesacquiredaftertheexercisingofanoption,oncespecifiedstockownershipguidelineshavebeenmetbytheexecutiveandhe/sheisabletoexercisetheoptions.Itisgenerallynetoftaxes,andmaybeofferedasapercentageofsharesacquired.Theguidelinescanapplytostockawardsaswell.Theholdingrequirementsofthestockcanbeforasetnumberofyearsfollowingtheexerciseoftheoptionorthroughthetermoftheexecutive’semploymentorretirement,oraspecifiedlengthoftimefollowingdeparturefromcompany(holduntilafterretirement).
› QualityScorewillconsidertherequiredpost-exerciseholdingperiod,ifany,basedonthenumberofmonthsoriftheperiodextendstoorthroughretirement,orifnooptionsaregranted,ornoinformationisgivenintheproxystatement.Ameaningfulportionofnetsharesheldwouldgenerallybeviewedas50percentormore,andwhenevaluatingthisquestionforU.S.companies,QualityScorewillconsiderholdingperiodsstipulatedfornamedexecutiveofficers.
![Page 49: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/49.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 49of159©2016ISS|InstitutionalShareholderServices
MarketApplicability:U.S.,Canada,W.Europe,Germanic,Anglo,S.Europe,AsiaPacific,Australasia,LatinAmerica
Whatistheholdingperiodforrestrictedshares(forexecutives)?(Q135)› Seeabove.
MarketApplicability:U.S.,W.Europe,Germanic,Anglo,S.Europe,AsiaPacific,Australasia,LatinAmerica
Whatproportionofthesalaryissubjecttostockownershiprequirements/guidelinesfortheCEO?(Q145)
› Bestpracticesuggeststhatexecutivesattainsubstantiveshareownershipbyacertaintimeafterappointmenttobetteraligntheirinterestswiththoseofshareholders.
› QualityScorewillconsiderthepercentage/multipleofsalarysubjecttostockownershiprequirements,orifnoinformationisdisclosed.CEOstockownershipguidelinesrequireorencourageexecutivestoownacertainamountofstockwithinaperiodoftime.Theseguidelinesaregenerallydisclosedasamultipleofbasesalary,numberofshares,oradollarvalue.ThisfactorrelatestothemultipleoftheCEO'scashfixedremunerationorbasesalaryasabasisforthestockownershipguidelines.
› FortheAustralianandNewZealandMarkets,thismayalsobedisclosedamultipleofcashfixedremuneration.
› FortheU.S.,multiplesoflessthanthreetimessalaryraisethelevelofgovernanceriskconcern.Forothermarkets,multiplesoflessthanonetimesalaryornondisclosurewouldraisegovernanceriskconcern.
MarketApplicability:U.S.,Canada,W.Europe,Anglo,S.Europe,Australasia
Whatproportionofthesalaryissubjecttostockownershiprequirements/guidelinesfortheotherexecutives?(Q146)
› Bestpracticesuggeststhatexecutivesattainsubstantiveshareownershipbyacertaintimeafterappointmenttobetteraligntheirinterestswiththoseofshareholders.
› GovernanceQualityScorewillconsiderthepercentage/multipleofsalarysubjecttostockownershiprequirements,orifnoinformationisdisclosed.FortheAustraliaandNewZealandmarkets,executivestockownershipguidelinesrequireorencourageexecutivestoownacertainamountofstockwithinaperiodoftime.Theseguidelinesaregenerallydisclosedasamultipleofcashfixedremuneration,basesalary,numberofshares,oradollarvalue.Thisfactorrelatestothemultipleoftheotherexecutives’cashfixedremunerationorbasesalaryasabasisforthestockownershipguidelines.
MarketApplicability:W.Europe,Anglo,S.Europe,Australasia
![Page 50: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/50.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 50of159©2016ISS|InstitutionalShareholderServices
Non-ExecutivePay
Doesthecompanyprovideloanstodirectors?(Q104)› Anyloansmadetodirectorsshouldbeaspartofabroad-based,company-wideplanavailabletoall
employeestoencourageownershipratherthanbeinggivenonlytonon-executivedirectors.Loansshouldbesetatmarketinterestrates,andrequirefullrepaymentoverareasonablelengthoftime.
› QualityScorewillconsiderwhetherthecompanyhasgrantedloanstoitsnon-executivedirectorsandwhethersuchloansaregrantedinthecourseofnormalbusinessactivities.
MarketApplicability:Canada,S.Europe,Russia
Dodirectorsparticipateinequitybasedplans?(Q109)› Bestpracticesuggestsnon-executivedirectorsnottoparticipateinequity-basedplansasthisputsthemat
thesamelevelofexecutiveswhoshouldbemonitoredandremuneratedbynon-executivedirectors.Deferredshareunits(DSUs)receivedin-lieuofcashcompensationarenotconsideredforthisquestion;however,DSUsoranyotherequity-basedcompensationgiventodirectorsinadditiontoretainerareincluded.
› QualityScorewillconsiderwhethernon-executivedirectorswillparticipateinequitybasedplans.
MarketApplicability:Canada,W.Europe,Germanic,Nordic,S.Europe,Russia
Dodirectorsparticipateinperformance-relatedremuneration?(Q110)› Bestpracticerequiresnon-executivedirectorsnottoparticipateinperformancebasedremunerationasthis
putsthematthesamelevelofexecutiveswhoshouldbemonitoredandremuneratedbynon-executivedirectors.
› QualityScorewillconsiderwhethernon-executivedirectorsparticipateinperformancerelatedremunerationschemes.
MarketApplicability:W.Europe,Germanic,Anglo,S.Europe,Australasia,LatinAmerica,Africa,Russia,India,AsiaPacific
Whatpartofthetotalremunerationreceivedbydirectorsisoptions-based?(Q107)› Bestpracticesuggeststhatdirectorsshouldnotreceiveoptionsasremunerationbutinsteadshouldreceive
equityasaretainerorinlieuofcash.Theunderlyingrationaleisthatdirectors’independencecouldbecompromisedandtheirinterestsmorealignedwithmanagementthanwithshareholdersinsituationswheredirectorcompensationissimilartoexecutivecompensation.
![Page 51: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/51.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 51of159©2016ISS|InstitutionalShareholderServices
› QualityScorewillconsiderthepercentageofoptionsgrantedrelativetothetotalremunerationreceivedbynon-executivedirectorsifsuchinformationisdisclosed.
MarketApplicability:Canada
Aredirectorswhoareeligibletoreceivegrants/awardsundertheplanalsoinvolvedintheadministrationoftheplan?(Q325)
› QualityScorewillconsiderwhetherdirectorsreceivegrantsorawardsunderaplanwhichtheyareresponsiblethemselvesfortheadministrationof.Directorsreceivinggrantsunderaplanthattheyareresponsibleforadministeringpresentsaclearconflictofinterest.
Marketapplicability:AsiaPacific,LatinAmerica,India
CommunicationsandDisclosure
DoesthecompanydisclosetheremunerationpaidtotheboardinAGMproxyfilings?(Q341)› Thebestpracticeistodisclosetheaggregateremunerationpaidtotheboardmembersinthecompany's
proxyfilings.Mostcompaniesdonotdisclosesuchinformationintheproxymaterials.› QualityScorewillconsiderwhetherornotsuchdisclosurewasmadeintheproxyfilings.
MarketApplicability:SouthKorea
Doesthecompanydisclosedetailsofindividualexecutives’remuneration?(Q112)› Bestpracticesuggestscompaniestodisclosecompleteandindividualinformationonexecutives'
remuneration,especiallyfortheCEO.› QualityScorewillconsiderthelevelofdisclosureonremunerationgrantedtoexecutives,whether
informationisdisclosedperindividualandwhetherinformationcontainsbreakdownsofthevariousremunerationcomponents.
MarketApplicability:AsiaPacific,S.Europe,LatinAmerica,Russia,India,Japan
Doesthecompanyhaveapolicyonexecutiveremunerationandcomputationbasisforthepay?(Q376)› Executiveremunerationistypicallyamixtureofsalary,bonuses,sharesoforcalloptionsonthecompany
stock,benefits,andperquisites,ideallyconfiguredtotakeintoaccountgovernmentregulations,taxlaw,thedesiresoftheorganizationandtheexecutive,andrewardsforperformance.Corporateexecutive
![Page 52: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/52.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 52of159©2016ISS|InstitutionalShareholderServices
remunerationshouldbealignedwithlong-termgoalsandstrategiesandwithlong-termshareownerinterests.Remunerationshouldbestructuredtoachievelong-termstrategicandvalue-creationgoals.
› UntilrecentyearslittleattentionhadbeenpaidtoexecutiveremunerationandexecutivepaypolicyinJapanandmanystilllacksaframeworkforsettinganddecidingexecutivepay.Thisquestionwillconsiderwhetherthecompanyhasestablishedapolicyonexecutivepayasdisclosedinthecorproategovernancereport,butdoesexamimetherigorofsuchpolicy.
MarketApplicability:Japan
Doesthecompanydiscloseperformancemetricsfortheshorttermincentiveplan(forexecutives)?(Q113)
› Poorormissingdisclosureofthefinancialbasisforperformancemetricsmakeitdifficultforinvestorstojudgethequalityand/orrigorofthesemetrics.ISSlooksintoperformancemeasuresusedinawardingshort-termincentivesorannualbonusestoexecutives.Bestpracticeistodisclosethetargetperformancemetricsatleastonaretrospectivebasis.
› QualityScorewillconsidertheextentofdisclosureofspecificperformancecriteriaanddisclosedhurdleratesforshort-term,typicallyannual,cashincentiveplans.Bydefinition,theplanisone-yearorlessintheU.S.Theperformancemeasure(s)canbeanytypeofobjectivepre-determinedgoal,oftenfinancialinnature,suchasearningspershareorearningsbeforeinterest,tax,depreciation,andamortization.
MarketApplicability:U.S.,Canada,W.Europe,Germanic,Anglo,Nordic,S.Europe,AsiaPacific,Australasia,Africa,Russia
Whatisthelevelofdisclosureonperformancemeasuresforthelatestactiveorproposedlong-termincentiveplan?(Q246)
› Poorormissingdisclosureofthefinancialbasisforperformancemetricsmakeitdifficultforinvestorstojudgethequalityand/orrigorofthesemetrics.ISSwillevaluatelong-termequityandcashawardsgrantedinthemostrecentfiscalyearbasedonpre-determinedmetricsandtargetgoals.
› GovernanceQualityScorewillevaluateandconsiderwhetherperformanceconditionsforthelatestproposedlong-termincentiveplansaredisclosedandmeasuredbyincluding,forexample,targetscomparedwithpeergroupperformance,etc.Thisquestioncombinesseveralquestionsthatexamineddisclosureofperformancemeasuresfordifferentlong-termpayinstruments.
MarketApplicability:U.S.,Australasia,Russia
Doesthecompanydiscloseaperformancemeasureformatching?(Q121)
![Page 53: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/53.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 53of159©2016ISS|InstitutionalShareholderServices
› Poorormissingdisclosureofthefinancialbasisforperformancemetricsmakeitdifficultforinvestorstojudgethequalityand/orrigorofthesemetrics.
› QualityScorewillconsiderthelevelofdisclosureonperformancemeasuresformatchingplansifsuchincentiveshavebeengrantedtoexecutivesinthepastyear.
MarketApplicability:W.Europe,Germanic,Anglo,Nordic,S.Europe,Africa
Doesthecompanydiscloseaperformancemeasureforstockoptionsplans(forexecutives)?(Q122)› Poorormissingdisclosureofthefinancialbasisforperformancemetricsmakeitdifficultforinvestorsto
judgethequalityand/orrigorofthesemetrics.› QualityScorewillconsiderthelevelofdisclosureonperformancemeasuresforstockoptionplansifsuch
incentiveshavebeengrantedtoexecutivesinthepastyear.
MarketApplicability:Canada,W.Europe,Germanic,Anglo,Nordic,S.Europe,AsiaPacific,LatinAmerica,Africa,India
Doesthecompanydiscloseaperformancemeasureforrestrictedshareplans(forexecutives)?(Q123)› Poorormissingdisclosureofthefinancialbasisforperformancemetricsmakeitdifficultforinvestorsto
judgethequalityand/orrigorofthesemetrics.FortheCanadianmarket,fullvalueawardsarepartoftheexecutives'long-termincentive.Awardsgivenunderlong-termincentiveplansareeithertime-based,whicharecalledrestrictedshareunits(RSUs);orperformance-based,calledperformanceshareunits(PSUs);oracombinationofboth.Ifthecompanyhasbothplans,thePSUplansupersedestheRSUplan.ISSconsidersfullvalueawardswhichareeithergrantedfromthecompany'streasuryorpurchasedinopenmarket.
› QualityScorewillconsiderthelevelofdisclosureonperformancemeasuresforrestrictedshareplansifsuchincentiveshavebeengrantedtoexecutivesinthepastyear.
MarketApplicability:Canada,W.Europe,Germanic,Anglo,Nordic,S.Europe,AsiaPacific,LatinAmerica,Africa
Doesthecompanydiscloseaperformancemeasureforotherlong-termplans(forexecutives)?(Q125)› Poorormissingdisclosureofthefinancialbasisforperformancemetricsmakeitdifficultforinvestorsto
judgethequalityand/orrigorofthesemetrics.› QualityScorewillconsiderthelevelofdisclosureonperformancemeasuresforotherlong-termplansifsuch
incentiveshavebeengrantedtoexecutivesinthepastyear.
MarketApplicability:W.Europe,Germanic,Anglo,Nordic,S.Europe,AsiaPacific,LatinAmerica,Africa
![Page 54: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/54.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 54of159©2016ISS|InstitutionalShareholderServices
Doesthecompanyemployatleastonemetricthatcomparesitsperformancetoabenchmarkorpeergroup(relativeperformance)?(Q353)
QualityScorewillconsiderwhethercompanypre-establishedmetric,inanyshorttermorlongtermincentiveplan,issetrelative(meauredonrelativeterms)toanexternalgroup,suchasapeergroup,anindex,orcompetitors.
MarketApplicability:U.S.
Hasthecompanyvoluntarilyadoptedamanagementsay-on-payadvisoryvoteresolutionforthemostrecentannualmeetingorcommittedtoaresolutiongoingforward?(Q166)
› AstheMSOPresolutionisnotmandatoryinallmarkets,QualityScorewillconsiderwhetherthecompanyhasadoptedavoluntarysay-on-payadvisoryvoteformanagementatthelatestannualgeneralmeeting,orwhetherthecompanycommittedtosucharesolutiongoingforward.
MarketApplicability:Canada,W.Europe,SouthAfrica
DidthemostrecentSay-on-Payproposalreceivesignificantoppositionfromshareholders?(Q328)› QualityScorewillconsiderthelevelofshareholdersupportonthemostrecentSay-on-Payproposalatthe
lastannualmeetingwherethesayonpayproposalwasupforvote.U.S.companymeetingresultsarecomparedto70percentofvotescast,whileAustralasiancompanymeetingresultsarecomparedto75percent,whicharewhenISS’policiesinitiateareviewoftheBoard’sresponsivenesstothelowshareholdersupportfortheappliedmarkets.
› FromthedateofpublicationoftheISSproxyresearchreportuntilthemeetingresultsareavailable,thisquestionwillbependingandtheresultwillindicate“meetingresultsinprogress”forthisfactor.
Marketapplicability:U.S.
WhatisthelevelofdisclosureonCEOownershipguidelines?(Q250)› AsownershipguidelinesintheGermanregionarenotcommon,ISSwillonlyanalyzethelevelofdisclosure.› QualityScorewillconsiderthelevelofdisclosureonCEOownershipguidelines.
MarketApplicability:Germanic
Termination
Whatisthetriggerunderthechange-in-controlagreements?(Q148)
![Page 55: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/55.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 55of159©2016ISS|InstitutionalShareholderServices
› Asingletriggerrequiresonlyachangeincontrolandnosubsequentterminationofemploymentorsubstantialdimunitionofdutiesfortheexecutivetoreceivehis/herexitpaypackage.Amodifiedsingletriggerissimilar,butprovidesaspecificwindowperiodduringwhichtimetheexecutivecanleaveemploymentforanyreason.Inbothinstances,theexecutivecanunilaterallydecidewhethertocontinueemploymentandmaynotbesufficientlymotivatedtostaywiththecompanylongtermgiventheprospectofunconditionalpayment.Moreover,iftheboardofthenewcompanywishestoretaintheservicesoftheexecutive,theymaynegotiateanycontractundercircumstancesthatgivetheexecutiveconsiderableleverageinseekingretentionpaymentsoradditionalcompensation.Adoubletriggergenerallyrequiresanactualterminationofemploymentbythecompanyorbytheexecutiveforgoodreasonorasubstantialdiminutionofresponsibilitiesundertheexecutive'snewrole.
› QualityScorewillevaluateandconsiderthetypeoftriggeremployedinchange-in-controlagreements,andtheyearthechange-in-controlagreementwasenteredinto.
MarketApplicability:U.S.,Canada
Doequitybasedplansorlong-termcashplansvestcompletelyonchangeincontrol?(Q153)› Whilechange-in-controlagreementshavetheirplaceinordertoinsulateexecutivesfromlossof
employmentinconjunctionwithachangeincontrol,acceleratedvestingoftheCEOornexthighestpaidofficer'salloutstandingequitygrantstendstodisconnectpayfromperformanceandmayincentivizeexecutivestopursuetransactionsnotinthebestinterestsofshareholders.Bestpracticedictatesthatequitybasedplansvestintheeventofterminationofemploymentcombinedwithachangeofcontroltransaction(double-trigger).
› QualityScorewillconsidervestingtriggersfortheCEO’soutstandingequityawards.Thisfactorisspecificallyforthecompany'sCEO.IfthecompanyhasanewCEO,theprovisionsforhis/herequityremunerationwouldbecaptured.QualityScorewillconsidervestingtriggersforalloutstandingequityawardsoftheCEO.IfthecompanydisclosedmultipleeventsrelatedtothetreatmentofequityuponCIC,ISSwillconsiderthespecificeventapplicabletothehighestnumberofoutstandingequityawards.
› Thepossibleanswersforthisquestionare:Autoacceleratedvesting;Converted/Assumed;Acceleratedifnotassumed;Vestonlyupontermination;Fullboarddiscretion;Other;Informationonchange-of-controlprovisionscannotbedeterminedduetoinadequatedisclosure;andthecompanydoesnotissueequitybasedawards.
MarketApplicability:U.S.,Canada,Australasia,LatinAmerica
Intheeventofterminationofthecontractofexecutives,doestheequitybasedremunerationvest?(Q150)
› Acceleratedvestingofequitygrantsorevencontinuedvestingafterterminationofcontractsofexecutivestendstodisconnectpayfromperformance.
![Page 56: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/56.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 56of159©2016ISS|InstitutionalShareholderServices
› QualityScorewillconsiderthetreatmentofequityawardsuponterminationofanexecutive’scontract.Thisquestionaddressesexecutives’contractsonly,nottheCEO’swhichisinaseparatequestion.QualityScorewilllookforprovisionsonthetreatmentofequityintheeventtheexecutive’scontracthasbeenterminatedwithoutcause,suchasredundancy.
MarketApplicability:Australasia,S.Europe
WhatisthemultipleofsalaryplusbonusintheseveranceagreementsfortheCEO(uponachange-in-control)?(Q161)
› UnderISS'benchmarkpolicy,severancepayments(inEurope)uponachangeofcontrol(allotherregions)thatareinexcessofaonetime(Netherlands),twotimes(CanadaandEurope),orthreetimes(U.S.)thebasesalaryandbonusareproblematicinallinstancesandconsideredexcessiveforallnamedexecutiveofficers.The'pay'mentionedinthisquestionincludesonlybasesalaryandbonus.Long-termcashand/orequityawardsarenotconsideredforthisquestion.
MarketApplicability:U.S.,Canada,W.Europe,Germanic,Anglo,Nordic,S.Europe,Africa,Russia
Whatisthebasisforthechange-in-controlorseverancepaymentfortheCEO?(Q247)› QualityScorewillconsiderthebasisuponwhichchange-in-controlorseverancepaymentsfortheCEOare
calculated.› Thepossibleanswersforthisquestionare:NoInformation;Salary;Salary+AverageBonus;Salary+Most
RecentBonus;Salary+MaximumBonus;Salary+Other;Salary+Last/HighestPaidBonus;andSalary+TargetBonus
› FormarketsoutsidetheU.S.,terminationpayelementsmayincludeeither(oracombination)ofthefollowing:salary,bonus,andbenefits.
MarketApplicability:U.S.,Canada,W.Europe,Germanic,Anglo,Nordic,S.Europe,Africa,Russia
WhatisthemultipleofsalaryplusbonusintheseveranceagreementsforexecutivesexcludingtheCEO(uponachange-in-control)?(Q160)
› UnderISS’benchmarkpolicy,paymentsthatareinexcessofonetime(Netherlands),twotimes(CanadaandEurope),orthreetimes(U.S.)baseandbonusmultipleareproblematicinallinstancesandconsideredexcessiveforallnamedexecutiveofficers.Multiplesequaltoorbelowmentionedbaseandbonusareconsideredacceptable,perISS’policy.
› QualityScorewillconsiderwhatmultipleofsalaryplusbonusexecutiveswillreceiveunderemploymentagreementsduetoachange-in-controleventorterminationofcontract.
![Page 57: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/57.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 57of159©2016ISS|InstitutionalShareholderServices
MarketApplicability:W.Europe,Germanic,Anglo,Nordic,S.Europe,Africa,Russia
Whatisthebasisforthechange-in-controlorseverancepaymentforexecutivesexcludingtheCEO?(Q248)
› Paymentsbasedonbasesalaryplustargetoractualbonusesareacceptable.Apaymentbasedonthemaximumbonus,orparticularlyonthe“greaterof”actualandmaximum,isconsideredexcessive.
› QualityScorewillconsiderwhatthebasisuponwhichchange-in-controlorseverancepaymentsforexecutivesarecalculated.
› InmarketsoutsidetheUS,terminationpayelementsmayincludeeither(oracombination)ofthefollowing:salary,bonusandbenefits.
MarketApplicability:W.Europe,Germanic,Anglo,Nordic,S.Europe,Africa,Russia
HowlongisthenoticeperiodfortheCEOifthecompanyterminatesthecontract?(Q152)› WhenacompanyterminatesthecontractoftheCEO,itis,inmostcases,obligedtocontinuecontractual
paymentuntilacertainperiod.Shareholdersacceptthisprovidedthenoticeperiodislimitedtosixmonths.› QualityScorewillconsiderthelengthofthenoticeperiodfortheCEOifthecompanyterminatesthe
contract.
MarketApplicability:Australasia,S.Europe
Doesthecompanyprovideexcisetaxgross-upsforchange-in-controlpayments?(Q162)› AnexcisetaxisanadditionaltaximposedbytheIRSforchange-in-controlrelatedseverancepaythat
exceedsthreetimesanexecutive'saveragetaxableincome--includingsalary,bonus,andthegainsonanyequitycompensation--overthepreviousfiveyears.Whileexcisetax-gross-upsbecamesomewhatcommonduringthe1990s,recentshareholderoppositiontothepracticehasledmanycompaniestoeliminatetheprovision,basedonrationalethatexecutiveofficersshouldberesponsiblefortheirindividualtaxliabilitiesandthatcommonmarketpracticedoesnotjustifyextraordinaryfinancialburdenstocompaniesandtheirshareholders.Further,theexcisetaxgross-upprovisionleadstosuchsubstantialincreasesinpotentialterminationpaymentsthatitmayencourageexecutivestonegotiatemergeragreementsthatmaynotbeinthebestinterestsofshareholders.Companieshavebeguntoprovideforpackagestobereducedtotheextentnecessarynottotriggertheexcisetax.Insomeinstances,thecompanymaycommittoloweraseverancepaymenttojustbelowthecapinlimitedcircumstances,buttopayagross-upifthepaymentexceedsthatlevel,whichdoesnotaddressthefundamentalproblemswiththesefeatures.
› QualityScorewillconsiderwhethergross-upsforchange-in-controlpaymentsaremade,whetherthecompanyprovidedgross-ups,butmadeacommitmentnottoprovidethemuponchange-in-controlinthefuture,whetherthecompanyimplementedgross-upprovisionsinacontractthatwasnewormaterially
![Page 58: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/58.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 58of159©2016ISS|InstitutionalShareholderServices
amendedwithinthepastyear,andwhetherthecompanyprovidestaxgross-upsinoneormorecontracts,butnonewereenteredintoormateriallyamendedlastyear.Thequestionappliestoallexecutives,notjusttheCEO.
MarketApplicability:U.S.,Canada
WhatisthelengthofemploymentagreementwiththeCEO?(Q163)› Bestpracticesdictatethatcompaniesshouldnotenterintofixed-durationemploymentcontractswith
executives,andiftheydo,onlyenterintoemploymentcontractsunderlimitedcircumstancesforashorttimeperiod(e.g.,newexecutivehiresforathree-yearcontract)forafinitenumberofexecutives.Theindividualagreementsshouldnothaveanautomaticrenewalfeatureandshouldhaveaspecifiedterminationdate.Anauto-renewfeatureindicatesthattheagreementcanbeextendedinperpetuity,forallintentsandpurposes,unlesseitherpartyprovidesdirectiontothecontrarypursuanttoadefinednoticeperiod.
› Thisfactorhasazero-weightimpactonthescoringmodelandisincludedforinformationalpurposesonly.
MarketApplicability:U.S.
Controversies
HasISS'qualitativereviewidentifiedapay-for-performancemisalignment?(Q300)› ISS’qualitativeanalysisofexecutivecompensationidentifiespaypracticesanddesignfeaturesthatmay
strengthenorweakenthelinkagebetweenexecutivepayandcompanyperformance.FeaturesandpracticestobeexaminedinISS’qualitativeanalysismayinclude(butarenotlimitedto):therigorofperformanceconditionsonincentiveplans,theproportionofperformance-basedequitypay,whetherterminationprovisionsmayenable“payforfailure,”thepresenceofretentionorotherdiscretionaryawards,“realizable”payrelativetograntedpay,andotherfeaturesofthepaydesignasdeemedappropriatetothecompany’sspecificcircumstances.
MarketApplicability:U.S.,Canada
HasISSidentifiedaproblematicpaypracticeorpolicythatraisesconcerns?(Q301)› ISS’focusisonspecificexecutivecompensationpracticesthatruncountertoapay-for-performance
philosophy,including,butnotlimitedto:problematicpracticesrelatedtonon-performance-basedcompensationelementssuchasexcessiveperquisites;incentivesthatmaymotivateexcessiverisktaking;andspecificproblematicpracticessuchasoptionsbackdatingorrepricingoptionsheldbytopexecutivesand/ordirectorsorrepricinganyoptionswithoutshareholderapproval.
![Page 59: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/59.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 59of159©2016ISS|InstitutionalShareholderServices
MarketApplicability:U.S.,Canada,W.Europe,Germanic,Anglo,Nordic,S.Europe,Australasia,LatinAmerica,Africa,Russia,India
ShareholderRights&TakeoverDefenses
One-Share,One-Vote
Doesthecompanyhaveclassesofcommonstockwithdifferentvotingrights?(Q54)› Dual-classcapitalstructurescanservetoentrenchcertainshareholdersandmanagement,insulatingthem
frompossibletakeoversorotherexternalinfluenceoraction.Theinterestsofpartieswithvotingcontrolmaynotbethesameasthoseofshareholdersconstitutingamajorityofthecompany’soutstandingcapital.Additionally,researchsuggeststhatcompanieswithdual-classcapitalstructuresorotherantitakeovermechanismsoftentradeatadiscounttosimilarcompanieswithoutsuchstructures.
› Thequestionwillevaluatewhetherthecompanyhasissuedstocktypeswithdifferentvotingrights.Convertiblesecuritiesentitledwithvariousvotingrightwhichisequaltothenumberofconvertedcommonsharesareexcluded.
› Thisfactorhasazero-weightimpactonthescoringmodelforAustralasiancompaniesandisincludedforinformationalpurposesonly.
MarketApplicability:U.S.,Canada,W.Europe,Germanic,Anglo,Nordic,S.Europe,Australasia,LatinAmerica,Africa,Russia
Doesthecompanyhaveclassshareswithfullormultiplevotingrights?(Q369)› Issuingshareswithmultiplevotingrightsisoftenclaimedbyproponentsthatitallowsthefoundersand
managementtomaintaincontroloverthestrategicdirectionofthecompany.Suchastructurehelpsthemfocusonthelong-termgrowthofthecompanyinsteadofimmediatefinancialreturn.Itisalsoseentobeatooltodefendagainstunwantedtakeoverattempts,asthecontrollingpartiescanvotedowntakeoverproposalsbyexercisingtheirvotingpower.Ontheotherside,weightedvotingrightstructuresareconsideredtobeproblematic,becausesuchgovernancestructures,withsuperiorvotingpowerheldbyagroupofassociatedpersons,increasetheriskthatthemanagementmaypursueprojectsthatarenotinthebestinterestsofthecompanybutfortheirowngood.Thisdeterioratedagencyproblemmayimplyhighercostofcapitalonfuturefundraising.
› Similarly,classshareswithfullvotingrightsviolatestheprincipleofone-share-one-vote,andcouldcontributetoboardandmanagemententrenchment.
MarketApplicability:Japan
![Page 60: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/60.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 60of159©2016ISS|InstitutionalShareholderServices
Arethereanydirectorsontheboardwhoarenotupforelectionbyallclassesofcommonshareholders?(Q55)
› Barringsomeholdersofcommonstockfromvotingondirectorsmayservetoentrenchboardmembersandperpetuatecontrolbycertainblocksorgroups.
› QualityScorewillconsiderwhetheranydirectorsarenotelectedbyallclassesofcommonstock.
MarketApplicability:U.S.,Canada
Isthereasunsetprovisiononthecompany'sunequalvotingstructure?(Q56)› Somecompanieswithunequalvotingstructureshavesettheconditionsuponwhichtheunequalvoting
structurewillbeterminatedandanequalvotingstructurewilltakeplace.Suchaconditioniscalledasunsetprovisioninthisregard.
› QualityScorewillconsiderwhetherunequalvotingstructuresincludeasunset(termination)provision,orwhetherthequestionisnotapplicablebecausethereisnosuchstructure.
MarketApplicability:U.S.,Canada
Whatistheproportionofmultiplevotingrights(orvotingcertificates)relativetothetotalnumberofvotingrights?(Q57)
› Thisisthefirstpartofadoublematerialitytestwheretheimpactofthemultiplevotingrightsonthetotalnumberofvotingrightsismeasured.
› QualityScorewillconsiderthepercentageofmultiplevotingrightsrelativetototalvotingrights.
MarketApplicability:W.Europe,Germanic,Anglo,Nordic,Africa
Whatistheleveloffreefloatofthemultiplevotingrightsorvotingcertificates?(Q58)› ISSwillconsiderthepercentageoffreefloatofthemultiplevotingrights,orifnoinformationisgiven.Thisis
thesecondpartofadoublematerialitytestwheretheleveloffreefloatofmultiplevotingrightsismeasured.
› QualityScorewillconsiderthepercentageoffreefloatofthemultiplevotingrights,orifnoinformationisgiven.
MarketApplicability:W.Europe,Germanic,Anglo,Nordic,Africa
Whatpercentageofthecompany'ssharesisrepresentedbydepositaryreceiptswhereafoundationvotesunexercisedproxies?(Q59)
![Page 61: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/61.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 61of159©2016ISS|InstitutionalShareholderServices
› DepositaryreceiptshavetypicallybeenissuedbyDutchcompaniesinordertokeepminorityshareholdersfromexertingdisproportionateinfluenceatgeneralmeetingswhereattendanceisoftenlow.Underthissystem,theunderlyingsharesarenearlyallheldbyafoundation,whichisusuallyindependentofthecompany(Question62)thathasissuedthedepositaryreceipts.Theseinstrumentsaresoldonthemarket.Holdersofsuchinstrumentsareentitledtothesamerightsasordinaryshareholders,saveforvotingrights.Inordertovote,theholdersneedtorequestavotingproxyfromthefoundation,ortheycanexchangetheirdepositaryreceiptsfortheunderlyingshares.Takingthesestepscansometimesberestrictedeitherbylimitationsontheabilitytorequestvotingproxiesortoexchangedepositaryreceiptsforshares.
› QualityScorewillmeasurethepercentageofcompanyshareswhicharerepresentedbydepositoryreceiptsforwhichthefoundationwillexecutevotingrightsunlessavotingproxyhasbeenrequestedshouldthispossibilityexist.
MarketApplicability:W.Europe
Hasthecompanyindicatedanintenttoeliminatethesystemofdepositaryreceipts?(Q60)› Overthepast10years,Dutchcompanieshavegraduallyeliminatedthesystemofdepositoryreceiptsbased
onattendanceofshareholdersatgeneralmeetings.Ingeneral,ifattendanceofshareholdersinthepastthreeyearshasreachedthresholdsof30percentorhigher,anumberofDutchcompanieshavecommittedtoeliminatingthesystem.
› Thisquestionwillconsiderwhetherthecompanyhasindicatedpubliclytoconsidereliminatingthesystemofdepositoryreceipts.
MarketApplicability:W.Europe
Aredepositaryreceiptholdersrestrictedintheirvotingrights?(Q61)› Traditionallydepositaryreceiptscouldbeexchangedforsharesorholdersofsuchdepositaryreceiptscould
requestavotingproxy,butonlytoacertainlimit(usuallybetween1and2percentofthesharecapital).Dutchcompanieshavemostlyeliminatedthesebarriers.
› QualityScorewillconsiderwhetherholdersofdepositaryreceiptscanrequestforvotingproxiesorexchangingtheirdepositaryreceiptsinsharesarelimitedintheirright.
MarketApplicability:W.Europe
Whatpercentageofthecompany'ssharecapitalismadeupofnon-votingshares?(Q63)› Thisisthefirstpartofadoublematerialitytestwheretheimpactofthenon-votingsharesonthetotalshare
capitalismeasured.Theissueofpreferentialnon-votingshareswherethelackofvotingiscompensatedbyahigherorguaranteeddividendisaccepteduptoacertainlevel.However,beyondthatlevel,theinfluence
![Page 62: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/62.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 62of159©2016ISS|InstitutionalShareholderServices
ofshareholdersoncompanydecisionscanbehampered,especiallyiftheleveloffreefloatofthevotingrightsislimited.
Thisquestionwillmeasuretheproportionofnon-votingsharesrelativetothetotalsharecapitalofthecompany.
MarketApplicability:W.Europe,Germanic,Anglo,Nordic,S.Europe,Africa,Russia
Whatistheleveloffreefloatofvotingsharesinrelationtothenon-votingshares?(Q64)› ISSwillmeasuretheleveloffreefloatofthevotingrightsinasystemofvarioussharetypeswithatleastone
ofthesharetypeslackingvotingrights.Thisisthesecondpartofadoublematerialitytestwheretheleveloffreefloatofvotingrightsismeasured.
› QualityScorewillmeasuretheleveloffreefloatofthevotingrightsinasystemofvarioussharetypeswithatleastoneofthesharetypeslackingvotingrights.
MarketApplicability:W.Europe,Germanic,Anglo,Nordic,S.Europe,Africa,Russia
Doesthecompanyhaveanabsolutevotingrightceiling?(Q65)› Theexistenceofanabsolutevotingrightceiling,whichcapsthevoteafteracertainthresholdhasbeen
reached,alwayscreatesavotingrightdistortionfortheshareholderswhosestakeliesabovetheceiling.Thelowertheceiling,themoreshareholdersseetheirvotingrightsreducedandthelargerthevotingrightdistortion.
› QualityScorewillconsiderwhetheraceilingexpressedasaproportionofallsharesoutstandingisinplace,thepercentageoftheceiling,orifnoinformationisdisclosed.
MarketApplicability:W.Europe,Germanic,Nordic,S.Europe,LatinAmerica
Doesthecompanyhavearelativevotingrightceiling?(Q66)› Theexistenceofarelativevotingrightceiling,whichcapsthevoteafteracertainthresholdhasbeen
reached,alwayscreatesavotingrightdistortionfortheshareholderswhosestakeliesabovetheceiling.Thelowertheceiling,themoreshareholdersseetheirvotingrightsreducedandthelargerthevotingrightdistortion.
› QualityScorewillconsiderwhetheraceilingexpressedasaproportionofallsharesrepresentedatthegeneralmeetingisinplace,thepercentageoftheceilingorifnoinformationisdisclosed.
MarketApplicability:W.Europe,Germanic,Nordic,S.Europe
![Page 63: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/63.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 63of159©2016ISS|InstitutionalShareholderServices
Doesthecompanyhaveanownershipceiling?(Q67)› Adiscountedscorefortheexistenceofownershipceilingsismeanttoreflectthetendencyofinvestorsto
discountcompaniesfeaturingownershipceilings;assuchceilingscurbinvestmentsandthuslimitthevotingpowershareholdersmayattain.
› QualityScorewillconsiderwhetheranownershipceilingexpressedasaproportionofallsharesoutstandingisinplace,thepercentageoftheceiling,orifnoinformationisdisclosed.
MarketApplicability:Japan,W.Europe,Germanic,Anglo,Nordic,S.Europe,Australasia,LatinAmerica,Africa,Russia
Doesthecompanyhaveownershipceilingsforspecificparties?(Q68)› Adiscountedscorefortheexistenceofownershipceilingsismeanttoreflectthetendencyofinvestorsto
discountcompaniesfeaturingownershipceilings,assuchceilingscurbinvestmentsandthuslimitthevotingpowershareholdersmayattain,especiallyifsuchceilingappliesonlytoonegroupofshareholders.
› QualityScorewillconsiderwhether,intheeventthecompanyhasinstalledanownershipceiling,itisapplicabletoallshareholdersoronlytoacertaincategoryofshareholders(suchasforeigninvestors).
MarketApplicability:W.Europe,Germanic,Anglo,Nordic,S.Europe,Australasia,LatinAmerica,Africa,Russia
DoshareholdersortheStatehavethepriorityright?(Q69)› Theinvestorcommunitygenerallydisapprovesofspecialsharesthatgrantdisproportionatelyhighvoting
powerstotheState(goldenshares)orotherspecificshareholders(referredtoaspriorityshares).› QualityScorewillevaluateandconsidertheexistenceofpriorityrightsheldbytheStateorspecific
shareholdersandwillqualifythenatureofsuchrightsintohighorlowimportance.
MarketApplicability:W.Europe,Germanic,Anglo,Nordic,S.Europe,LatinAmerica,Africa,Russia
Isthereacoattailprovisionattachedtothecompany'sunequalvotingstructure?(Q217)› Coattailprovisionsprovideprotectionforminorityshareholderswhenamajorityshareholderexistsundera
dualcapitalstructure,i.e.duringatake-overbid,asimilarofferismadetothe"subordinate"sharewiththatofthe"superior"shares.
› QualityScorewillconsiderwhetherthecompanyhasanunequalvotingstructureandwhetheracoattailprovisionhasbeenattachedtothestructure.
MarketApplicability:Canada
![Page 64: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/64.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 64of159©2016ISS|InstitutionalShareholderServices
TakeoverDefenses
Doesthecompanyhavetargetedstockplacementthatcanbeusedasatakeoverdefense?(Q72)› Attheirholders’discretion,financialinstrumentsgivingpotentialaccesstothecompany’scapitalmaybe
exercisedandmaycompromisethesuccessofatakeoverattemptthroughthedilutionofthepercentageofvotingrightsavailableonthemarket.Holdersoftheseinstrumentsmayormaynotbeexistingshareholdersofthecompany.
› Thisquestionwillmeasuretheimpactoftargetedstockplacementintheeventofatakeoverbidwhichthecompanycanuseasadefense.
MarketApplicability:W.Europe,S.Europe,S.Korea
Doesthecompanymaintainpreemptiverightsintheeventofatakeoverbid?(Q73)› Authorizationsgiventothemanagementboardtoincreasesharecapitaldonotalwayspreservepreemptive
rightsforexistingshareholders,andmayevensometimesbeallowedduringatakeoverincertainmarkets.› Thisquestionwillmeasuretheimpactofthepossibilityofthecompanytoissuesharesandrestrict
preemptiverightswhichitcanuseasadefenseintheeventofatakeoverbid.
MarketApplicability:W.Europe,S.Europe
Canthecompanytargetrepurchasedsharesintheeventofatakeoverbid?(Q74)› Sharesareusuallyrepurchasedeithertominimizethedilutionofemployeeshareplans,tofundashare
exchangeforacquisitions,ortoincreaseearningspershare(bystabilizingtheshareprice).Atthesametime,asharerepurchasecouldalsobeusedasatakeoverdefense,whichreducesthevotingpowerofthefloatingcapitalandincreasestherelativevotingpowerofthereferenceorcoreshareholder(s).Thismayhappenwhenthecompanyrepurchasesitsownsharesduringatakeoverandwhenvotingrightsofrepurchasedsharesaretemporarilyorpermanently(whenrepurchasedsharesaredestroyed)cancelled.Itcouldalsoincreasethevotingpoweroffriendlyparties(existingreferenceorcoreshareholders,the“WhiteKnight”defense)whenthecompanyresellssharesthathavebeenrepurchasedpriortoorevenduringatakeover.
› Thisquestionwillmeasuretheimpactofthepossibilityofthecompanytorepurchaseownshareswhichitcanuseasadefenseintheeventofatakeoverbid.
MarketApplicability:W.Europe,Nordic,S.Europe
Arethereownershipfactorsthataffectthetakeoverdefenses?(Q218)
![Page 65: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/65.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 65of159©2016ISS|InstitutionalShareholderServices
› Ownershipfactors,suchasceilings,precludethesuccessofatakeoverattemptwhiledenyingshareholdersatakeoverpremiumandpotentiallyentrenchingthecompany’smanagement.
› QualityScorewillconsidertheexistenceofownershipceilingswhichhamperthesuccessofatakeoverbidonthecompany.
MarketApplicability:W.Europe,Germanic,Anglo,Nordic,S.Europe,LatinAmerica,Africa,Russia
Aretherepriorityrightsthataffectthetakeoverdefenses?(Q219)› Priorityrightsaffordholderstherighttodecideonkeycorporateactionssuchastakeoversthatarenormally
sanctionedbyshareholderscollectively.Suchrightscanbevestedinspecificsharetypes,suchaspriorityshares.Theserightsmaybelinkedtoaspecificcompanystructurewherecertainshareholdersholdrightsbeyondnormalvotingrights.Ifsuchrightsaregrantedtothestate,theyarecalledgoldenshares.
› QualityScorewillconsidertheexistenceofpriorityrightswithwhichtheStateorspecificshareholderscanblocktakeoverbidsonthecompany.
MarketApplicability:W.Europe,Germanic,Anglo,Nordic,S.Europe,LatinAmerica,Africa,Russia
Arealldirectorselectedannually?(Q77)› Classifyingtheboardmakesitmoredifficultforshareholderstoremoveineffectivedirectors,ortochange
controlofacompanythroughaproxycontestinvolvingtheelectionofdirectors.Becauseonlyaminorityofthedirectorsiselectedeachyear,adissidentwillbeunabletowincontroloftheboardinasingleelectionandwouldneedtwoyearstogaincontrolofthecompanyunlesstherearevacanciesintheotherclasses.Studieshaveshownanegativecorrelationbetweentheexistenceofaclassifiedboardandafirm'svalue.
› QualityScorewillconsiderwhetheralldirectorsareelectedeachyear,ratherthaninstaggeredterms—oftenreferredtoasaclassifiedboard.QualityScorewillalsoconsiderwhethercompaniesaretransitioningtoadeclassifiedboard,asdefinedwhenacompanyreceivesshareholderapprovalfortheswitch,butannualelectionsofallmembershasnotyetcommenced.
› QualityScorewillalsoconsiderwhetheracompany,thoughcurrentlyelectedannually,couldclassifyitsboardwithoutshareholderapproval.
› Thisfactorhasazero-weightimpactonthescoringmodelforLatinAmericancompaniesandisincludedforinformationalpurposesonly.
MarketApplicability:U.S.,Canada,Japan,LatinAmerica
Istheboardauthorizedtoissueblankcheckpreferredstock?(Q83)› Authorizationtoissueblankcheckpreferredstockgivestheboardthepowertoissue,atitsdiscretion,
preferredstockwithvoting,conversion,distribution,andotherrightstobedeterminedbytheboardatthe
![Page 66: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/66.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 66of159©2016ISS|InstitutionalShareholderServices
timeofissue.Althoughauthoritytoissuepreferredsharesgivesthecompanyflexibilitytomeetthecompany'sbroadfinanceneeds,theseplacementscandiluteexistingshareholders'equityandvotingpositions.
› Preferredstockcanbeusedforsoundcorporatepurposessuchasraisingcapitalormakingacquisitions.Inthesecases,blankcheckimpliesflexibilityinmeetingthecompany’sbroadfinanceneeds.Bynotestablishingthetermsofpreferredstockatthetimetheclassofstockiscreated,companiesmaintaintheflexibilitytotailortheirpreferredstockofferingstoprevailingmarketconditions.Nevertheless,blankcheckpreferredstockcanbeusedasanentrenchmentdevice,tofundapoisonpillforexample.Albeitlesscommontoday,anotherpowerfultakeoverdefenseistheplacementoflargeblocksofblankcheckpreferredstock,withfriendlythirdparties—theso-called“whiteknight”rescue.Blankcheckpreferredstockwouldnotbeasobjectionabletoshareholdersifacompanystatedinwritingthatsuchshareswouldbe“declawed”andnotbeusedtothwartapotentialtakeover.Declawedblankcheckpreferredstockmeansthattheboardcannotauthorizesharesofpreferredstockwithoutshareholderapprovalthatcanbeusedintakeoverdefensepurposes.
› QualityScorewillconsiderwhethertheboardisauthorizedtoissueblankcheckpreferredstock,andwhetherthestock,ifauthorized,isdeclawed.
MarketApplicability:U.S.,Canada,SouthKorea
Doesthecompanyhaveapoisonpill(shareholderrightsplan)ineffect?(Q78)› Institutionalinvestorsviewpoisonpills,whichcanmakeahostileacquisitionattemptprohibitively
expensive,asamongthemostonerousoftakeoverdefensesthatmayservetoentrenchmanagementandhaveadetrimentalimpactontheirlong-termsharevalue.Whilerecognizingthatboardshaveafiduciarydutytouseallavailablemeanstoprotectshareholders'interests,investorsoftenarguethat,asabestgovernanceprinciple,boardsshouldseekshareholderratificationofapoisonpill(oranamendmentthereof)withinareasonableperiod.
› QualityScorewillconsiderwhetherthecompanyhasashareholderplanineffect,andwhetherthepoisonpillhasbeenapprovedbyshareholders.ForCanadiancompanies,ISSwillalsoconsideriftheshareholderrightsplanmeetsthenecessaryrequirementsundertheguidelinesfornewgenerationpills.
MarketApplicability:U.S.,Canada,Japan
Whatisthetriggerthresholdforthepoisonpill?(Q79)› Poisonpilltriggerstypicallyrangefrom10to25percent.Bestpracticeisforapill(otherthananNOLpill)to
haveatriggernolowerthan20%.› QualityScorewillconsiderthetriggerpercentageforthepill.
MarketApplicability:U.S.
![Page 67: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/67.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 67of159©2016ISS|InstitutionalShareholderServices
Doesthepoisonpillhaveasunsetprovision?(Q80)› Poisonpillswithscheduleddatesofterminationmeanthatthedecisiontomaintainthepoisonpillmustbe
periodicallyrevisitedand,ideally,resubmittedforshareholderapproval.› QualityScorewillconsiderwhethertheplanincludesaprovisionwhichpermitsshareholderstoreaffirmor
redeemapoisonpillwithinaspecifiedtimeperiod.
MarketApplicability:U.S.
DoesthepoisonpillhaveaTIDEprovision?(Q81)› TIDEprovisionsrequirethecompany’sindependentdirectorstoreviewtheplaneverythreeyearsto
evaluatewhetheritisstillinshareholders’bestinterest.› GovernanceQualityScorewillconsiderwhethertheplanincludesaThree-YearIndependentDirector
Evaluation(TIDE)provision,aprovisionwheretheindependentdirectorsoftheboardmeetperiodicallytoreviewtheneedtokeeptheplaninplace.
› Thisfactorhasazero-weightimpactinthescoringmodelforU.S.companiesandisincludedforinformationalpurposesonly.
MarketApplicability:U.S.
Doesthepoisonpillhaveaqualifiedofferclause?(Q82)› Well-designedpillsprovidethecompanywithnegotiatingpowerandtimetoreceivethebestpossibleoffer
forshareholders.Qualifiedofferclausesempowershareholderstoredeemthepillandacceptavalidtakeoveroffer.
› QualityScorewillconsiderwhethertheplanincludesaclauseallowingshareholderstoredeemthepillinthefaceofabonafidetakeoveroffer.
MarketApplicability:U.S.
Whatistheexpirationdateofthepoisonpill?(Q91)› Whilelong-termpillsmaytendtoserveasadevicetoentrenchmanagement,shorter-termpillsaremore
likelytobeinresponsetoparticularmarketorcompanycircumstances,andrequire,theboardtorevisitthedecisiontoinstitutetherightsplan.
› QualityScorewillconsiderthenumberofyearsuntilsunsetorterminationdateoftheplan.
MarketApplicability:U.S.
![Page 68: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/68.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 68of159©2016ISS|InstitutionalShareholderServices
Isthepoisonpilldesignedtopreservetaxassets(NOLpill)?(Q220)› AnNOLPillisashareholderrightsplanwithalowtriggerthatismeanttopreservethevalueofnet
operatinglosscarryforwards(NOLs),ataxbenefitaccruedbycompaniesthatcanpotentiallyreducetheirfuturetaxliability.PerIRSrules,thesetax-lossassetsareforfeiteduponadefinedchangeincontrol;assuch,NOLpillsaredesignedtopreserveshareholdervalue
› QualityScorewillconsiderwhetherthepillisdesignedtopreservetaxassets.
MarketApplicability:U.S.
Whenwasthepoisonpillimplementedorrenewed?(Q222)› QualityScorewillconsiderhowlongagotheboardmostrecentlytookactiononthepill,whetherto
implementitorrenewit.
MarketApplicability:U.S.
Doesthecompany'spoisonpillincludeamodifiedslow-handordead-handprovision?(Q223)› “Deadhand”and“slowhand”provisionsthatpreventtheredemptionofthepoisonpillareegregiousand
unjustifiableviolationofshareholders’rightstoacceptanattractivetakeoveroffer,evenafterreplacingmembersoftheboard.
› QualityScorewillconsiderastowhethertheimplementationofthepillinhibitsorprohibitstheabilityoffutureboardsofdirectorstoredeemthepill.Aslow-handprovisionforcesadelayintheredemptionofthepoisonpillevenifshareholdersofthetargetfirmfavorthetakeover.Adead-handprovisionprovidesthatonlytheincumbentdirectors,continuingdirectors,ortheirdesignatedsuccessorscanredeemthepoisonpill,evenaftertheyhavebeenvotedoutofoffice(thusprecludingredemption).
MarketApplicability:U.S.
Wasthepoisonpillapprovedbyshareholders?(Q221)› Theboardofdirectorsshouldseekshareholderratificationofapoisonpill(oranamendmentthereof).› QualityScorewillconsiderwhetherthepoisonpillwasapprovedbyamajorityofshareholders.Voting
resultsareconsideredasamajorityofvotescast,abstentionsincludedbutexcludingbrokernon-votes.
MarketApplicability:Japan
Doesthecompanyhaveacontrollingshareholder?(Q290)
![Page 69: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/69.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 69of159©2016ISS|InstitutionalShareholderServices
› Whenthereisacontrollingshareholder,theminorityshareholdersmayfacechallengesinmatterswheretheirinterestsdivergefromthoseofthemajorityshareholder.
› QualityScorewillconsiderwhetherthecompanyhasashareholderorshareholdersactinginconcertandholdingamajorityofthevotingrights.
› Thisfactorhasazero-weightimpactonthescoringmodelforU.S.,SouthernEuropean,andAustralasiancompaniesandisincludedforinformationalpurposesonly.
MarketApplicability:U.S.,AsiaPacific,Japan,S.Europe,Australasia,LatinAmerica,Africa,RussiaSouthKorea,India
Ifthecompanyhasamajorityvotingstandard,isthereapluralitycarve-outinthecaseofcontestedelections?(Q224)
› Bestpracticecallsforamajorityvotestandardinuncontesteddirectorelections,andapluralityvotestandardincontestedelections.Otherwise,inacontestedelection,evenifadissidentnomineereceivesmorevotesthanamanagementnominee,themanagementnomineewouldbeseated.QualityScorewillconsiderastowhetherthemajorityvotingstandard–ifinplace–doesnotapplyinthecaseofcontestedelections.SomecompaniesincorporatedoutsideoftheU.S.donothavea“contestedsituation”:allnominees(whethermanagementorshareholder-nominated)whoreceiveamajorityofvotescastareseatedontheboard.Thissituationisincludedinthepossibleanswers.
MarketApplicability:U.S.
Doestheremovalofadirectorrequireasupermajorityvote?(Q284)› Japanesedirectorscanberemovedbyasimplemajorityshareholdervote,unlessthearticlesrequirea
supermajority.Thesupermajorityrequirementcanserveasaformofmanagemententrenchment.
MarketApplicability:Japan
Whatistheleveloftagalongrightsforminorityshareholders?(Q333)› Tagalongrightsaregrantedtominorityshareholderswhenacompanyreachedanagreementwithamajor
shareholdertotakeoverthecompanyatacertainprice.Thetagalongrightswillindicateatwhatlevelminorityshareholdercanselltheirsharestotheacquiringshareholder.Inprincipleminorityshareholdersshouldbeallowedtoreceivethesameprice.
› TagalongrightsareprovidedbyBrazilianlaw(LeidasS.A.,Article254-A)andassurethatthedisposal,directorindirect,ofacompany’scontrolshallbecarriedoutonconditionsthatthebuyerundertakestotenderapublicofferforacquisitionofallcommonsharesheldbytheothershareholdersinthecompany,sothattheymaybeaccordedasminimumprice80%ofthevaluepaidforthesellingcontrollingshareholder.Some
![Page 70: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/70.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 70of159©2016ISS|InstitutionalShareholderServices
companieshavedecidedvoluntarilytoextendtagalongrightstopreferredshareholders,and/orassuretothecommonshareholdersapriceabove80%.
› QualityScorewillconsidertheleveloftagalongrightsintheeventofatakeoverbid.
Marketapplicability:LatinAmerica
Meeting&VotingRelatedIssues
Doesthecompanyrequireasuper-majorityvotetoapproveamendmentstothecharterandbylaws?(Q89)
› Supermajorityprovisionsviolatetheprinciplethatasimplemajorityofvotingsharesshouldbeallthatisnecessarytoeffectchangeregardingacompanyanditscorporategovernanceprovisions.Requiringmorethanthismaypermitmanagementtoentrenchitselfbyblockingamendmentsthatareinthebestinterestsofshareholders.
› QualityScorewillconsiderwhetherasuper-majorityvoteisrequired,orifnoinformationisgiven.Supermajorityisdefinedasanythingabovesimplemajority.ISSgenerallyseesthresholdsoftwo-thirdsor75percentbutanythingabovesimplemajority(typically,66.66percentorhigher)ischaracterizedassupermajority.
› QualityScorewillalsoconsiderwhethershareholdershavetherighttoamendthebylaws.IntheU.S.,underSECRule14a-8,shareholderswhohaveheldsharesvaluingatleast$2,000foroneyeararepermittedtosubmitshareholderproposals,bothprecatoryandbinding,toamendbylaws.However,somestatesallowcompanies,intheircharters,torestrictshareholders’righttoamendthebylawsthroughbindingbylawamendmentsorproxyfights.
MarketApplicability:U.S.,S.Europe,Canada
Doesthecompanyrequireasuper-majorityvotetoapprovemergers/businesscombinations?(Q90)› Supermajorityprovisionsviolatetheprinciplethatasimplemajorityofvotingsharesshouldbeallthatis
necessarytoeffectamerger.Forcompaniesthatarecontrolled,however,supermajorityprovisionsmayhelpensurethatthecontrollingshareholdercannotunilaterallyforceamergerdespitetheoppositionofminorityshareholders.
› QualityScorewillconsiderwhetherasuper-majorityvoteisrequired,orifnoinformationisgiven.Supermajorityistypicallydefinedasanythingabovesimplemajority.ISSgenerallyseesthresholdsoftwo-thirdsor75percentbutanythingabovesimplemajorityischaracterizedassupermajority.
MarketApplicability:U.S.,Canada
Doesthecompanyhavediscretionoverdividendpayments?(Q285)
![Page 71: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/71.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 71of159©2016ISS|InstitutionalShareholderServices
› AccordingtoJapanesecorporatelaw,dividendpaymentsrequireshareholderapproval,unlessthecompanyarticlesstatethattheboardhasthisauthority.
› QualityScorewillconsiderwhetherthecompanyhasdiscretionoverdividendpayments.
MarketApplicability:Japan,SouthKorea
Aretheshareholdersallowedtosubmitdividendproposals?(Q286)› Investorsshouldhavetheabilitytosubmitshareholderproposalsondividendsincaseswhereinvestorssee
existingdividendpracticeasproblematic.› QualityScorewillconsiderwhethershareholdersareallowedtosubmitproposalsondividends.
MarketApplicability:Japan
Arethenamesofthenomineedirectorsdisclosed?(Q334)› Inordertohaveameaningfulvoteonthenominationofdirectors,thecompanyneedstodisclosecrucial
informationonitscandidates.› QualityScorewillconsiderwhetherthenamesofthenomineedirectorsaredisclosedaheadofthegeneral
meeting.
MarketApplicability:LatinAmerica
Whatproportionofsharesmustberepresentedatthegeneralmeetingtocancelthebindingnatureofthenominationofsupervisoryboardmembers(andorexecutiveboardmembers)?(Q84)
› AccordingtotheDutchCodeofCorporateGovernance(December2008),thegeneralmeetingofshareholdersofacompanynothavingstatutorytwo-tierstatusmaypassaresolutiontocancelthebindingnatureofanominationfortheappointmentofamemberofthemanagementboardorofthesupervisoryboardand/oraresolutiontodismissamemberofthemanagementboardorofthesupervisoryboardbyanabsolutemajorityofthevotescast.Itmaybeprovidedthatthismajorityshouldrepresentagivenproportionoftheissuedcapital,whichproportionmaynotexceedone-third.Ifthisproportionofthecapitalisnotrepresentedatthemeeting,butanabsolutemajorityofthevotescastisinfavorofaresolutiontocancelthebindingnatureofanomination,ortodismissaboardmember,anewmeetingmaybeconvenedatwhichtheresolutionmaybepassedbyanabsolutemajorityofthevotescast,regardlessoftheproportionofthecapitalrepresentedatthemeeting.‖
› QualityScorewillconsiderthepercentageofsharesneededtocancelthebindingnatureofboardormanagementnominations.
MarketApplicability:W.Europe
![Page 72: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/72.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 72of159©2016ISS|InstitutionalShareholderServices
Didthecompanyhaveaslateballotatitslastshareholders'meeting?(Q53)› Bundled,orslate,directorelectionsprovideshareholderswithonlyasinglevotefororagainstallofthe
nomineesasagroup.Ashareholderwhowishestowithholdsupportfromasingledirectordoesnothavetheabilitytodosowhenthecompanybundlesdirectorelections.Bestpracticeistoprovideaseparateballotitemforeachdirectorupforelection.QualityScorewillconsiderwhetherthecompanyhadbundledorindividualelectionsatthemostrecentshareholdermeetingwithelectionofdirectors.
MarketApplicability:W.Europe,Germanic,LatinAmerica,SouthKorea
Whatisthenumberofvacanciesontheboard?(Q262)› Therearevacanciesontheboardifthecurrentnumberofdirectorsislessthanthemaximumnumberof
directorsallowedunderthecompany'sbylaws.Iftherearevacanciesontheboardandtheboardhasnotdeclared"novacancy"(subjecttoprovisionsoftheAustralianCorporationsAct),itiseasierforshareholdernominatedcandidatestobeelectedtotheboard.
› QualityScorewillconsiderthemaximumnumberofboardseatsprovidedinthecompany'sconstitutionminusthecurrentnumberofdirectorsontheboard.
MarketApplicability:Australasia,Japan
Whatisthepercentageofsharecapitalneededtoconveneaspecialmeeting?(Q97)› MostU.S.statecorporationstatutesallowshareholderstocallaspecialmeetingwhentheywanttotake
actiononcertainmattersthatarisebetweenregularlyscheduledannualmeetings.Generally,thisrightappliesonlyifashareholderorgroupofshareholdersownsaspecifiedpercentageoftheoutstandingshares.Intermsofday-to-daygovernance,shareholdersmayloseanimportantright–theabilitytoremovedirectorsorinitiateashareholderresolutionwithouthavingtowaitforthenextscheduledmeeting–iftheyareunabletocallatimelyspecialmeeting.Shareholderscouldalsobepowerlesstorespondtoabeneficialofferifabiddercannotcallaspecialmeeting.Therefore,theinabilitytocallaspecialmeetingandtheresultinginsulationofmanagementmayresultinthedeclineofcorporateperformanceandshareholderreturns.
› QualityScorewillconsiderwhethershareholderscancallaspecialmeeting,and,ifso,theownershipthresholdrequired.
MarketApplicability:U.S.,W.Europe,Canada
Canshareholdersactbywrittenconsent?(Q98)
![Page 73: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/73.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 73of159©2016ISS|InstitutionalShareholderServices
› Consentsolicitationscanbeadvantageoustobothshareholdersandmanagementinthattheprocessdoesnotinvolvetheexpenseofholdingaphysicalmeeting,anditiseasierforshareholderswhocansimplyrespondtotheproposalbymail.Aconsentsolicitationissimilartoaproxysolicitation:consentsaremailedtoshareholdersfortheirvoteandsignatureanddeliveredtomanagement.Thedifferencesarethat1)thereisnophysicalmeeting,2)aconsentperiod(generally60days)issetforthedeliveryoftheconsents,and3)assoonasthethresholdlevelofconsentsaredelivered,theproposalsaredeemedratifiedandtheconsentsolicitationends..Incontrast,aproxysolicitationmustendwithameetingbecauseproxycardsmerelyauthorizetheindicated"proxy"tocastavoteatashareholdermeeting.Asignedconsentcardisitselfthefinalvoteand,assuch,doesnotrequireavotebyproxyatashareholdermeeting.
› Limitationsonwrittenconsentaregenerallyconsideredcontrarytoshareholderinterests.Intermsofday-to-daygovernance,shareholdersmayloseanimportantright–theabilitytoremovedirectorsorinitiateashareholderresolutionwithouthavingtowaitforthenextscheduledmeeting–iftheyareunabletoactbywrittenconsent.Beneficialtenderoffersalsomaybeprecludedbecauseofabidder'sinabilitytotakeactionbywrittenconsent.
› QualityScorewillconsiderwhethershareholderscanactbywrittenconsent,oriftheinformationisnotdisclosed.Companiesthatmandateunanimouswrittenconsentmaintainapracticethatincreasesconcern.
MarketApplicability:U.S.,Canada
Doesthecompanyusecumulativevotingfordirectorelection?(Q338)› Undercumulativevoting,oncetheGeneralAssemblyfixestheboardsize,shareholdersmayfocusalloftheir
votesononeormorecandidates.Thenomineesreceivingthemostvotescomprisethenewboard.Underarticle141ofBrazilianCorporateLaw,shareholdersmustrequestcumulativevotingatleast48hourspriortothemeetingdate.Shareholdersmustalsohave5percentofsharecapitaltorequestcumulativevoting(thispercentageisbasedonsharecapital;smallercompanieshavehigherthresholds.
MarketApplicability:AsiaPacific,SouthKorea
Doesthecompanyhaveamajorityvotestandardinuncontestedelections?(Q52)› Amajorityvotestandardrequiresthat,fordirectorstobeelected(orreelected)toserveonthecompany's
board,theymustreceivesupportfromholdersofamajorityofsharesvoted.Apluralitystandardonlyrequiresthemostvotes,meaningadirectornomineeinanuncontestedelectioncanbeelectedtotheboardwith,intheory,asinglevote.
› Amajorityvotestandard,incombinationwithapluralitystandardinelectionswithmorenomineesthanseats,andadirectorresignationpolicytoaddresspost-electionresults,hasemergedintheU.S.asawaytomakedirectorelectionsmeaningfulratherthanmerelysymbolic,andisconsideredbestpractice:shareholdershaveaclear,legallysignificantvote,andtheboardretainstheabilitytoaddressthesituation
![Page 74: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/74.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 74of159©2016ISS|InstitutionalShareholderServices
of"holdover"directorstoaccommodatebothshareholderconcernsandtheneedforstabilityandcontinuityoftheboard.
› IntheU.S.,a“majorityvotepolicy”isatermsometimesusedtodescribeadirectorresignationpolicy,whichisthepost-electionprocesstobefollowedifadirectordoesnotreceiveamajorityofvotescast.Suchresignationpoliciesareusuallyfoundinacompany’scorporategovernanceguidelines,andcanaccompanyeitheramajorityorapluralityvotestandard.Itisnotthesameasamajorityvotestandard.
› Whilemajorityvoting,byitself,doesnotaddresstheholdoversituationifadirectorfailstogetmajoritysupport,thedirectorinquestionisstillnotlegally"elected."Thisistrueevenifthedirectortendershis/herresignationandtheboardrejectsit;thatdirectorwasnot"elected"totheboard.Ontheotherhand,pluralityvotinglacksteeth:theincumbentdirectorstilldetermineswhethertotenderhisorherresignation.Evenifthecompanyhasadirectorresignationpolicywiththepluralitystandard,iftheboarddoesnotaccepttheresignation,thedirectorwhodidnotgarnermajoritysupportisstilllegallyconsidered"elected."
› ForCanada,theadoptionofmajorityvotingpolicyconnotesthateachdirectorofalistedissuermustbeelectedbyamajority(50%+1vote)ofthevotescastwithrespecttohisorherelectionotherthanatcontestedmeetings.Ifnot,thedirectornomineewillprovidehisorherresignationtotheboard.Theboardwillthenconsidertheresignationanddecidewhethertoaccepttheresignationornot.
› QualityScorewillconsiderthevotingstandardsforelectingdirectorstotheboard.
MarketApplicability:U.S.,Canada
Ifthecompanyhasamajorityvotingpolicyindirectorelections,doesapluralitystandardapplyforcontestedelections?(Q343)
› Bestpracticecallsforamajorityvotestandardinuncontesteddirectorelections,andapluralityvotestandardincontestedelections.Otherwise,inacontestedelection,evenifadissidentnomineereceivesmorevotesthanamanagementnominee,themanagementnomineewouldbeseated.QualityScorewillconsiderastowhetherthemajorityvotingstandard–ifinplace–doesnotapplyinthecaseofcontestedelections.
MarketApplicability:Canada
Aretherematerialrestrictionsastotimingortopicstobediscussed,orownershiplevelsrequiredtocallameeting?(Q225)
› QualityScorewillconsiderwhethertherearematerialrestrictionstotherighttocallaspecialmeetingofshareholders.Materialrestrictionsinclude:restrictionsthatprohibitspecialmeetingsmorethan90daysawayfromtheprior(orplannedfuture)annualmeetingdate,restrictionsthatmaybeinterpretedtoprecludedirectorelectionsorothersignificantbusiness,andrestrictionsthateffectivelyraisetheownershipthresholdrequiredtocallthemeeting.
MarketApplicability:U.S.
![Page 75: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/75.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 75of159©2016ISS|InstitutionalShareholderServices
Isthequorumforshareholders'meetingsatleasttwopersonsrepresentingatleast25percentoftheoutstandingshares?(Q101)
› Shareholdermeetingsshouldonlyconvenewithaminimumacceptablelevelofattendance,therebyeliminatinganyshareholderresolutionsthatmaybepassedinameetingwithinsufficientshareholderrepresentation.
› QualityScorewillconsiderwhetherquorumrequirementsareatleasttwopersonsrepresenting25percentofoutstandingshares,orifrequirementsarelessthantwopersonsand/orrepresenting25percentofoutstandingshares.QualityScorealsowillconsiderifthecompanyhasacontrollingholderwhomeetsorexceedsquorumrequirements.
MarketApplicability:Canada
Didthecompanyfileitsproxymaterialslateinthepastyear?(Q335)› Relevantproxymaterialsshouldbedisclosedinatimelymannerwellinadvanceofthegeneralmeetingto
allowforameaningfulshareholderreview.› QualityScorewillconsiderwhetherthetimingofthefilingofproxymaterialsmeetlocalbestpractice.The
assessmentisbasedonwhenacompanyshouldbedisclosingmaterials,nottheminimumrequiredunderthelocalregulations.
MarketApplicability:AsiaPacific,Russia,SouthKorea,India
Howmanynumberofdaysbeforethegeneralmeetingdidthecompanypublishitsproxymaterials?(Q371)
› Companyshouldpublishproxymaterialasearlyaspossiblebeforethemeetingdateinordertoprovideforampletimeforshareholderstoreviewandevaluatethemandmakeinformedvotingdecisions.
MarketApplicability:Japan
DoesthecompanyprovideproxymaterialsinEnglish?(Q373)› Accesstoinformationisintegraltoexerciseofownershiprights.AsignificantnumberofcompaniesinJapan,
however,disclosesproxymaterialsinJapanaeseonly,creatinghurdlesforforeigninvestorstomakeaninformedvotingdecision.MakingEnglishproxymaterialsreadilyavailabletoinvestorsisconsideredabestpractice.
MarketApplicability:Japan
![Page 76: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/76.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 76of159©2016ISS|InstitutionalShareholderServices
Doesthecompanydisclosethepolicyoncross-shareholding,includingvotingpolicyforsuchshares?(Q370)
› Cross-shareholdingstructures,whichtendtolockupcontrolamonglong-standingbusinesspartnersorfellowcompaniesinaconglomerate,arecommoninJapan.Ingeneral,sellingcross-shareholdingswillbegoodforbroaderequitymarket,reducingmanagemententrenchment,offeringpossibleimprovementsincapitalefficiency,puttingmoresharesinthepublic’shandsandsupportingmerger-and-acquisitionactivity.
› NewJapaneseCorporateGovernanceCode(1-4)encouragescompaniestoevaluateeconomicbenefitsandrisksofcross-shareholdingsandtoestablishapolicyonmanagingsuchequitypositions.
MarketApplicability:Japan
Doesthecompanyholditsgeneralmeetingonapeakdate?(Q287)› ManyJapanesecompaniesholdtheirannualshareholdermeetinginthelastfewdaysofJune,usuallywith
anoverwhelmingconcentrationononeortwodays.InvestorshaveaskedcompaniesnottoholdshareholdermeetingsonthisJune"peak"date.SimilarlyinSouthKoreamostcompaniesholdtheirgeneralmeetingontwodaysinMarch.
MarketApplicability:Japan,SouthKorea
Doesthecompanycollaboratewithintermediariestoaccommodatebeneficialownerstoattendshareholdermeetings?(Q372)
› Allshareholders,whetherregisteredinthecompany’sshareholderregistryorholdingsharesthroughcustodianaccounts,shouldhavetherighttoattendgeneralmeetings.TheJapaneseCorporateGovernanceCode(1-2-5)encouragesmoreactiveparticipationbyshareholdersatgeneralmeetings,anddiscouragescompaniesfromrestrictingbeneficialowners’participations.
MarketApplicability:Japan
Doesthecompanyparticipateinanelectronicvotingplatform?(Q374)› TheTokyoStockExchange(TSE)andBroadridgeFinancialSolutions,Inc.(Broadridge)haveestablishedan
"ElectronicVotingPlatformforForeignandInstitutionalInvestors,"andstartedoperationoftheplatformfromcompanieswith2005Decemberyear-end.Useoftheelectronicvotingplatformaffordsgreatervotingflexibilityforinvestorsasthevotingdeadlinescouldbesignificantreducedandinvestorscouldrelativelyeasilychangetheirvotingdecisionsclosetothemeetingdate.Currentlymorethan700companieshavealreadyagreedtoparticipateintheplatform.
![Page 77: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/77.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 77of159©2016ISS|InstitutionalShareholderServices
MarketApplicability:Japan
Doesthecompanyhaveanexclusivevenue/forumprovision?(Q351)› Exclusivevenueprovisionsrestrictshareholderlitigationagainstthecompanytoalimitednumberof
jurisdictions.Themostcommonvenuechosenisthestateofincorporation,thoughsomecompanieshavechosenothervenues,suchasthestateorcountywherethecompanyisheadquartered.Therationaleistolimitpotentiallitigationcostsbypreventingsimilarlawsuitsinmultiplestates,andtohavethecasesheardbyjudgesmostfamiliarwiththeapplicablestatelaw.However,thesearerestrictionsonshareholders’rights,and,intheabsenceofpastharm,itisnotalwayscleartherestrictionsarejustified.
MarketApplicability:U.S.
Doesthecompanyhaveafeeshiftingprovision?(Q363)› Fee-shiftingprovisionsprovidesfortheshiftingoflitigationexpensestoanunsuccessfulplaintiffwhodoes
notobtainajudgmentonthemeritsthatsubstantiallyachievesthefullremedysought.Broadprovisionsandscopemaydissuadeshareholdersfrompursuingmeritoriouslegalactionagainstthecompanyduetothesignificantfinancialhurdlesimposed.TheyalsoviolatetheordinaryAmericanpracticewhereeachpartyisresponsibleforitsownlitigationcosts.
› ForDelaware-incorporatedcompanies,theDelawareGeneralCorporationLawwasamendedin2015toinvalidatefee-shiftingbylawsastheypertainedtomattersofDelawarelaw,butdidnotextendtomattersunderfederaljurisdiction.
MarketApplicability:U.S.
Doesthecompanyhavearepresentativeclaimlimitationorothersignificantlitigationrightslimitations?(Q364)
› Representativeclaimsprovisionsrequirethataminimumlevelofsupportisrequiredforashareholdertoinitiatealawsuitagainstthecompany.Theaimistopreventfrivolouslawsuitsbroughtbyshareholderswithsmallstakes,buttheprovisionsdonotdistinguishbetweenfrivolousandmeritoriouslawsuits,andpreventsmallshareholders,unlessbandedtogether,fromsuingthecompany.
› Limitationsonshareholders’litigationrightscontinuetoproliferate.Asothertypesoflimitationsemerge,theywillbecapturedinthisdatapointaswell.
MarketApplicability:U.S.
Doesthecompanyprovideproxyaccesstoshareholders?(Q346)
![Page 78: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/78.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 78of159©2016ISS|InstitutionalShareholderServices
› Theabilityofshareholderstonominateboarddirectorsinthecompanyproxyalongwithmanagementnominees(knownas“proxyaccess”intheU.S.)isincreasinglyseenasafundamentalshareholderright.Companiescanprovideshareholderswiththisrightthroughadoptionofbylawprovisions,buttheymaylimitorputrestrictionsontheright.Restrictionstypicallyincludelimitsontheproportionanddurationofownershiprequiredtobeanominator,thenumberofshareholdersthatmayaggregateholdingstomeetthosethresholds,andthenumberofproxyaccesscandidatesthatmaybeputforward.
› Thisquestionwillconsiderwhetherproxyaccessisprovided,whetherproxyaccessisrequiredbyregulation,andwhethertheproxyaccessbylawincludesproblematicprovisionsthatnullifyitasapracticalrightforshareholders.
› The“requiredbyregulation”coversforeign-incorporatedU.S.DomesticIssuerssubjecttorulesallowingshareholdernominationsduetotheirjurisdictionofincorporation.Forexample,U.K.incorporatedcompaniesaresubjecttorulesthatallowshareholdersowning5%ofsharestonominatedirectors.TheserequirementsdifferfromproxyaccessbylawsadoptedvoluntarilyintheU.S.thatgenerallyfollowtheSEC’svacatedRule14a-11formulation,yettheystillprovidemechanismsforshareholderaccesstotheballot
› Inclusionofproblematicprovisions,suchas:countingdifferentmutualfundsundercommonmanagementasseparateshareholdersundertheaggregationlimits;requiringnominatingshareholderstopledgetoholdtheirsharespastthedateofthemeeting;providingtheboardwithbroadandbindingauthoritytointerprettheprovision;orcombinationsofotherproblematicprovisionsthataredeemedsufficienttonullifytheproxyaccessrightwillcausenocredittobegivenfortheadoptionofaproxyaccessbylaw.
MarketApplicability:U.S.
Whatistheownershipthresholdforproxyaccess?(Q359)› Thisproxyaccessprovisionistheownershipthresholdthatneedstobemetbytheproxyaccessnominating
group,asmeasuredastheownershipoverthetotalvotingpowerofacompany’ssecuritiesentitledtovoteintheelectionofdirectors.Athresholdisneededtobesettoensureshareholdershavesufficientinvestmentinthecompany,butthelevelshouldnotbetoohightopreventshareholdersfrombeingabletousetheright.MostcompaniesintheU.S.haveadoptedthevacatedSECRule14a-11formulationof3%ofthevotingpowerasfavoredbyinvestors.
MarketApplicability:U.S.
Whatistheownershipdurationthresholdforproxyaccess?(Q360)› Thisprovisionistheholdingrequirementofcontinuousownershipforeachmemberoftheproxyaccesss
nominatinggroup.Thisensuresthatthenominatorsarelong-termshareholders.TheSECformulationofaminimumof3yearsofownershiphasfoundacceptanceamonginvestorsandcompanies.Longerholdingperiodrequirementsareconsideredexcessive.
![Page 79: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/79.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 79of159©2016ISS|InstitutionalShareholderServices
MarketApplicability:U.S.
Whatisthecaponshareholdernomineestofillboardseatsfromproxyaccess?(Q361)› Proxyaccessisnotdesignedtoallowachangeofcontrol,thus,amaximumisplacedonthenumberof
boardseatsthatcanbefilledbyproxyaccessnomineeseachyear.UndertheSECformulation,thispercentagewassetat25%.Generally,investorshaveapprovedarangeof20%to25%oftheboard.Manycompanieshaveadopteda“greaterof2personsor20%”standard.
MarketApplicability:U.S.
Whatistheaggregationlimitonshareholderstoformanominatinggroupforproxyaccess?(Q362)› Thisprovisionconcernsanyrestrictiononthenumberofshareholderspermittedtojointogethertoform
thenominatinggrouptoachievethenecessaryownershipthreshold.ThevacatedSECrulehadnolimitonthenumberofshareholderspermitted.However,manyinvestors(notall)havepermittedareasonable,minimallimitation,onethatbalancestheadministrativeneedsofcompaniesvs.thedifficultyofachievingtheownershipthreshold.Alimitationofnofewerthan20shareholdershasgenerallybeenconsideredaminimalrestriction.
MarketApplicability:U.S.
OtherShareholderRightsIssues
Arethererelated-partytransactions(RPTs)withsignificantshareholders?(Q263)› Related-partytransactionswithasignificantshareholdercanrepresentguaranteedbusinesswhichcanhelp
tojustifysignificantinvestments,butcanalso"crowdout"transactionswithunrelatedpartieswhichmaybemoreprofitableforthecompany.
› QualityScorewillconsiderwhetherthecompanyhasRPTswithitsmajorshareholder.Majorshareholderandreportabletransactionsaregenerallydefinedbytherelevantstockexchange.
MarketApplicability:AsiaPacific,Australasia,LatinAmerica,Russia,SouthKorea,India
Cantheboardmateriallymodifythecompany'scapitalstructurewithoutshareholderapproval?(Q352)› Companiesgenerallyarerequiredtoputauthorizedcapitalincreasesorreductiontoashareholdervote,as
suchchangesrepresentsignificantpotentialdilutionofshareholdervalue.› Maryland-incorporatedREITshavetheabilitytoincrease/decreaseauthorizedcapitalwithoutashareholder
vote.OtherMarylandincorporatedcompaniescanoptinwithaspecificcharterprovision.
![Page 80: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/80.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 80of159©2016ISS|InstitutionalShareholderServices
MarketApplicability:U.S.
Whatisthedilutionlimitofthegeneralmandatetoissueshares?(Q318)› QualityScorewillconsiderthemaximumproportionofshareswhichcanbeissuedunderageneralmandate
approvedatthegeneralmeeting.
Marketapplicability:AsiaPacific,Australasia,SouthKorea,India
Whatisthediscountlimitofthegeneralmandatetoissueshares?(Q319)› QualityScorewillconsiderthemaximumdiscountlimitappliedonthemarketpriceofshareswhichcanbe
issuedunderageneralmandateapprovedatthegeneralmeeting.
Marketapplicability:AsiaPacific,Australasia,India
Whatisthedilutionlimitofthegeneralmandatetoissuerepurchasedshares?(Q320)› QualityScorewillconsiderthemaximumproportionofrepurchasedshareswhichcanbeissuedundera
generalmandateapprovedatthegeneralmeeting.
Marketapplicability:AsiaPacific
Whatistheaggregatedilutionlimitofshareissuanceandreissuancemandate?(Q321)› QualityScorewillconsiderthemaximumaggregateproportionofshareswhichcanbeissuedunderthe
generalissuanceandreissuancemandateapprovedatthegeneralmeeting.
Marketapplicability:AsiaPacific
Audit&RiskOversight
ExternalAuditor
Non-Auditfeesrepresentwhatpercentageoftotalfees?(Q1)› Thepracticeofauditorsprovidingnon-auditservicestocompaniescanproveproblematic.Whilelarge
auditorsmayhaveeffectiveinternalbarrierstoensurethattherearenoconflictsofinterest,anauditor'sabilitytoremainobjectiveisquestionablewhenfeespaidtotheauditorfornon-auditservices,suchas
![Page 81: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/81.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 81of159©2016ISS|InstitutionalShareholderServices
managementconsultingandspecialsituationaudits,exceedthestandardannualauditfees.Whilesomecompensationfornon-auditservicesiscustomary,theimportanceofmaintainingtheindependenceoftheauditorisparamount,andanimportantgaugeforthatistheportionthatnon-auditfeescompriseoftotalauditfees.
› Thisquestionwillevaluatewhethernon-auditfeesconstituteamajorityoffeespaidtothecompany‘sexternalauditor.
› AuditFeesconsistofallfeesnecessarytoperformtheauditorreview,whichinclude:statutoryaudits,comfortletters/duediligence,attestservices,consents,reviewoffilings,financialstatementauditandreview.Thefollowingareconsideredasaudit-relatedfees:assuranceandrelatedservices,employeebenefitplan/audits,duediligencerelatedtomergersandacquisitions,auditsinconnectionwithacquisitions,internalcontrolreviews,consultationonfinancialaccountingandreportingstandards.OtherFeesincludestaxfeesingeneral,taxservices,reviewoftaxlaws,taxrestructuring,taxplanning-excludesfeesresultedfromone-timecapitalstructureevents,initialpublicofferings(IPOs),bankruptcyemergence,andspinoffs,reviewofnetoperatinglosses,taxassistanceforpotentialtransactionssalesandusetaxexaminations,andotherfeesthatcannotbecategorizedunderthethreeclassifications.
MarketApplicability:AllregionsexceptJapan
Whatisthetenureoftheexternalauditor?(Q347)› Auditortenureisthelengthoftheauditor-clientrelationship.Someacadamicstudiesfoundlimitingauditor
tenuremayensureauditorindependence,reducetheauditfailurerisksandprotectauditquality.TheSarbanes-OxleyActof2002requirestheperiodicrotationofcertainkeyauditfirmstaff,butsomeinvestorsseektherotationoftheauditfirmitselftoensureauditorindependence.ThismustbebalancedagainsttheadditionalexpensesinvolvedandthelimitednumberofauditfirmsintheUS.
› Ifmultipleexternalauditorsexist,theoneidentifiedastheprimaryisevaluatedforU.S.companies,whiletheonewiththelongesttenureisevaluatedforAnglocompanies.
› Thisfactorhasazero-weightimpactonthescoringmodelandisincludedforinformationalpurposesonly.
MarketApplicability:U.S.,Anglo
Didtheauditorissueanadverseopinioninthepastyear?(Q2)› Auditoropinionreportsarecriticaltoensuringacompany’sfinancialsarepresentedcorrectlyandfreeof
materialmisstatements.IntheU.S.,an“adverse”auditoropinioniswhentheauditorbelievesthatnopartofthecompany’sfinancialstatementsshouldbereliedon.A“qualified”auditoropinioniswhentheauditorbelievesthatingeneralthefinancialstatementscanberelieduponwithcertainexceptions.An“unqualified”opinionisthebest.
![Page 82: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/82.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 82of159©2016ISS|InstitutionalShareholderServices
› Thisquestionwillevaluatewhetheracompanyreceivedanadverseopinionfromitsauditor,havingreceivedeitheranUnqualifiedopinion,Qualifiedopinion,Adverseopinion,Emphasisofmatter,orGoingConcerndetermination.
MarketApplicability:Allregions
Doesthecompanyhaveapolicyonevaluatingcompetencyandindependenceoftheexternalauditor?(Q365)
› Anexternalauditfirmperformingauditingservicesshouldnotonlyhavenecessarycompetenciesandskillstoperformtheauditbutalsomaintainhighdegreeofindependence.CompaniesshouldputinplaceaformalpoliciesandprocessestoroutinelyreviewtheindependenceandeffectivenessoftheauditorasrecommendedundertheJapaneseCorporateGovernanceCode(3-2-1).
MarketApplicability:Japan
AuditandAccountingControversies
Hasthecompanyrestatedfinancialsforanyperiodwithinthepasttwoyears?(Q3)› Companiesmayrestatetheirfinancialsduetomisrepresentationoraccountingirregularities,forexample,
or,inothercases,duetoclericalerrorsintheproductionoffinancialstatementsorbusinesscombinationsorachangeinaccountingpolicies.QualityScorewillconsidertheformer,focusingonthoserestatementsthatposeamaterialrisktoshareholdersand/orstakeholders.Restatementscanresultinsignificantreputational,legal,andfinancialrisks.
› Whendeterminingifacompanyhasamaterialrestatement,ISS’guidelinesare:› Hasthecompanyrestatedfinancialresultsforanyperiodduringthepast24months(thisreferstowhen
thecompanyrestateditsfinancialstatements,nottheperiodrestated);› Didtherestatementcausematerialchanges(whetherpositiveornegative)tothefinancialstatements?
Possibleexceptionstotherulewouldbeindustry-specificissues,suchaspoorinventorycontrolinamanufacturing/industrialcompanyorpoorassetvaluationsforfinancialinstitutions;
› Includeannouncedrestatementsthatarebeingmadetocorrectmaterialmisstatementsofpreviouslyreportedfinancialinformation;
› Excludeannouncementsinvolvingstocksplits,changesinaccountingprinciples(rulechanges),andotherrestatementsthatwerenotmadetocorrectmistakesintheapplicationofaccountingstandards;
› Revisionsandrestatementslinkedtoamaterialweaknessareconsideredmaterial.› Someexamplesofrestatementsthataregenerallyexcluded:
› Thoseresultingfrommergersandacquisitions;› Discontinuedoperations;› Stocksplits,issuanceofstockdividends;
![Page 83: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/83.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 83of159©2016ISS|InstitutionalShareholderServices
› Currency-relatedissues(forexample,convertingfromJapaneseyentoU.S.dollars);› Changesinbusinesssegmentdefinitions;› Changesduetotransfersofmanagement;› Changesmadeforpresentationpurposes;› Generalaccountingchangesundergenerallyacceptedaccountingprinciples(GAAP);and› Litigationsettlements.
› Thisquestionwillevaluatewhether,inthepasttwoyears,thecompanyhasrestateditsfinancialsforanyperiod,oriftheinformationisnotdisclosed.
MarketApplicability:U.S.,Canada,SouthKorea
Hasthecompanymadenon-timelyfinancialdisclosurefilingsinthepasttwoyears?(Q4)› Non-timelyfinancialfilingscouldresultinpenaltiesfortheissuerandcouldbeindicativeofinternalprocess
orcontrolissues.› QualityScorewillconsiderwhetherthecompanyfilednon-timelyfilingsinthepasttwoyears,orthereisno
disclosuretoindicateithasdoneso.IntheU.S.,any“NT”SECfilingisconsideredevidenceofnon-timelyfilings.
MarketApplicability:U.S.,Canada,Japan,SouthKorea
HasthecompanyfiledbelatedlyitsAnnualReportforthemostrecentfiscalyear?(Q302)› ThisquestionwillevaluatewhetherthecompanyfileditsAnnualReportontimeforthemostrecentfiscal
year.Latefinancialfilingscouldresultinpenaltiesfortheissuerandadverselyimpactthecompany’sreputationandshareholdervalue.
Marketapplicability:AsiaPacific,India,SouthKorea
Hasaregulatortakenenforcementactionagainstthecompanyinthepasttwoyears?(Q5)› Regulatoryenforcementactionscouldresultinsignificantpenaltiesfortheissuerandadverselyimpactthe
company’sreputationandshareholdervalue.Enforcementactioncoversawidebreadthofcircumstances,forexample,freezingofacompany'sassets,fines,probationaryperiodsofanysort,oranyotheractiontakenbyanyregulatorybodyunderanyjurisdictioninwhichthecompanyoperates.
› Thisquestionwillevaluatewhetheracompanywassubjecttoenforcementactionbyaregulatorwithinthepasttwoyears.ISSwillalsoanalyzeiftheinvestigationwasresolvedwithamaterialpenalty.
› Inassessingthematerialityofanypenalties,QualityScorewillconsiderthenatureoftheunderlyinginvestigation(s),thesizeofanymonetarypenalties,bothonanabsolutebasisandrelativetocertainfinancialmetrics,includingbutnotlimitedto,revenues,earnings,cashflows,andmarketvalue,aswellas
![Page 84: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/84.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 84of159©2016ISS|InstitutionalShareholderServices
anynon-monetarypenaltiesorrequirements.Settlementagreementswithregulatorybodiesarealsoconsidered,evenifthecompanydeniestheallegationsunderlyingtheinvestigation.
MarketApplicability:Allregions
Hasaregulatortakenenforcementactionagainstadirectororofficerofthecompanyinthepasttwoyears?(Q200)
› Enforcementactionscouldresultinsignificantpenaltiesfortheissuerandadverselyimpactthecompany’sreputationandshareholdervalue.
› Thisquestionwillevaluatewhetheradirectororofficerwassubjecttoenforcementactionbyaregulatorwithinthepasttwoyears,includingenforcementactionsrelatedtoemploymentorboardserviceatotherfirms.ISSwillalsoanalyzeiftheinvestigationwasresolvedwithamaterialpenalty.Inassessingthematerialityofanypenalties,QualityScorewillconsiderthenatureoftheunderlyinginvestigation(s),thesizeofanymonetarypenalties,aswellasanynon-monetarypenaltiesorrequirements.IntheU.S.,ingeneral,anypenaltyagainstanindividualisconsideredmaterial.Settlementagreementswithregulatorybodiesarealsoconsidered,evenifthedirectororofficerdeniestheallegationsunderlyingtheinvestigation.
MarketApplicability:U.S.,Canada,AsiaPacific,SouthKorea,India
Isthecompany,adirectororofficerofthecompanycurrentlyunderinvestigationbyaregulatorybody?(Q201)
› Disclosedinvestigationsindicatethepotentialforcontroversythatcouldresultinenforcementactions,significantpenaltiesfortheissuer,andadverseconsequencesforthecompany’sreputationandshareholdervalue.
› Thisquestionwillevaluatewhetherthecompany,oranyofitsdirectorsorofficers,iscurrentlyunderinvestigationbyaregulatorybody.ISSwillcategorizeinvestigationsaseitherroutineornon-routine.FCPA-relatedinvestigationsandWellsNoticesaregenerallyconsideredtobenon-routineinvestigations,unlessthecompanystatesthatitdoesnotexpecttheoutcometohaveamaterialadverseeffectonthecompany.Non-routinewillalsoincludeinvestigationswhichraiseseriousethicalconcernsorposepotentialrisktothebroaderfinancialsystem(LIBORmanipulation,mortgagefraud,highfrequencytrading,orotherseriousone-offinvestigations).
› Thefollowingtypeswillgenerallybeconsidered"routine",unlessthereisindicationthattheyinvolvemajorfraudorrisk:› "Promotion,marketingorsaleofproducts"and"billing/falseclaims;"› Accounting(unlesstiedtoarestatement);and› Civilinvestigationdemands.
MarketApplicability:U.S.,AsiaPacific,SouthKorea,India
![Page 85: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/85.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 85of159©2016ISS|InstitutionalShareholderServices
Hasthecompanydisclosedanymaterialweaknessesinitsinternalcontrolsinthepasttwofiscalyears?(Q8)
› Companieswithsignificantmaterialweaknessespotentiallyhaveineffectiveinternalcontrols,whichmayleadtoinaccuratefinancialstatements,hamperingshareholders’abilitytomakeinformedinvestmentdecisions,andmayleadtoaweakeninginpublicconfidenceandshareholdervalue.
› QualityScorewillevaluateandconsidermaterialweaknessesoverthepasttwofiscalyearsandwhethertheywereevidencedinthemostrecentyear;inthepreviousyear;inconsecutiveyears;ifallmaterialweaknesseswerefullyremediated;oriftheinformationisnotdisclosed.
MarketApplicability:U.S.,Canada,Japan,Anglo,Africa
OtherAuditissues
Howmanyfinancialexpertsserveontheauditcommittee?(Q6)› Thosedeemedfinancialexpertsmustpossessaccountingandauditskills.Localbestpracticerequirements
orrulesdetailingspecificcriteriawillapplyfortherelevantjurisdictions.Forexample,Germany’sgovernancecodecallsforthechairmanoftheauditcommitteetopossessspecialistknowledgeandexperienceintheapplicationofaccountingprinciplesandinternalcontrolprocesses.‖TheDutchcorporategovernancecode,meanwhile,issimilarbutnotthesame,suggestingthatatleastonememberofthesupervisoryboardshallbeafinancialexpertwithrelevantknowledgeandexperienceoffinancialadministrationandaccountingforlistedcompaniesorotherlargelegalentities.Insomemarkets,bestpracticealsorecommendsthatthefinancialexpertbeindependent.
› Thisquestionwillevaluatewhetherthecompanyhasindicatedamemberontheauditcommitteewithsufficientfinancialskillsinauditandaccounting.AmemberoftheAuditCommitteeisconsideredafinancialexpertifhe/sheisorwasachieffinancialOfficer,charteredaccountant,certifiedmanagementaccountant,fellowcharteredaccountant(FCA),fellowcertifiedpracticingaccountant(FCPA),orpartnerofanaccountingfirm.IntheUSandCanada,QualityScorewillincludethefinancialexpert(s)disclosedbythecompany.
› Thisfactorhasazero-weightimpactonCanadiancompaniesandisincludedforinformationalpurposesonly.IntheU.S.,thisisnowascoredfactorforcompanieswithzero,one,ortwofinancialexpertssittingontheauditcommittee.
MarketApplicability:U.S.,Canada,W.Europe,Germanic,Anglo,S.Europe,AsiaPacific,Australasia,AsiaPacific,Africa,Russia,SouthKorea
Hasthecompanychangeditsauditfirmwithoutavalidreasoninthepasttwofiscalyears?(Q288)› Bestpracticedictatesthatacompanytoprovideavalidreasonforanauditorchange.
![Page 86: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/86.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 86of159©2016ISS|InstitutionalShareholderServices
› Thisquestionwillevaluatewhetherthecompanygaveavalidexplanationforchangingitsauditfirminthepasttwofiscalyears.
MarketApplicability:Japan,AsiaPacific,LatinAmerica
Cantheauditfirmbeindemnifiedwithoutshareholdervote?(Q280)› Somecompaniesallowtheboardtoindemnifytheauditfirmwithoutshareholdervote.Institutional
investorstypicallyarguethatsuchindemnificationshouldbesubjecttoashareholdervoteandnotleftsolelytoboarddiscretion.
› QualityScorewillconsiderwhetherauditfirmscanbeindemnifiedwithoutshareholdervotes.
MarketApplicability:Japan
AppendixI:Event-drivenDataUpdatesMuchoftheinformationincludedinQualityScorecomesfromthecompany’scircular/proxyfilingforitsannualshareholdermeeting,andtheISSResearchteams’interpretationandproxyvotingrecommendationstoourclientsforthatmeeting.WhilecompanieshavetheabilitymostoftheyeartoupdateinformationforQualityScore,thisabilityisrestrictedduringthetimeISSisgatheringtheinformationfromtheproxyandpreparingitsproxyanalysis.Oncetheproxyvotingrecommendationsreportisreleasedtoinstitutionalclients,companiesareabletoonceagainreviewtheirQualityScoredataprofilesandupdate/correctinformation.
OnlineQualityScoreprofilesareupdatedoncedaily,atapproximately5amEastern.Therefore,whentheISSproxyanalysisisreleasedcontainingtheupdatedQualityScorescores,theonlinewebsitemaynotyetreflecttheupdatedscoresandprofile.Theonlinescoreandprofilewillbeupdatedthenextday.
Duringtheyearoutsideoftheannualmeeting,ISSreviewsnewfilingstokeepQualityScoreuptodate,incorporatingchangestobylaws,adoptionsandredemptionsofpoisonpills,andotherevents.TwocategoriesofsuchupdatesareaccordedspecialtreatmentinQualityScore:
ClassificationofNewly-AppointedDirectors
ISSwillmonitor8-Kfilingsfornewdirectordisclosures,suchasnewdirectorsbeingappointedtotheboard,orincumbentdirectorsleavingtheboard.Ingeneral,thestandard8-KdisclosureisinsufficientforISStodetermineifthenewdirectorisindependentunderISS’classification.However,ifthecompanyprovidessufficientdisclosure,ISSmaymakeapreliminarydetermination(forQualityScorepurposes)ofthedirector’sISSclassification.Thisclassificationistentativeandsubjecttochangeoncethefulldisclosureonthedirectorisavailableintheproxy.
![Page 87: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/87.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 87of159©2016ISS|InstitutionalShareholderServices
IfISSisunabletomakeapreliminarydeterminationofthenewlyappointeddirector’sclassificationbasedonacompany'sdisclosure,ISSwillconsiderthedirector“unclassified”untilthereissufficientinformationtodeterminetheclassification.Insuchacase,thecompany’sboardpercentages,includingboardindependence,committeeindependencecalculations,andpercentageofdirectorsthatarefamilymembersorwithrelatedpartytransactions,arefrozenatthecalculatedvaluesbasedonthelastcompletedisclosures.Thecompletelistsoffactorsare:10,11,19,25,31,50,51,203,205,206,and208.Assuch,thereisnoimpactoncompanyscoresforthesefactors.Whenalldirectorshavebeenclassifiedaseitherindependentorotherwise,thecalculationwillbeupdatedtoreflectthesechanges.
ForISStobeabletomakethepreliminarydeterminationofwhetheranewlyappointeddirectorisindependentunderISSstandards,thefollowingminimuminformationonthedirector(perhapsintheformofashortbiography)isrequired:
1. Currentposition;2. Thecompany’sdeterminationofwhetherthedirectorisindependentunderitslistingstandards;3. Anypreviousemploymentatthecompany;4. Anyfamilialrelationshipswiththecompany’sexecutivesordirectors;5. Anytransactions(perItem404aofRegulationS-K)betweenthedirector,thedirector’semployer,orthe
director’simmediatefamilymember’scurrentemployer,andthecompanyinthelastfiscalyear.
![Page 88: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/88.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 88of159
©2016ISS|InstitutionalShareholderServices
AppendixII:QualityScoreFactorMethodologyandRegionApplicability(Ü Indicatesthefactorhaszero-weightimpactonthescoringmodelandisforinformationalpurposesonly)
QualityScore US Canada Anglo AsiaPac Japan W.Europe S.Europe Nordic Germanic Australasia LatinAmerica Africa Russia SouthKorea India
Audit&RiskOversight
1Non-Auditfeesrepresent
whatpercentageoftotal
fees?x x x x X x x x x x x x x x
347Whatisthetenureofthe
externalauditor? * *
365
Doesthecompanyhave
apolicyonevaluating
competencyand
independenceofthe
externalauditor?
x
2Didtheauditorissuean
adverseopinioninthe
pastyear?x x x x x X x x x x x x x x x
3
Hasthecompany
restatedfinancialsfor
anyperiodwithinthe
pasttwoyears?
x x x
4
Hasthecompanymade
non-timelyfinancial
disclosurefilingsinthe
pasttwoyears?
x x x x
302Hasthecompanyfiled
belatedlyitsAnnual x x x
![Page 89: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/89.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 89of159
©2016ISS|InstitutionalShareholderServices
QualityScore US Canada Anglo AsiaPac Japan W.Europe S.Europe Nordic Germanic Australasia LatinAmerica Africa Russia SouthKorea India
Reportforthemost
recentfiscalyear?
5
Hasaregulatortaken
enforcementaction
againstthecompanyin
thepasttwoyears?
x x x X x X x x x x x x x x x
200
Hasaregulatortaken
enforcementaction
againstadirectoror
officerofthecompanyin
thepasttwoyears?
x x X x x
201
Isthecompany,a
directororofficerofthe
companycurrentlyunder
investigationbya
regulatorybody?
x X x x
8
Hasthecompany
disclosedanymaterial
weaknessesinitsinternal
controlsinthepasttwo
fiscalyears?
x x x x x
6Howmanyfinancial
expertsserveonthe
auditcommittee?x * x X X x x x x x x
288
Hasthecompany
changeditsauditfirm
withoutavalidreasonin
thepastthreefiscal
years?
X x x
![Page 90: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/90.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 90of159
©2016ISS|InstitutionalShareholderServices
QualityScore US Canada Anglo AsiaPac Japan W.Europe S.Europe Nordic Germanic Australasia LatinAmerica Africa Russia SouthKorea India
280Cantheauditfirmbe
indemnifiedwithout
shareholdervote? X x
Board
9Howmanydirectors
serveontheboard? * x x X x X x x x x x x x x x
304Whatisthenumberof
womenontheboard?x x x X x X x x x x x x x x x
354Whatistheproportionof
womenontheboard?x x x X x X x x x x x x x x
10
Whatistheindependent
directorcompositionof
theBoardaccordingto
ISSclassification?
x x x X x X x x x x x x x x x
203
Ifthecompanyis
controlled,what
percentageoftheboard
isindependentunderISS’
standards?
X x
11
Whatpercentageofthe
directorselectedby
shareholdersare
independent?
X X x
289Isthereanoutside
directorontheBoard? X *
282Whatpercentageofthe
boardiscomposedof
outsidedirectors? X x
![Page 91: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/91.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 91of159
©2016ISS|InstitutionalShareholderServices
QualityScore US Canada Anglo AsiaPac Japan W.Europe S.Europe Nordic Germanic Australasia LatinAmerica Africa Russia SouthKorea India
281Whatistheindependent
statutoryauditors’
composition? x
13
Whatproportionofnon-
executivedirectorson
theboardhaslengthy
tenure?
x x X * x x
355
Whatproportionofnon-
executivedirectorshas
beenontheboardless
than6years?
x
14Istheboardchair
independent?x x x X x X x x x x x x x x x
16Hasthecompany
identifiedasenior(lead)
independentdirector?X x x X X x x x x
367
Hasthecompany
appointedaLead
IndependentDirectoror
establishedotherwaysof
effectivecollaboration
betweenindependent
directorsand
managementand
statutoryauditors?
x
17
Whatisthetermof
mandateproposedfor
supervisoryboard
members(atthelatest
generalmeeting)?
X x x
![Page 92: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/92.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 92of159
©2016ISS|InstitutionalShareholderServices
QualityScore US Canada Anglo AsiaPac Japan W.Europe S.Europe Nordic Germanic Australasia LatinAmerica Africa Russia SouthKorea India
205
Whatpercentageofthe
boardconsistsof
immediatefamily
membersofmajority
shareholders,executives
andformerexecutives
(withinthepastfive
years)?
* * *
206
Whatpercentageofthe
boardconsistsofformer
orcurrentemployeesof
thecompany?
* X * *
19
Whatpercentageof
nominatingcommittee
membersare
independentbasedon
ISS’standards?
x x x X x X x x x x x x x
306Arethereexecutiveson
thenominating
committee? X x x x
23Isthechairofthe
nominatingcommittee
independent? X x X x x x x x x
207Doesthecompany
maintainaformal
nominatingcommittee? x x
208Arethereanyboard
membersonthe
nominatingcommittee? x
![Page 93: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/93.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 93of159
©2016ISS|InstitutionalShareholderServices
QualityScore US Canada Anglo AsiaPac Japan W.Europe S.Europe Nordic Germanic Australasia LatinAmerica Africa Russia SouthKorea India
210
Istheremorethanone
boardmemberwhois
dependentonmajor
shareholdersonthe
nominatingcommittee?
x
211Whatisthenumberof
nominatingcommittee
members? x x
330
Doesthecompany
maintainaformal
remuneration
committee?
X x
25
Whatpercentageofthe
compensationcommittee
isindependentunderISS’
standards?
x x x X x X x x x x x x x
27Arethereexecutiveson
thecompensation
committee? X X x x x x x x
28Isthechairofthe
compensationcommittee
independent? x X x X x x x x x x x
29
Isthechairoftheboard
ofdirectorsamemberof
thecompensation
committee?
x
212Whatisthenumberof
remunerationcommittee
members? x x
![Page 94: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/94.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 94of159
©2016ISS|InstitutionalShareholderServices
QualityScore US Canada Anglo AsiaPac Japan W.Europe S.Europe Nordic Germanic Australasia LatinAmerica Africa Russia SouthKorea India
331Doesthecompany
maintainaformalaudit
committee? x
332Doesthecompany
maintainaformalfiscal
council? x
31
Whatpercentageofthe
auditcommitteeis
independentunderISS’
standards?
x x x X x X x x x x x x x
33Arethereexecutiveson
theauditcommittee? X X x x x x x
34Isthechairoftheaudit
committeeindependent? x X x X x x x x x x x
35Isthechairoftheboard
ofdirectorsamemberof
theauditcommittee? x X
213
Howmanymembers
serveontheaudit
committee?
x x
283Doesthecompanyhave
athreecommittee
system? *
340
Hasthecompany
disclosedinformationon
keycommittee
attendance?
x
![Page 95: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/95.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 95of159
©2016ISS|InstitutionalShareholderServices
QualityScore US Canada Anglo AsiaPac Japan W.Europe S.Europe Nordic Germanic Australasia LatinAmerica Africa Russia SouthKorea India
309
Howmanydirectors
serveonanexcessive
numberofoutside
boards?
X
36Dotheexecutivesserve
onasignificantnumber
ofoutsideboards? x X x x x *
37DoestheCEOserveona
significantnumberof
outsideboards?x x x X x x x x *
38
Howmanynon-
executivesserveona
significantnumberof
outsideboards?
x x x X x x x x *
39Doesthechairserveona
significantnumberof
outsideboards? x X x x x x *
337Hasthecompany
disclosedtheattendance
ofeachdirector? X
43
Whatpercentageofall
meetingswasattended
byatleast50%ofthe
supervisoryboard?
x
44
Whatpercentageofthe
directorsattendedless
than75%ofboard
and/orkeycommittee
meetings?
X x X x x x x x
![Page 96: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/96.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 96of159
©2016ISS|InstitutionalShareholderServices
QualityScore US Canada Anglo AsiaPac Japan W.Europe S.Europe Nordic Germanic Australasia LatinAmerica Africa Russia SouthKorea India
45
Didanydirectorsattend
lessthan75%ofthe
aggregateboardand
applicablekeycommittee
meetingswithoutavalid
excuse?
x x x
49
Howmanydirectors
receivedwithhold/
againstvotesof50%or
greateratthelastannual
meeting?
x x X
366
Doesthecompany
routinelyhold
independentdirector
meetingsorhaveother
mechanismstofacilitate
effectivecollaborationof
independentdirectors,
managementand
statutoryauditors?
x
312
Whatpercentageof
directorsreceived
shareholderapproval
ratesbelow80%?
x X
348
Doesthecompany
disclosetheexistenceof
aformalCEOandkey
executiveofficers
successionplan?
x
368Doesthecompanyhave
amechanismto x
![Page 97: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/97.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 97of159
©2016ISS|InstitutionalShareholderServices
QualityScore US Canada Anglo AsiaPac Japan W.Europe S.Europe Nordic Germanic Australasia LatinAmerica Africa Russia SouthKorea India
appropriatelymonitor
andsuperviseitsCEO
successionplanning?
315
Whatwastheaverage
outsidedirector'stotal
compensationasa
multipleofthepeer
median?
x
140
Whatistheaggregate
levelofstockownership
oftheofficersand
directors,asa
percentageofshares
outstanding?
x X x x x x x x
144Doalldirectorswith
morethanoneyearof
serviceownstock?x x X x x x
243Didanyexecutiveor
directorpledgecompany
shares?x
41
Doesthecompany
discloseapolicy
requiringanannual
performanceevaluation
oftheboard?
x x x x X x x x x x
46
Doesthecompany
disclose
board/governance
guidelines?
x X
![Page 98: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/98.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 98of159
©2016ISS|InstitutionalShareholderServices
QualityScore US Canada Anglo AsiaPac Japan W.Europe S.Europe Nordic Germanic Australasia LatinAmerica Africa Russia SouthKorea India
349
Doestheboardhaveany
mechanismsto
encouragedirector
refreshment?
*
215Whatisthequorumfor
directormeetings x
100
Doesthecompanyallow
thechairasecondor
castingvoteatdirector
meetingsintheeventof
atie?
x x
143Aredirectorssubjectto
stockownership
guidelines?x x x
244
Doesthecompanyhave
apolicyprohibiting
hedgingofcompany
sharesbyemployees?
x x x
336
Doesthecompany
discloseinformationon
RelatedParty
Transactions?
x x
50Whatpercentofthe
directorswereinvolved
inmaterialRPTs?x x
51Dothedirectorswith
RPTssitonkeyboard
committees?x x
![Page 99: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/99.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 99of159
©2016ISS|InstitutionalShareholderServices
QualityScore US Canada Anglo AsiaPac Japan W.Europe S.Europe Nordic Germanic Australasia LatinAmerica Africa Russia SouthKorea India
216
Aretherematerial
related-party
transactionsinvolvingthe
CEO?
x X
99
Hastheboard
adequatelyaddresseda
shareholderresolution
supportedbyamajority
vote?
x
350
Hastheboard
adequatelyrespondedto
lowsupportfora
managementproposal?
x
345
HasISS’reviewfound
thattheboardof
directorsrecentlytook
actionthatmaterially
reducesshareholder
rights?
x X
ShareholderRightsandTakeoverDefenses
54Doesthecompanyhave
classesofstockwith
differentvotingrights?x x x X x x x x * x x
369Doesthecompanyhave
classshareswithfullor
multiplevotingrights? x
55Arethereanydirectors
ontheboardwhoarenot
upforelectionbyallx x
![Page 100: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/100.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 100of159
©2016ISS|InstitutionalShareholderServices
QualityScore US Canada Anglo AsiaPac Japan W.Europe S.Europe Nordic Germanic Australasia LatinAmerica Africa Russia SouthKorea India
classesofcommon
shareholders?
56
Isthereasunset
provisiononthe
company'sunequal
votingstructure?
x x
57
Whatistheproportionof
multiplevotingrights(or
votingcertificates)
relativetothetotal
numberofvotingrights?
x X x x x
58
Whatistheleveloffree
floatofthemultiple
votingrightsorvoting
certificates?
x X x x x
59
Whatpercentageofthe
company'ssharesis
representedby
depositaryreceipts
whereafoundationvotes
unexercisedproxies?
X
60
Hasthecompany
indicatedtoeliminate
thesystemofdepositary
receipts?
X
61Aredepositaryreceipt
holdersrestrictedintheir
votingrights? X
![Page 101: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/101.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 101of159
©2016ISS|InstitutionalShareholderServices
QualityScore US Canada Anglo AsiaPac Japan W.Europe S.Europe Nordic Germanic Australasia LatinAmerica Africa Russia SouthKorea India
63
Whatpercentageofthe
company'ssharecapital
ismadeupofnon-voting
shares?
x X x x x x x
64
Whatistheleveloffree
floatofvotingsharesin
relationtothenon-
votingshares?
x X x x x x x
65Doesthecompanyhave
anabsolutevotingright
ceiling? X x x x x
66Doesthecompanyhave
arelativevotingright
ceiling? X x x x
67Doesthecompanyhave
anownershipceiling? x x X x x x x x x x
68Doesthecompanyhave
ownershipceilingsfor
specificparties? x X x x x x x x x
69Doshareholdersorthe
Statehavethepriority
right? x X x x x x x x
217
Isthereacoattail
provisionattachedtothe
company'sunequal
votingstructure?
x
![Page 102: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/102.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 102of159
©2016ISS|InstitutionalShareholderServices
QualityScore US Canada Anglo AsiaPac Japan W.Europe S.Europe Nordic Germanic Australasia LatinAmerica Africa Russia SouthKorea India
72
Doesthecompanyhave
targetedstockplacement
thatcanbeusedasa
takeoverdefense?
X x x
73
Doesthecompany
maintainpre-emptive
rightsintheeventofa
takeoverbid?
X x
74
Canthecompanytarget
repurchasedsharesin
theeventofatakeover
bid
X x x
218Arethereownership
factorsthataffectthe
takeoverdefenses? x X x x x x x x
219Aretherepriorityrights
thataffectthetakeover
defenses? x X x x x x x x
77Arealldirectorselected
annually?x x x *
83Istheboardauthorized
toissueblankcheck
preferredstock?x x x
78Doesthecompanyhave
apoisonpill(shareholder
rightsplan)ineffect?x x x
![Page 103: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/103.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 103of159
©2016ISS|InstitutionalShareholderServices
QualityScore US Canada Anglo AsiaPac Japan W.Europe S.Europe Nordic Germanic Australasia LatinAmerica Africa Russia SouthKorea India
79Whatisthetrigger
thresholdforthepoison
pill?x
80Doesthepoisonpillhave
asunsetprovision?x X
81Doesthepoisonpillhave
aTIDEprovision? *
82Doesthepoisonpillhave
aqualifiedofferclause?x
91Whatistheexpiration
dateofthepoisonpill?x
220Isthepoisonpill
designedtopreservetax
assets(NOLpill)?x
222Whenwasthepoisonpill
implementedor
renewed?x
223
Doesthecompany's
poisonpillincludea
modifiedslow-handor
dead-handprovision?
x
221Wasthepoisonpill
approvedby
shareholders? x
![Page 104: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/104.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 104of159
©2016ISS|InstitutionalShareholderServices
QualityScore US Canada Anglo AsiaPac Japan W.Europe S.Europe Nordic Germanic Australasia LatinAmerica Africa Russia SouthKorea India
290Doesthecompanyhave
acontrolling
shareholder?* X x * * x x x x x
224
Ifthecompanyhasa
majorityvotingstandard,
isthereapluralitycarve-
outinthecaseof
contestedelections?
x
284Doestheremovalofa
directorrequirea
supermajorityvote? x
333Whatistheleveloftag
alongrightsforminority
shareholders? X x
89
Doesthecompany
requireasuper-majority
votetoapprove
amendmentstothe
charterandbylaws?
x x x
90
Doesthecompany
requireasuper-majority
votetoapprove
mergers/business
combinations?
x x
285Doesthecompanyhave
discretionoverdividend
payments? x x
286Aretheshareholders
allowedtosubmit
dividendproposals? x
![Page 105: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/105.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 105of159
©2016ISS|InstitutionalShareholderServices
QualityScore US Canada Anglo AsiaPac Japan W.Europe S.Europe Nordic Germanic Australasia LatinAmerica Africa Russia SouthKorea India
334Arethenamesofthe
nomineedirectors
disclosed? x
84
Whatproportionof
sharesmustbe
representedatthe
generalmeetingto
cancelthebindingnature
ofthenominationof
supervisoryboard
members(andor
executiveboard
members)?
X
53Didthecompanyhavea
slateballotatitslast
shareholders'meeting? X x x x x
262Whatisthenumberof
vacanciesontheboard? x x
97
Whatisthepercentage
ofsharecapitalneeded
toconveneaspecial
meeting?
x x X
98Canshareholdersactby
writtenconsent?x *
338Doesthecompanyuse
cumulativevotingfor
directorelection? X x
![Page 106: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/106.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 106of159
©2016ISS|InstitutionalShareholderServices
QualityScore US Canada Anglo AsiaPac Japan W.Europe S.Europe Nordic Germanic Australasia LatinAmerica Africa Russia SouthKorea India
52Doesthecompanyhave
amajorityvotestandard
inuncontestedelections?x x
343
Ifthecompanyhasa
majorityvotingpolicyin
directorelections,does
thepluralitystandard
applyforcontested
elections?
x
225
Aretherematerial
restrictionsastotiming
ortopicstobediscussed,
orownershiplevels
requiredtocallthe
meeting?
x
101
Isshareholderquorum
forshareholders'
meetingsatleast2
personsrepresentingat
least25%ofthe
outstandingshares?
x
335
Didthecompanyfileits
proxymaterialslatein
thepastyear?
X x x x
371
Howmanynumberof
daysbeforethegeneral
meetingdidthecompany
publishitsproxy
materials?
x
![Page 107: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/107.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 107of159
©2016ISS|InstitutionalShareholderServices
QualityScore US Canada Anglo AsiaPac Japan W.Europe S.Europe Nordic Germanic Australasia LatinAmerica Africa Russia SouthKorea India
373Doesthecompany
provideproxymaterials
inEnglish? x
370
Doesthecompany
disclosethepolicyon
cross-shareholding,
includingvotingpolicy
forsuchshares?
x
287Doesthecompanyhold
itsgeneralmeetingona
peakdate? x x
372
Doesthecompany
collaboratewith
intermediariesto
accommodatebeneficial
ownerstoattend
shareholdermeetings?
x
374
Doesthecompany
participateinan
electronicvoting
platform?
x
351Doesthecompanyhave
anexclusive
venue/forumprovision?x
363Doesthecompanyhave
afeeshiftingprovision?x
364Doesthecompanyhave
arepresentativeclaim
limitationorotherx
![Page 108: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/108.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 108of159
©2016ISS|InstitutionalShareholderServices
QualityScore US Canada Anglo AsiaPac Japan W.Europe S.Europe Nordic Germanic Australasia LatinAmerica Africa Russia SouthKorea India
significantlitigation
rightslimitations?
346Doesthecompany
provideproxyaccessto
shareholders?x
359Whatistheownership
thresholdforproxy
access?x
360Whatistheownership
durationthresholdfor
proxyaccess?x
361
Whatisthecapon
shareholdernomineesto
fillboardseatsfrom
proxyaccess?
x
362
Whatistheaggregation
limitonshareholdersto
formanominatinggroup
forproxyaccess?
x
263ArethereRPTswith
significantshareholders? X x x x x x
352
Cantheboardmaterially
modifythecompany's
capitalstructurewithout
shareholderapproval?
x
318Whatisthedilutionlimit
ofthegeneralmandate
toissueshares? X x x x
![Page 109: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/109.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 109of159
©2016ISS|InstitutionalShareholderServices
QualityScore US Canada Anglo AsiaPac Japan W.Europe S.Europe Nordic Germanic Australasia LatinAmerica Africa Russia SouthKorea India
319Whatisthediscountlimit
ofthegeneralmandate
toissueshares? X x x
320
Whatisthedilutionlimit
ofthegeneralmandate
toissuerepurchased
shares?
X
321
Whatistheaggregate
dilutionlimitofshare
issuanceandreissuance
mandate?
X
Compensation/Remuneration
114IsthereacaponCEO's
annualbonus? x * X x x x x
115Isthereacapon
executives'annual
bonus? x X x x x x
116Whatpercentageofthe
annualbonusforCEOis
orcanbedeferred? x X x x x
117
Whatpercentageofthe
annualbonusfor
executivesisorcanbe
deferred?
x X x x x
226
Whatisthedegreeof
alignmentbetweenthe
company'scumulative3-
yearpaypercentilerank,
relativetopeers,andits
* *
![Page 110: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/110.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 110of159
©2016ISS|InstitutionalShareholderServices
QualityScore US Canada Anglo AsiaPac Japan W.Europe S.Europe Nordic Germanic Australasia LatinAmerica Africa Russia SouthKorea India
3-yearcumulativeTSR
rank,relativetopeers?
227
Whatisthedegreeof
alignmentbetweenthe
company's1-yearpay
percentilerank,relative
topeers,andits1-year
TSRrank,relativeto
peers?
* *
228
Whatisthesizeofthe
CEO's1-yearpay,asa
multipleofthemedian
payforcompanypeers?
X x x X x x x
229
Whatisthedegreeof
alignmentbetweenthe
company'sTSRand
changeinCEOpayover
thepastfiveyears?
X x x X x x x
232
Whatistheratioofthe
CEO'stotalcompensation
tothenexthighestpaid
executive?
X
233
Whatistheperformance
periodforthelatest
activelongterm
incentiveplan(orthe
proposedplan)for
executives?
x X x x x
![Page 111: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/111.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 111of159
©2016ISS|InstitutionalShareholderServices
QualityScore US Canada Anglo AsiaPac Japan W.Europe S.Europe Nordic Germanic Australasia LatinAmerica Africa Russia SouthKorea India
329
Whatisthedegreeof
alignmentbetweenthe
company'sannualized3-
yearpaypercentilerank,
relativetopeers,andits
3-yearannualizedTSR
rank,relativetopeers?
X x x X x x x
156AreanyoftheNEOs
eligibleformulti-year
guaranteedbonuses?X x
154Doesthecompany
provideloansto
executives? x x X x x x x x
118Ispartofthebonus
grantedortobegranted
guaranteed? x x X x x x x
159Didthecompanygranta
one-offrewardtoanyof
itsexecutives? x x x
237
Whatistheratioofthe
CEO'snon-performance-
basedcompensation(All
OtherCompensation)to
BaseSalary?
X
322Doesthecompanyhave
anequity-based
compensationplan? X x x x x x
375Doesthecompanyhave
aperformance-basedpay x
![Page 112: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/112.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 112of159
©2016ISS|InstitutionalShareholderServices
QualityScore US Canada Anglo AsiaPac Japan W.Europe S.Europe Nordic Germanic Australasia LatinAmerica Africa Russia SouthKorea India
orotherincentivesforits
executives?
129
Dothecompany'sactive
equityplansprohibit
sharerecyclingfor
options/SARS?
X
138Dothecompany'sactive
equityplansprohibit
option/SARrepricing?X x
238
Doesthecompany's
activeequityplans
prohibitoption/SARcash
buyouts?
X x
239Dothecompany'sactive
equityplanshavean
evergreenprovision?X X
240
Dothecompany'sactive
equityplanshavea
liberal
definitionofchange-in-
control?
X
139
Hasthecompany
repricedoptionsor
exchangedthemfor
shares,optionsorcash
withoutshareholder
approvalinthelastthree
years?
X x
127Whatisthetotal
proportionofall x x x x x x x x x x x x
![Page 113: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/113.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 113of159
©2016ISS|InstitutionalShareholderServices
QualityScore US Canada Anglo AsiaPac Japan W.Europe S.Europe Nordic Germanic Australasia LatinAmerica Africa Russia SouthKorea India
outstandingequitybased
planstowardstheshare
capital?
128Isthereamaximumlevel
ofdilutionperyear? x X x *
130
Doesthecompany’s
equitygrantrateexceed
themean+1standard
deviationofits
industry/indexpeers?
X
136
Whatarethepricing
conditionsforstock
optionsgrantedto
executives?
x X x x x x x x x x x
155Didthecompanydisclose
aclawbackormalus
provision?X x x x x x x x
131
Whatarethevesting
periodsmandatedinthe
plandocumentsfor
executives'stockoptions
orSARSintheequity
plans(adopted/amended
inthelast3years)?
X x x X x x x x x x x x x x
132
Whatarethevesting
periodsmandatedinthe
plandocuments,
adopted/amendedinthe
lastthreeyears,for
x x x x x x x x x x x x x
![Page 114: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/114.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 114of159
©2016ISS|InstitutionalShareholderServices
QualityScore US Canada Anglo AsiaPac Japan W.Europe S.Europe Nordic Germanic Australasia LatinAmerica Africa Russia SouthKorea India
executives'restricted
stock/stockawards?
133
Whatarethevesting
periodsmandatedinthe
plandocumentsfor
executives'restricted
stock/stockawards
(adopted/amendedin
thelastthreeyears)?
x x X x x x x x x x x
323
Whatarethevesting
periodsmandatedinthe
plandocuments,
adopted/amendedinthe
lastthreeyears,for
executives'Matching
plan?
x
324
Whatarethevesting
periodsmandatedinthe
plandocuments,
adopted/amendedinthe
lastthreeyears,for
executives'deferralplan?
X x
134
Whatisthe
holding/retentionperiod
forstockoptions(for
executives)?
X x x x x x x x
135Whatisthe
holding/retentionperiod
forrestrictedshares/x x x x x x x
![Page 115: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/115.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 115of159
©2016ISS|InstitutionalShareholderServices
QualityScore US Canada Anglo AsiaPac Japan W.Europe S.Europe Nordic Germanic Australasia LatinAmerica Africa Russia SouthKorea India
stockawards(for
executives)?
145
Whatproportionofthe
salaryissubjecttostock
ownership
requirements/guidelines
fortheCEO?
X x x x x x
146
Whatproportionofthe
salaryissubjecttostock
ownership
requirements/guidelines
fortheotherexecutives?
x x x x
104Doesthecompany
provideloansto
directors? x x x
109Dodirectorsparticipate
inequitybasedplans? x x x x x x
110
Donon-executive
directorsparticipateto
performancerelated
remuneration?
x X x x x x x x x x
107
Whatpartofthetotal
remunerationreceived
bydirectorsisoptions-
based?
x
325
Aredirectorswhoare
eligibletoreceive
grants/awardsunderthe
planalsoinvolvedinthe
x x x
![Page 116: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/116.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 116of159
©2016ISS|InstitutionalShareholderServices
QualityScore US Canada Anglo AsiaPac Japan W.Europe S.Europe Nordic Germanic Australasia LatinAmerica Africa Russia SouthKorea India
administrationofthe
plan?
341
Doesthecompany
disclosethe
remunerationpaidtothe
boardinAGMproxy
filings?
x
112
Doesthecompany
disclosedetailsof
individualexecutives’
remuneration?
X X x x x x
376
Doesthecompanyhave
apolicyonexecutive
remunerationand
computationbasisfor
thepay?
X
113
Doesthecompany
discloseperformance
metricsfortheshort
termincentiveplan(for
executives)?
X x x X x x x x x x x
246
Whatisthelevelof
disclosureon
performancemeasures
forthelatestactiveor
proposedlongterm
incentiveplan?
X x x
121Doesthecompany
discloseaperformance
measureformatching? x X x x x x x
![Page 117: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/117.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 117of159
©2016ISS|InstitutionalShareholderServices
QualityScore US Canada Anglo AsiaPac Japan W.Europe S.Europe Nordic Germanic Australasia LatinAmerica Africa Russia SouthKorea India
122
Doesthecompany
discloseaperformance
measureforstock
optionsplans(for
executives)?
x x X x x x x x x x
123
Doesthecompany
discloseaperformance
measureforrestricted
shareplans(for
executives)?
x x X x x x x x x
125
Doesthecompany
discloseaperformance
measureforotherlong
termplans(for
executives)?
x X x x x x x x
353
Doesthecompany
employatleastone
metricthatcomparesits
performancetoa
benchmarkorpeergroup
(relativeperformance)?
X
166
Hasthecompany
voluntarilyadopteda
managementsay-on-pay
advisoryvoteresolution
forthemostrecent
annualmeetingor
committedtoa
resolutiongoing
forward?
x x x
![Page 118: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/118.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 118of159
©2016ISS|InstitutionalShareholderServices
QualityScore US Canada Anglo AsiaPac Japan W.Europe S.Europe Nordic Germanic Australasia LatinAmerica Africa Russia SouthKorea India
328
DidthemostrecentSay
onPayproposalreceive
shareholders'support
below70%?
X
250Whatisthelevelof
disclosureonCEO
ownershipguidelines? x
148Whatisthetriggerunder
thechange-in-control
agreements?X x
153
Doequitybasedplansor
otherlongtermawards
vestcompletelyupona
changeincontrol?
X x x x
150
Intheeventof
terminationofthe
contractofexecutives,
doestheequitybased
remunerationvest?
x x
161
Whatisthemultipleof
payintheseverance
agreementsfortheCEO
(uponachange-in-
control)?
X x x x x x x x x
247
Whatisthebasisforthe
change-in-controlor
severancepaymentfor
theCEO?
X x x x x x x x x
![Page 119: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/119.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 119of159
©2016ISS|InstitutionalShareholderServices
QualityScore US Canada Anglo AsiaPac Japan W.Europe S.Europe Nordic Germanic Australasia LatinAmerica Africa Russia SouthKorea India
160
Whatisthemultipleof
thechangein
control/severance
paymentforexecutives
excludingtheCEO(upon
achange-in-control)?
x x x x x x x
248
Whatisthebasisforthe
change-in-controlor
severancepaymentfor
executivesexcludingthe
CEO?
x x x x x x x
152
Howlongisthenotice
periodfortheCEOifthe
companyterminatesthe
contract?
x x
162
Doesthecompany
provideexcisetaxgross-
upsforchange-in-control
payments?
X x
163Whatisthelengthof
employmentagreement
withtheCEO?*
300
HasISS'qualitative
reviewidentifiedapay-
for-performance
misalignment?
X x
301
HasISSidentifieda
problematicpaypractice
orpolicythatraises
concerns?
X x x x x x x x x x x x
![Page 120: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/120.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 120of159
©2016ISS|InstitutionalShareholderServices
AppendixIII:Region-specificFactorMethodologyUnitedStates1 Non-Auditfeesrepresentwhatpercentageoftotalfees?
347 Whatisthetenureoftheexternalauditor?*
2 Didtheauditorissueanadverseopinioninthepastyear?
3 Hasthecompanyrestatedfinancialsforanyperiodwithinthepasttwoyears?
4 Hasthecompanymadenon-timelyfinancialdisclosurefilingsinthepasttwoyears?
5 Hasaregulatorinitiatedenforcementactionagainstthecompanyinthepasttwoyears?
200 Hasaregulatorinitiatedenforcementactionagainstadirectororofficerofthecompanyinthepast
twoyears?
201 Isthecompany,adirectororofficerofthecompanycurrentlyunderinvestigationbyaregulatory
body?
8 Hasthecompanydisclosedanymaterialweaknessesinitsinternalcontrolsinthepasttwofiscal
years?
6 Howmanyfinancialexpertsserveontheauditcommittee?
9 Howmanydirectorsserveontheboard?*
304 Whatisthenumberofwomenontheboard?
354 Whatistheproportionofwomenontheboard?
10 WhatistheindependentdirectorcompositionoftheBoardaccordingtoISSclassification?
13 Whatproportionofnon-executivedirectorsontheboardhaslengthytenure?
355 Whatproportionofnon-executivedirectorshasbeenontheboardforlessthan6years?
14 WhatistheclassificationoftheChairmanoftheBoard?
16 HasthecompanyidentifiedaSeniorIndependentDirectororanindependentLeadDirector?
205 Whatpercentageoftheboardconsistsofimmediatefamilymembersofmajorityshareholders,
executivesandformerexecutives(withinthepastfiveyears)?*
206 Whatpercentageoftheboardareformerorcurrentemployeesofthecompany?*
19 Whatistheindependentstatusofthenominatingcommitteemembers?
25 Whatistheindependentstatusofthecompensationcommitteemembers?
31 Whatistheindependentstatusoftheauditcommitteemembers?
37 DoestheCEOserveonasignificantnumberofoutsideboards?
38 Howmanynon-executivesserveonanexcessivenumberofoutsideboards?
45 Didanydirectorsattendlessthan75%oftheaggregateboardandapplicablekeycommittee
meetingswithoutavalidexcuse?
49 Howmanydirectorsreceivedwithhold/againstvotesof50%orgreateratthelastannualmeeting?
312 Whatpercentageofdirectorsreceivedshareholderapprovalratesbelow80%?
348 DoesthecompanydisclosetheexistenceofaformalCEOandkeyexecutiveofficerssuccessionplan?
315 Whatwastheaverageoutsidedirector'stotalcompensationasamultipleofthepeermedian?
144 Doalldirectorswithmorethanoneyearofserviceownstock?
243 Didanyexecutiveordirectorpledgecompanyshares?
41 Doesthecompanydiscloseapolicyrequiringanannualperformanceevaluationoftheboard?
46 Doesthecompanydiscloseboard/governanceguidelines?
349 Doestheboardhaveanymechanismstoencouragedirectorrefreshment?*
![Page 121: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/121.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 121of159
©2016ISS|InstitutionalShareholderServices
143 Aredirectorssubjecttostockownershipguidelines?
244 Doesthecompanyhavearobustpolicyprohibitinghedgingofcompanysharesbyemployees?
50 WhatpercentofthedirectorswereinvolvedinmaterialRPTs?
51 DothedirectorswithRPTssitonkeyboardcommittees?
216 Aretherematerialrelated-partytransactionsinvolvingtheCEO?
99 Hastheboardadequatelyaddressedashareholderresolutionsupportedbyamajorityvote?
350 Hastheboardadequatelyrespondedtolowsupportforamanagementproposal?
345 HasISS'reviewfoundthattheboardofdirectorshastakenunilateralactionthatmateriallyreduces
shareholderrightsorthecompanyhashadothergovernancefailures?
54 Doesthecompanyhaveclassesofstockwithdifferentvotingrights?
55 Arethereanydirectorsontheboardwhoarenotupforelectionbyallclassesofcommon
shareholders?
56 Isthereasunsetprovisiononthecompany'sunequalvotingstructure?
77 Arealldirectorselectedannually?
83 Istheboardauthorizedtoissueblankcheckpreferredstock?
78 Doesthecompanyhaveapoisonpill(shareholderrightsplan)ineffect?
79 Whatisthetriggerthresholdforthepoisonpill?
80 Doesthepoisonpillhaveasunsetprovision?
81 DoesthepoisonpillhaveaTIDEprovision?*
82 Doesthepoisonpillhaveaqualifiedofferclause?
91 Whatistheexpirationdateofthepoisonpill?
220 Isthepoisonpilldesignedtopreservetaxassets(NOLpill)?
222 Whenwasthepoisonpillimplementedorrenewed?
223 Doesthecompany'spoisonpillincludeamodifiedslow-handordead-handprovision?
290 Doesthecompanyhaveacontrollingshareholder?*
224 Ifthecompanyhasamajorityvotingstandard,isthereapluralitycarve-outinthecaseofcontested
elections?
89 Doesthecompanyrequireasuper-majorityvotetoapproveamendmentstothecharterand
bylaws?
90 Doesthecompanyrequireasuper-majorityvotetoapprovemergers/businesscombinations?
97 Whatisthepercentageofsharecapitalneededtoconveneaspecialmeeting?
98 Canshareholdersactbywrittenconsent?
52 Doesthecompanyhaveamajorityvotestandardinuncontestedelections?
225 Aretherematerialrestrictionsastotimingortopicstobediscussed,orownershiplevelsrequiredto
callthemeeting?
351 Doesthecompanyhaveanexclusivevenue/forumprovision?
363 Doesthecompanyhaveafeeshiftingprovision?
364 Doesthecompanyhavearepresentativeclaimlimitationorothersignificantlitigationrights
limitations?
346 Doesthecompanyprovideproxyaccesstoshareholders?
359 Whatistheownershipthresholdforproxyaccess?
360 Whatistheownershipdurationthresholdforproxyaccess?
361 Whatisthecaponshareholdernomineestofillboardseatsfromproxyaccess?
362 Whatistheaggregationlimitonshareholderstoformanominatinggroupforproxyaccess?
![Page 122: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/122.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 122of159
©2016ISS|InstitutionalShareholderServices
352 Cantheboardmateriallymodifythecompany'scapitalstructurewithoutshareholderapproval?
226 Whatisthedegreeofalignmentbetweenthecompany'scumulative3-yearpaypercentilerank,
relativetopeers,andits3-yearcumulativeTSRrank,relativetopeers?*
227 Whatisthedegreeofalignmentbetweenthecompany's1-yearpaypercentilerank,relativeto
peers,andits1-yearTSRrank,relativetopeers?*
228 WhatisthesizeoftheCEO's1-yearpay,asamultipleofthemedianpayforcompanypeers?
229 Whatisthedegreeofalignmentbetweenthecompany'sTSRandchangeinCEOpayoverthepast
fiveyears?
232 WhatistheratiooftheCEO'stotalcompensationtothenexthighestpaidexecutive?
329 Whatisthedegreeofalignmentbetweenthecompany'sannualized3-yearpaypercentilerank,
relativetopeers,andits3-yearannualizedTSRrank,relativetopeers?
156 AreanyoftheNEOseligibleformulti-yearguaranteedbonuses?
237 WhatistheratiooftheCEO'snon-performance-basedcompensation(AllOtherCompensation)to
BaseSalary?
129 Dothecompany'sactiveequityplansprohibitsharerecyclingforoptions/SARS?
138 Dothecompany'sactiveequityplansprohibitoption/SARrepricing?
238 Doesthecompany'sactiveequityplansprohibitoption/SARcashbuyouts?
239 Dothecompany'sactiveequityplanshaveanevergreenprovision?
240 Dothecompany'sactiveequityplanshavealiberaldefinitionofchange-in-control?
139 Hasthecompanyrepricedoptionsorexchangedthemforshares,optionsorcashwithout
shareholderapprovalinthelastthreeyears?
130 Doesthecompany'sequitygrantrateexceedthemean+1standarddeviationofitsindustry/index
peers?
155 Didthecompanydiscloseaclawbackormalusprovision?
131 Whatarethevestingperiodsmandatedintheplandocumentsforexecutives'stockoptionsorSARS
intheequityplans(adopted/amendedinthelast3years)?
132 Whatarethevestingperiodsmandatedintheplandocumentsforexecutives'restrictedstock/
stockawards(adopted/amendedinthelastthreeyears)?
134 Whatistheholding/retentionperiodforstockoptions(forexecutives)?
135 Whatistheholding/retentionperiodforrestrictedshares/stockawards(forexecutives)?
145 Whatproportionofthesalaryissubjecttostockownershiprequirements/guidelinesfortheCEO?
113 Doesthecompanydiscloseaperformancemeasurefortheshorttermincentiveplan(for
executives)?
246 Whatisthelevelofdisclosureonperformancemeasuresforthelatestactiveorproposedlongterm
incentiveplan?
353 Doesthecompanyemployatleastonemetricthatcomparesitsperformancetoabenchmarkor
peergroup(relativeperformance)?
328 DidthemostrecentSayonPayproposalreceiveshareholdersupportbelow70%?
148 What'sthetriggerunderthechange-in-controlagreements?
153 Doequitybasedplansorotherlongtermawardsvestcompletelyuponachangeincontrol?
161 WhatisthemultipleofpayintheseveranceagreementsfortheCEO(uponachange-in-control)?
247 Whatisthebasisforthechange-in-controlorseverancepaymentfortheCEO?
162 Doesthecompanyprovideexcisetaxgross-upsforchange-in-controlpayments?
163 WhatisthelengthofemploymentagreementwiththeCEO?*
![Page 123: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/123.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 123of159
©2016ISS|InstitutionalShareholderServices
300 HasISS'qualitativereviewidentifiedapay-for-performancemisalignment?
301 HasISSidentifiedaproblematicpaypracticeorpolicythatraisesconcerns?
![Page 124: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/124.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 124of159
©2016ISS|InstitutionalShareholderServices
Canada1 Non-Auditfeesrepresentwhatpercentageoftotalfees?
2 Didtheauditorissueanadverseopinioninthepastyear?
3 Hasthecompanyrestatedfinancialsforanyperiodwithinthepasttwoyears?
4 Hasthecompanymadenon-timelyfinancialdisclosurefilingsinthepasttwoyears?
5 Hasaregulatorinitiatedenforcementactionagainstthecompanyinthepasttwoyears?
200 Hasaregulatorinitiatedenforcementactionagainstadirectororofficerofthecompanyinthepast
twoyears?
8 Hasthecompanydisclosedanymaterialweaknessesinitsinternalcontrolsinthepasttwofiscal
years?
6 Howmanyfinancialexpertsserveontheauditcommittee?*
9 Howmanydirectorsserveontheboard?
304 Whatisthenumberofwomenontheboard?
354 Whatistheproportionofwomenontheboard?
10 WhatistheindependentdirectorcompositionoftheBoardaccordingtoISSclassification?
13 Whatproportionofnon-executivedirectorsontheboardhaslengthytenure?
14 WhatistheclassificationoftheChairmanoftheBoard?
16 HasthecompanyidentifiedaSeniorIndependentDirectororanindependentLeadDirector?
19 Whatistheindependentstatusofthenominatingcommitteemembers?
25 Whatistheindependentstatusofthecompensationcommitteemembers?
31 Whatistheindependentstatusoftheauditcommitteemembers?
37 DoestheCEOserveonasignificantnumberofoutsideboards?
38 Howmanynon-executivesserveonasignificantnumberofoutsideboards?
45 Didanydirectorsattendlessthan75%oftheaggregateboardandapplicablekeycommittee
meetingswithoutavalidexcuse?
49 Howmanydirectorsreceivedwithhold/againstvotesof50%orgreateratthelastannualmeeting?
144 Doalldirectorswithmorethanoneyearofserviceownstock?
41 Doesthecompanydiscloseapolicyrequiringanannualperformanceevaluationoftheboard?
215 Whatisthequorumfordirectormeetings?
100 Doesthecompanyallowthechairasecondorcastingvoteatdirectormeetingsintheeventofatie?
143 Aredirectorssubjecttostockownershipguidelines?
244 Doesthecompanyhavearobustpolicyprohibitinghedgingofcompanysharesbyemployees?
50 WhatpercentofthedirectorswereinvolvedinmaterialRPTs?
51 DothedirectorswithRPTssitonkeyboardcommittees?
54 Doesthecompanyhaveclassesofstockwithdifferentvotingrights?
55 Arethereanydirectorsontheboardwhoarenotupforelectionbyallclassesofcommon
shareholders?
56 Isthereasunsetprovisiononthecompany'sunequalvotingstructure?
217 Isthereacoattailprovisionattachedtothecompany'sunequalvotingstructure?
77 Arealldirectorselectedannually?
83 Istheboardauthorizedtoissueblankcheckpreferredstock?
78 Doesthecompanyhaveapoisonpill(shareholderrightsplan)ineffect?
89 Doesthecompanyrequireasuper-majorityvotetoapproveamendmentstothecharterand
bylaws?
![Page 125: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/125.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 125of159
©2016ISS|InstitutionalShareholderServices
90 Doesthecompanyrequireasuper-majorityvotetoapprovemergers/businesscombinations?
97 Whatisthepercentageofsharecapitalneededtoconveneaspecialmeeting?
98 Canshareholdersactbywrittenconsent?*
52 Doesthecompanyhaveamajorityvotestandardinuncontestedelections?
343 Ifthecompanyhasamajorityvotingpolicyindirectorelections,doesthepluralitystandardapplyfor
contestedelections?
101 Isshareholderquorumforshareholders'meetingsatleast2personsrepresentingatleast25%ofthe
outstandingshares?
226 Whatisthedegreeofalignmentbetweenthecompany'scumulative3-yearpaypercentilerank,
relativetopeers,andits3-yearcumulativeTSRrank,relativetopeers?*
227 Whatisthedegreeofalignmentbetweenthecompany's1-yearpaypercentilerank,relativeto
peers,andits1-yearTSRrank,relativetopeers?*
228 WhatisthesizeoftheCEO's1-yearpay,asamultipleofthemedianpayforcompanypeers?
229 Whatisthedegreeofalignmentbetweenthecompany'sTSRandchangeinCEOpayoverthepast
fiveyears?
329 Whatisthedegreeofalignmentbetweenthecompany'sannualized3-yearpaypercentilerank,
relativetopeers,andits3-yearannualizedTSRrank,relativetopeers?
156 AreanyoftheNEOseligibleformulti-yearguaranteedbonuses?
154 Doesthecompanyprovideloanstoexecutives?
118 Ispartofthebonusgrantedortobegrantedguaranteed?
138 Dothecompany'sactiveequityplansprohibitoption/SARrepricing?
238 Doesthecompany'sactiveequityplansprohibitoption/SARcashbuyouts?
139 Hasthecompanyrepricedoptionsorexchangedthemforshares,optionsorcashwithout
shareholderapprovalinthelastthreeyears?
155 Didthecompanydiscloseaclawbackormalusprovision?
131 Whatarethevestingperiodsmandatedintheplandocumentsforexecutives'stockoptionsorSARS
intheequityplans(adopted/amendedinthelast3years)?
132 Whatarethevestingperiodsmandatedintheplandocumentsforexecutives'restrictedstock/
stockawards(adopted/amendedinthelastthreeyears)?
133 Whatarethevestingperiodsmandatedintheplandocuments,adopted/amendedinthelastthree
years,forexecutives'otherlong-termplan?
134 Whatistheholding/retentionperiodforstockoptions(forexecutives)?
145 Whatproportionofthesalaryissubjecttostockownershiprequirements/guidelinesfortheCEO?
104 Doesthecompanyprovideloanstodirectors?
109 Dodirectorsparticipateinequitybasedplans?
107 Whatpartofthetotalremunerationreceivedbydirectorsisoptionsbased?
113 Doesthecompanydiscloseaperformancemeasurefortheshorttermincentiveplan(for
executives)?
122 Doesthecompanydiscloseaperformancemeasureforstockoptionsplans(forexecutives)?
123 Doesthecompanydiscloseaperformancemeasureforrestrictedshare/stockawardplans(for
executives)?
166 Hasthecompanyvoluntarilyadoptedamanagement'sayonpay'advisoryvoteresolutionforthe
mostrecentannualmeeting?
148 What'sthetriggerunderthechange-in-controlagreements?
![Page 126: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/126.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 126of159
©2016ISS|InstitutionalShareholderServices
153 Doequitybasedplansorotherlongtermawardsvestcompletelyuponachangeincontrol?
161 WhatisthemultipleofpayintheseveranceagreementsfortheCEO(uponachange-in-control)?
247 Whatisthebasisforthechange-in-controlorseverancepaymentfortheCEO?
162 Doesthecompanyprovideexcisetaxgross-upsforchange-in-controlpayments?
300 HasISS'qualitativereviewidentifiedapay-for-performancemisalignment?
301 HasISSidentifiedaproblematicpaypracticeorpolicythatraisesconcerns?
![Page 127: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/127.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 127of159
©2016ISS|InstitutionalShareholderServices
Anglo1 Non-Auditfeesrepresentwhatpercentageoftotalfees?
347 Whatisthetenureoftheexternalauditor?*
2 Didtheauditorissueanadverseopinioninthepastyear?
5 Hasaregulatorinitiatedenforcementactionagainstthecompanyinthepasttwoyears?
8 Hasthecompanydisclosedanymaterialweaknessesinitsinternalcontrolsinthepasttwofiscal
years?
6 Howmanyfinancialexpertsserveontheauditcommittee?
9 Howmanydirectorsserveontheboard?
304 Whatisthenumberofwomenontheboard?
354 Whatistheproportionofwomenontheboard?
10 WhatistheindependentdirectorcompositionoftheBoardaccordingtoISSclassification?
14 WhatistheclassificationoftheChairmanoftheBoard?
16 HasthecompanyidentifiedaSeniorIndependentDirectororanindependentLeadDirector?
19 Whatistheindependentstatusofthenominatingcommitteemembers?
211 Whatisthenumberofnominatingcommitteemembers?
25 Whatistheindependentstatusofthecompensationcommitteemembers?
28 What'stheclassificationofthechairmanofthecompensationcommittee?
29 IstheChairmanoftheboardofdirectorsamemberofthecompensationcommittee?
212 Whatisthenumberofremunerationcommitteemembers?
31 Whatistheindependentstatusoftheauditcommitteemembers?
34 What'stheclassificationofthechairmanoftheauditcommittee?
35 IstheChairmanoftheboardofdirectorsamemberoftheauditcommittee?
213 Howmanymembersserveontheauditcommittee?
36 Dotheexecutivesserveonasignificantnumberofoutsideboards?
37 DoestheCEOserveonasignificantnumberofoutsideboards?
38 Howmanynon-executivesserveonasignificantnumberofoutsideboards?
39 Doesthechairserveonasignificantnumberofoutsideboards?
45 Didanydirectorsattendlessthan75%oftheaggregateboardandapplicablekeycommittee
meetingswithoutavalidexcuse?
140 Whatistheaggregatelevelofstockownershipoftheofficersanddirectors,asapercentageof
sharesoutstanding?
41 Doesthecompanydiscloseapolicyrequiringanannualperformanceevaluationoftheboard?
54 Doesthecompanyhaveclassesofstockwithdifferentvotingrights?
57 Whatistheproportionofmultiplevotingrights(orvotingcertificates)relativetothetotalnumber
ofvotingrights?
58 Whatistheleveloffreefloatofthemultiplevotingrightsorvotingcertificates?
63 Whatpercentageofthecompany'ssharecapitalismadeupofnon-votingshares?
64 Whatistheleveloffreefloatofvotingsharesinrelationtothenon-votingshares?
67 Doesthecompanyhaveanownershipceiling?
68 Doesthecompanyhaveownershipceilingsforspecificparties?
69 DoshareholdersortheStatehavethepriorityright?
218 Arethereownershipfactorsthataffectthetakeoverdefenses?
219 Aretherepriorityrightsthataffectthetakeoverdefenses?
![Page 128: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/128.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 128of159
©2016ISS|InstitutionalShareholderServices
114 IsthereacaponCEO'sannualbonus?
115 Isthereacaponexecutives'(excludingtheCEO)annualbonus?
116 WhatpercentageoftheannualbonusforCEOisorcanbedeferred?
117 Whatpercentageoftheannualbonusforexecutives(excludingtheCEO)isorcanbedeferred?
228 WhatisthesizeoftheCEO's1-yearpay,asamultipleofthemedianpayforcompanypeers?
229 Whatisthedegreeofalignmentbetweenthecompany'sTSRandchangeinCEOpayoverthepast
fiveyears?
232 WhatistheratiooftheCEO'stotalcompensationtothenexthighestpaidexecutive?
329 Whatisthedegreeofalignmentbetweenthecompany'sannualized3-yearpaypercentilerank,
relativetopeers,andits3-yearannualizedTSRrank,relativetopeers?
154 Doesthecompanyprovideloanstoexecutives?
118 Ispartofthebonusgrantedortobegrantedguaranteed?
127 Whatisthetotalproportionofalloutstandingequitybasedplanstowardsthesharecapital?
128 Isthereamaximumlevelofdilutionperyear?
136 Whatarethepricingconditionsforstockoptionsgrantedtoexecutives?
155 Didthecompanydiscloseaclawbackormalusprovision?
131 Whatarethevestingperiodsmandatedintheplandocumentsforexecutives'stockoptionsorSARS
intheequityplans(adopted/amendedinthelast3years)?
132 Whatarethevestingperiodsmandatedintheplandocumentsforexecutives'restrictedstock/
stockawards(adopted/amendedinthelastthreeyears)?
133 Whatarethevestingperiodsmandatedintheplandocuments,adopted/amendedinthelastthree
years,forexecutives'otherlong-termplan?
134 Whatistheholding/retentionperiodforstockoptions(forexecutives)?
135 Whatistheholding/retentionperiodforrestrictedshares/stockawards(forexecutives)?
145 Whatproportionofthesalaryissubjecttostockownershiprequirements/guidelinesfortheCEO?
146 Whatproportionofthesalaryissubjecttostockownershiprequirements/guidelinesforexecutives
(excludingtheCEO)?
110 Donon-executivedirectorsparticipatetoperformancerelatedremuneration?
113 Doesthecompanydiscloseaperformancemeasurefortheshorttermincentiveplan(for
executives)?
121 Doesthecompanydiscloseaperformancemeasureformatching?
122 Doesthecompanydiscloseaperformancemeasureforstockoptionsplans(forexecutives)?
123 Doesthecompanydiscloseaperformancemeasureforrestrictedshare/stockawardplans(for
executives)?
125 Doesthecompanydiscloseaperformancemeasureforotherlongtermplans(forexecutives)?
161 WhatisthemultipleofpayintheseveranceagreementsfortheCEO(uponachange-in-control)?
247 Whatisthebasisforthechange-in-controlorseverancepaymentfortheCEO?
160 Whatisthemultipleofthechangeincontrol/severancepaymentforexecutivesexcludingtheCEO
(uponachange-in-control)?
248 Whatisthebasisforthechange-in-controlorseverancepaymentforexecutivesexcludingtheCEO?
301 HasISSidentifiedaproblematicpaypracticeorpolicythatraisesconcerns?
![Page 129: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/129.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 129of159
©2016ISS|InstitutionalShareholderServices
AsiaPacific1 Non-Auditfeesrepresentwhatpercentageoftotalfees?
2 Didtheauditorissueanadverseopinioninthepastyear?
4 Hasthecompanymadenon-timelyfinancialdisclosurefilingsinthepasttwoyears?
302 HasthecompanymadelatefilingofAnnualReportforthemostrecentfiscalyear?
5 Hasaregulatorinitiatedenforcementactionagainstthecompanyinthepasttwoyears?
200 Hasaregulatorinitiatedenforcementactionagainstadirectororofficerofthecompanyinthepast
twoyears?
201 Isthecompany,adirectororofficerofthecompanycurrentlyunderinvestigationbyaregulatory
body?
6 Howmanyfinancialexpertsserveontheauditcommittee?
288 Hasthecompanychangeditsauditfirmduetoinvalidorquestionablereasonsinthepasttwo
years?
280 Canauditfirmbeindemnifiedwithoutshareholdervote?
281 Whatistheindependentstatutoryauditors’composition?
9 Howmanydirectorsserveontheboard?
304 Whatisthenumberofwomenontheboard?
354 Whatistheproportionofwomenontheboard?
10 WhatistheindependentdirectorcompositionoftheBoardaccordingtoISSclassification?
11 WhatistheindependentdirectorcompositionoftheBoard(shareholderelectedboardmembers)?
289 IsthereanoutsidedirectorontheBoard?
282 WhatistheoutsiderdirectorcompositionoftheBoard?
13 Whatproportionofnon-executivedirectorsontheboardhaslengthytenure?
14 WhatistheclassificationoftheChairmanoftheBoard?
16 HasthecompanyidentifiedaSeniorIndependentDirectororanindependentLeadDirector?
206 Whatpercentageoftheboardareformerorcurrentemployeesofthecompany?
19 Whatistheindependentstatusofthenominatingcommitteemembers?
306 Arethereexecutivesonthenominatingcommittee?
23 What'stheclassificationofthechairmanofthenominatingcommittee?
330 Doesthecompanymaintainaformalremunerationcommittee?
25 Whatistheindependentstatusofthecompensationcommitteemembers?
27 Arethereexecutivesonthecompensationcommittee?
28 What'stheclassificationofthechairmanofthecompensationcommittee?
31 Whatistheindependentstatusoftheauditcommitteemembers?
33 Arethereexecutivesontheauditcommittee?
34 What'stheclassificationofthechairmanoftheauditcommittee?
309 Howmanydirectorsserveonanexcessivenumberofoutsideboards?
337 Hasthecompanydisclosedtheattendanceofeachdirector?
44 Whatpercentageofthedirectorsattendedlessthan75%ofboardand/orkeycommitteemeetings?
49 Howmanydirectorsreceivedwithhold/againstvotesof50%orgreateratthelastannualmeeting?
312 Whatpercentageofdirectorsreceivedshareholderapprovalratesbelow80%?
144 Doalldirectorswithmorethanoneyearofserviceownstock?*
46 Doesthecompanydiscloseboard/governanceguidelines?
216 Aretherematerialrelated-partytransactionsinvolvingtheCEO?
![Page 130: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/130.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 130of159
©2016ISS|InstitutionalShareholderServices
345 HasISS'reviewfoundthattheboardofdirectorsrecentlytookactionthatmateriallyreduces
shareholderrights?
77 Arealldirectorselectedannually?
80 Doesthepoisonpillhaveasunsetprovision?
290 Doesthecompanyhaveacontrollingshareholder?
333 Whatistheleveloftagalongrightsforminorityshareholders?
338 Doesthecompanyusecumulativevotingfordirectorelection?
335 Didthecompanyfileitsproxymaterialslateinthepastyear?
263 ArethereRPTswithsignificantshareholders?
318 Whatisthedilutionlimitofthegeneralmandatetoissueshares?
319 Whatisthediscountlimitofthegeneralmandatetoissueshares?
320 Whatisthedilutionlimitofthegeneralmandatetoissuerepurchasedshares?
321 Whatistheaggregatedilutionlimitofshareissuanceandreissuancemandate?
322 Doesthecompanyhaveanequity-basedcompensationplan?
239 Dothecompany'sactiveequityplanshaveanevergreenprovision?
127 Whatisthetotalproportionofalloutstandingequitybasedplanstowardsthesharecapital?
128 Isthereamaximumlevelofdilutionperyear?
136 Whatarethepricingconditionsforstockoptionsgrantedtoexecutives?
131 Whatarethevestingperiodsmandatedintheplandocumentsforexecutives'stockoptionsorSARS
intheequityplans(adopted/amendedinthelast3years)?
132 Whatarethevestingperiodsmandatedintheplandocumentsforexecutives'restrictedstock/
stockawards(adopted/amendedinthelastthreeyears)?
133 Whatarethevestingperiodsmandatedintheplandocuments,adopted/amendedinthelastthree
years,forexecutives'otherlong-termplan?
324 Whatarethevestingperiodsmandatedintheplandocuments,adopted/amendedinthelastthree
years,forexecutives'Deferralplan?
110 Donon-executivedirectorsparticipatetoperformancerelatedremuneration?
325 Aredirectorswhoareeligibletoreceivegrants/awardsundertheplanalsoinvolvedinthe
administrationoftheplan?
112 Doesthecompanydisclosedetailsofindividualexecutives’remuneration?
158 Didthecompanydiscloseaperformanceoverviewforitslongtermincentiveplans?
113 Doesthecompanydiscloseaperformancemeasurefortheshorttermincentiveplan(for
executives)?
246 Whatisthelevelofdisclosureonperformancemeasuresforthelatestactiveorproposedlongterm
incentiveplan?
121 Doesthecompanydiscloseaperformancemeasureformatching?
122 Doesthecompanydiscloseaperformancemeasureforstockoptionsplans(forexecutives)?
123 Doesthecompanydiscloseaperformancemeasureforrestrictedshare/stockawardplans(for
executives)?
125 Doesthecompanydiscloseaperformancemeasureforotherlongtermplans(forexecutives)?
301 HasISSidentifiedaproblematicpaypracticeorpolicythatraisesconcerns?
![Page 131: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/131.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 131of159
©2016ISS|InstitutionalShareholderServices
Japan365 Doesthecompanyhaveapolicyonevaluatingcompetencyandindependenceoftheexternal
auditor?
2 Didtheauditorissueanadverseopinioninthepastyear?
4 Hasthecompanymadenon-timelyfinancialdisclosurefilingsinthepasttwoyears?
5 Hasaregulatorinitiatedenforcementactionagainstthecompanyinthepasttwoyears?
8 Hasthecompanydisclosedanymaterialweaknessesinitsinternalcontrolsinthepasttwofiscal
years?
288 Hasthecompanychangeditsauditfirmduetoinvalidorquestionablereasonsinthepasttwo
years?
280 Canauditfirmbeindemnifiedwithoutshareholdervote?
9 Howmanydirectorsserveontheboard?
304 Whatisthenumberofwomenontheboard?
354 Whatistheproportionofwomenontheboard?
10 WhatistheindependentdirectorcompositionoftheBoardaccordingtoISSclassification?
289 IsthereanoutsidedirectorontheBoard?*
282 WhatistheoutsiderdirectorcompositionoftheBoard?
281 Whatistheindependentstatutoryauditors’composition?
14 WhatistheclassificationoftheChairmanoftheBoard?
367 HasthecompanyappointedaLeadIndependentDirectororestablishedotherwaysofeffective
collaborationbetweenindependentdirectorsandmanagementandstatutoryauditors?
19 Whatistheindependentstatusofthenominatingcommitteemembers?
23 What'stheclassificationofthechairmanofthenominatingcommittee?
25 Whatistheindependentstatusofthecompensationcommitteemembers?
28 What'stheclassificationofthechairmanofthecompensationcommittee?
31 Whatistheindependentstatusoftheauditcommitteemembers?
34 What'stheclassificationofthechairmanoftheauditcommittee?
283 Doesthecompanyhaveathreecommitteesystem?*
44 Whatpercentageofthedirectorsattendedlessthan75%ofboardand/orkeycommitteemeetings?
366 Doesthecompanyroutinelyholdindependentdirectormeetingsorhaveothermechanismsto
facilitateeffectivecollaborationofindependentdirectors,managementandstatutoryauditors?
368 DoesthecompanyhaveamechanismtoappropriatelymonitorandsuperviseitsCEOsuccession
planning?
41 Doesthecompanydiscloseapolicyrequiringanannualperformanceevaluationoftheboard?
369 Doesthecompanyhaveclassshareswithfullormultiplevotingrights?
67 Doesthecompanyhaveanownershipceiling?
77 Arealldirectorselectedannually?
78 Doesthecompanyhaveapoisonpill(shareholderrightsplan)ineffect?
221 Wasthepoisonpillapprovedbyshareholders?
290 Doesthecompanyhaveacontrollingshareholder?
284 Doestheremovalofadirectorrequireasupermajorityvote?
285 Doesthecompanyhavediscretionoverdividendpayments?
286 Aretheshareholdersallowedtosubmitdividendproposals?
262 Whatisthenumberofvacanciesontheboard?
![Page 132: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/132.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 132of159
©2016ISS|InstitutionalShareholderServices
371 Howmanynumberofdaysbeforethegeneralmeetingdidthecompanypublishitsproxymaterials?
373 DoesthecompanyprovideproxymaterialsinEnglish?
370 Doesthecompanydisclosethepolicyoncross-shareholding,includingvotingpolicyforsuchshares?
287 Doesthecompanyholditsgeneralmeetingonapeakdate?
372 Doesthecompanycollaboratewithintermediariestoaccommodatebeneficialownerstoattend
shareholdermeetings?
374 Doesthecompanyparticipateinanelectronicvotingplatform?
322 Doesthecompanyhaveanequity-basedcompensationplan?
375 Doesthecompanyhaveaperformance-basedpayorotherincentivesforitsexecutives?
112 Doesthecompanydisclosedetailsofindividualexecutives’remuneration?
376 Doesthecompanyhaveapolicyonexecutiveremunerationandcomputationbasisforthepay?
![Page 133: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/133.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 133of159
©2016ISS|InstitutionalShareholderServices
WesternEurope1 Non-Auditfeesrepresentwhatpercentageoftotalfees?
2 Didtheauditorissueanadverseopinioninthepastyear?
5 Hasaregulatorinitiatedenforcementactionagainstthecompanyinthepasttwoyears?
6 Howmanyfinancialexpertsserveontheauditcommittee?
9 Howmanydirectorsserveontheboard?
304 Whatisthenumberofwomenontheboard?
354 Whatistheproportionofwomenontheboard?
10 WhatistheindependentdirectorcompositionoftheBoardaccordingtoISSclassification?
11 WhatistheindependentdirectorcompositionoftheBoard(shareholderelectedboardmembers)?
203 WhatistheindependentdirectorcompositionoftheBoardifthecompanyismajoritycontrolled?
14 WhatistheclassificationoftheChairmanoftheBoard?
16 HasthecompanyidentifiedaSeniorIndependentDirectororanindependentLeadDirector?
17 Whatisthetermofmandateproposedforsupervisoryboardmembers(atthelatestgeneral
meeting)?
19 Whatistheindependentstatusofthenominatingcommitteemembers?
23 What'stheclassificationofthechairmanofthenominatingcommittee?
25 Whatistheindependentstatusofthecompensationcommitteemembers?
27 Arethereexecutivesonthecompensationcommittee?
28 What'stheclassificationofthechairmanofthecompensationcommittee?
31 Whatistheindependentstatusoftheauditcommitteemembers?
33 Arethereexecutivesontheauditcommittee?
34 What'stheclassificationofthechairmanoftheauditcommittee?
35 IstheChairmanoftheboardofdirectorsamemberoftheauditcommittee?
36 Dotheexecutivesserveonasignificantnumberofoutsideboards?
37 DoestheCEOserveonasignificantnumberofoutsideboards?
38 Howmanynon-executivesserveonasignificantnumberofoutsideboards?
39 Doesthechairserveonasignificantnumberofoutsideboards?
44 Whatpercentageofthedirectorsattendedlessthan75%ofboardand/orkeycommitteemeetings?
140 Whatistheaggregatelevelofstockownershipoftheofficersanddirectors,asapercentageof
sharesoutstanding?
41 Doesthecompanydiscloseapolicyrequiringanannualperformanceevaluationoftheboard?
54 Doesthecompanyhaveclassesofstockwithdifferentvotingrights?
57 Whatistheproportionofmultiplevotingrights(orvotingcertificates)relativetothetotalnumber
ofvotingrights?
58 Whatistheleveloffreefloatofthemultiplevotingrightsorvotingcertificates?
59 Whatpercentageofthecompany'ssharesisrepresentedbydepositaryreceiptswhereafoundation
votesunexercisedproxies?
60 Hasthecompanyindicatedtoeliminatethesystemofdepositaryreceipts?
61 Aredepositaryreceiptholdersrestrictedintheirvotingrights?
63 Whatpercentageofthecompany'ssharecapitalismadeupofnon-votingshares?
64 Whatistheleveloffreefloatofvotingsharesinrelationtothenon-votingshares?
65 Doesthecompanyhaveanabsolutevotingrightceiling?
66 Doesthecompanyhavearelativevotingrightceiling?
![Page 134: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/134.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 134of159
©2016ISS|InstitutionalShareholderServices
67 Doesthecompanyhaveanownershipceiling?
68 Doesthecompanyhaveownershipceilingsforspecificparties?
69 DoshareholdersortheStatehavethepriorityright?
72 Doesthecompanyhavetargetedstockplacementthatcanbeusedasatakeoverdefense?
73 Doesthecompanymaintainpre-emptiverightsintheeventofatakeoverbid?
74 Canthecompanytargetrepurchasedsharesintheeventofatakeoverbid
218 Arethereownershipfactorsthataffectthetakeoverdefenses?
219 Aretherepriorityrightsthataffectthetakeoverdefenses?
84 Whatproportionofsharesmustberepresentedatthegeneralmeetingtocancelthebindingnature
ofthenominationofsupervisoryboardmembers(andorexecutiveboardmembers)?
53 Didthecompanyhaveaslateballotatitslastshareholders'meeting?
97 Whatisthepercentageofsharecapitalneededtoconveneaspecialmeeting?
114 IsthereacaponCEO'sannualbonus?
115 Isthereacaponexecutives'(excludingtheCEO)annualbonus?
116 WhatpercentageoftheannualbonusforCEOisorcanbedeferred?
117 Whatpercentageoftheannualbonusforexecutives(excludingtheCEO)isorcanbedeferred?
228 WhatisthesizeoftheCEO's1-yearpay,asamultipleofthemedianpayforcompanypeers?
229 Whatisthedegreeofalignmentbetweenthecompany'sTSRandchangeinCEOpayoverthepast
fiveyears?
232 WhatistheratiooftheCEO'stotalcompensationtothenexthighestpaidexecutive?
329 Whatisthedegreeofalignmentbetweenthecompany'sannualized3-yearpaypercentilerank,
relativetopeers,andits3-yearannualizedTSRrank,relativetopeers?
154 Doesthecompanyprovideloanstoexecutives?
118 Ispartofthebonusgrantedortobegrantedguaranteed?
127 Whatisthetotalproportionofalloutstandingequitybasedplanstowardsthesharecapital?
128 Isthereamaximumlevelofdilutionperyear?
136 Whatarethepricingconditionsforstockoptionsgrantedtoexecutives?
155 Didthecompanydiscloseaclawbackormalusprovision?
131 Whatarethevestingperiodsmandatedintheplandocumentsforexecutives'stockoptionsorSARS
intheequityplans(adopted/amendedinthelast3years)?
132 Whatarethevestingperiodsmandatedintheplandocumentsforexecutives'restrictedstock/
stockawards(adopted/amendedinthelastthreeyears)?
133 Whatarethevestingperiodsmandatedintheplandocuments,adopted/amendedinthelastthree
years,forexecutives'otherlong-termplan?
323 Whatarethevestingperiodsmandatedintheplandocuments,adopted/amendedinthelastthree
years,forexecutives'Matchingplan?
324 Whatarethevestingperiodsmandatedintheplandocuments,adopted/amendedinthelastthree
years,forexecutives'Deferralplan?
134 Whatistheholding/retentionperiodforstockoptions(forexecutives)?
135 Whatistheholding/retentionperiodforrestrictedshares/stockawards(forexecutives)?
145 Whatproportionofthesalaryissubjecttostockownershiprequirements/guidelinesfortheCEO?
146 Whatproportionofthesalaryissubjecttostockownershiprequirements/guidelinesforexecutives
(excludingtheCEO)?
109 Dodirectorsparticipateinequitybasedplans?
![Page 135: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/135.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 135of159
©2016ISS|InstitutionalShareholderServices
110 Donon-executivedirectorsparticipatetoperformancerelatedremuneration?
113 Doesthecompanydiscloseaperformancemeasurefortheshorttermincentiveplan(for
executives)?
121 Doesthecompanydiscloseaperformancemeasureformatching?
122 Doesthecompanydiscloseaperformancemeasureforstockoptionsplans(forexecutives)?
123 Doesthecompanydiscloseaperformancemeasureforrestrictedshare/stockawardplans(for
executives)?
125 Doesthecompanydiscloseaperformancemeasureforotherlongtermplans(forexecutives)?
166 Hasthecompanyvoluntarilyadoptedamanagement'sayonpay'advisoryvoteresolutionforthe
mostrecentannualmeeting?
161 WhatisthemultipleofpayintheseveranceagreementsfortheCEO(uponachange-in-control)?
247 Whatisthebasisforthechange-in-controlorseverancepaymentfortheCEO?
160 Whatisthemultipleofthechangeincontrol/severancepaymentforexecutivesexcludingtheCEO
(uponachange-in-control)?
248 Whatisthebasisforthechange-in-controlorseverancepaymentforexecutivesexcludingtheCEO?
301 HasISSidentifiedaproblematicpaypracticeorpolicythatraisesconcerns?
![Page 136: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/136.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 136of159
©2016ISS|InstitutionalShareholderServices
SouthernEurope1 Non-Auditfeesrepresentwhatpercentageoftotalfees?
2 Didtheauditorissueanadverseopinioninthepastyear?
5 Hasaregulatorinitiatedenforcementactionagainstthecompanyinthepasttwoyears?
6 Howmanyfinancialexpertsserveontheauditcommittee?
9 Howmanydirectorsserveontheboard?
304 Whatisthenumberofwomenontheboard?
354 Whatistheproportionofwomenontheboard?
10 WhatistheindependentdirectorcompositionoftheBoardaccordingtoISSclassification?
203 WhatistheindependentdirectorcompositionoftheBoardifthecompanyismajoritycontrolled?
14 WhatistheclassificationoftheChairmanoftheBoard?
16 HasthecompanyidentifiedaSeniorIndependentDirectororanindependentLeadDirector?
17 Whatisthetermofmandateproposedforsupervisoryboardmembers(atthelatestgeneral
meeting)?
19 Whatistheindependentstatusofthenominatingcommitteemembers?
23 What'stheclassificationofthechairmanofthenominatingcommittee?
211 Whatisthenumberofnominatingcommitteemembers?
25 Whatistheindependentstatusofthecompensationcommitteemembers?
27 Arethereexecutivesonthecompensationcommittee?
28 What'stheclassificationofthechairmanofthecompensationcommittee?
212 Whatisthenumberofremunerationcommitteemembers?
31 Whatistheindependentstatusoftheauditcommitteemembers?
33 Arethereexecutivesontheauditcommittee?
34 What'stheclassificationofthechairmanoftheauditcommittee?
213 Howmanymembersserveontheauditcommittee?
36 Dotheexecutivesserveonasignificantnumberofoutsideboards?
37 DoestheCEOserveonasignificantnumberofoutsideboards?
38 Howmanynon-executivesserveonasignificantnumberofoutsideboards?
39 Doesthechairserveonasignificantnumberofoutsideboards?
44 Whatpercentageofthedirectorsattendedlessthan75%ofboardand/orkeycommitteemeetings?
140 Whatistheaggregatelevelofstockownershipoftheofficersanddirectors,asapercentageof
sharesoutstanding?
41 Doesthecompanydiscloseapolicyrequiringanannualperformanceevaluationoftheboard?
100 Doesthecompanyallowthechairasecondorcastingvoteatdirectormeetingsintheeventofatie?
54 Doesthecompanyhaveclassesofstockwithdifferentvotingrights?
63 Whatpercentageofthecompany'ssharecapitalismadeupofnon-votingshares?
64 Whatistheleveloffreefloatofvotingsharesinrelationtothenon-votingshares?
65 Doesthecompanyhaveanabsolutevotingrightceiling?
66 Doesthecompanyhavearelativevotingrightceiling?
67 Doesthecompanyhaveanownershipceiling?
68 Doesthecompanyhaveownershipceilingsforspecificparties?
69 DoshareholdersortheStatehavethepriorityright?
72 Doesthecompanyhavetargetedstockplacementthatcanbeusedasatakeoverdefense?
73 Doesthecompanymaintainpre-emptiverightsintheeventofatakeoverbid?
![Page 137: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/137.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 137of159
©2016ISS|InstitutionalShareholderServices
74 Canthecompanytargetrepurchasedsharesintheeventofatakeoverbid
218 Arethereownershipfactorsthataffectthetakeoverdefenses?
219 Aretherepriorityrightsthataffectthetakeoverdefenses?
290 Doesthecompanyhaveacontrollingshareholder?*
89 Doesthecompanyrequireasuper-majorityvotetoapproveamendmentstothecharterand
bylaws?
53 Didthecompanyhaveaslateballotatitslastshareholders'meeting?
114 IsthereacaponCEO'sannualbonus?
115 Isthereacaponexecutives'(excludingtheCEO)annualbonus?
116 WhatpercentageoftheannualbonusforCEOisorcanbedeferred?
117 Whatpercentageoftheannualbonusforexecutives(excludingtheCEO)isorcanbedeferred?
228 WhatisthesizeoftheCEO's1-yearpay,asamultipleofthemedianpayforcompanypeers?
229 Whatisthedegreeofalignmentbetweenthecompany'sTSRandchangeinCEOpayoverthepast
fiveyears?
232 WhatistheratiooftheCEO'stotalcompensationtothenexthighestpaidexecutive?
329 Whatisthedegreeofalignmentbetweenthecompany'sannualized3-yearpaypercentilerank,
relativetopeers,andits3-yearannualizedTSRrank,relativetopeers?
154 Doesthecompanyprovideloanstoexecutives?
118 Ispartofthebonusgrantedortobegrantedguaranteed?
159 Didthecompanygrantaone-offrewardtoanyofitsexecutives?
127 Whatisthetotalproportionofalloutstandingequitybasedplanstowardsthesharecapital?
136 Whatarethepricingconditionsforstockoptionsgrantedtoexecutives?
155 Didthecompanydiscloseaclawbackormalusprovision?
131 Whatarethevestingperiodsmandatedintheplandocumentsforexecutives'stockoptionsorSARS
intheequityplans(adopted/amendedinthelast3years)?
132 Whatarethevestingperiodsmandatedintheplandocumentsforexecutives'restrictedstock/
stockawards(adopted/amendedinthelastthreeyears)?
133 Whatarethevestingperiodsmandatedintheplandocuments,adopted/amendedinthelastthree
years,forexecutives'otherlong-termplan?
134 Whatistheholding/retentionperiodforstockoptions(forexecutives)?
135 Whatistheholding/retentionperiodforrestrictedshares/stockawards(forexecutives)?
145 Whatproportionofthesalaryissubjecttostockownershiprequirements/guidelinesfortheCEO?
146 Whatproportionofthesalaryissubjecttostockownershiprequirements/guidelinesforexecutives
(excludingtheCEO)?
104 Doesthecompanyprovideloanstodirectors?
109 Dodirectorsparticipateinequitybasedplans?
110 Donon-executivedirectorsparticipatetoperformancerelatedremuneration?
112 Doesthecompanydisclosedetailsofindividualexecutives’remuneration?
113 Doesthecompanydiscloseaperformancemeasurefortheshorttermincentiveplan(for
executives)?
121 Doesthecompanydiscloseaperformancemeasureformatching?
122 Doesthecompanydiscloseaperformancemeasureforstockoptionsplans(forexecutives)?
123 Doesthecompanydiscloseaperformancemeasureforrestrictedshare/stockawardplans(for
executives)?
![Page 138: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/138.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 138of159
©2016ISS|InstitutionalShareholderServices
125 Doesthecompanydiscloseaperformancemeasureforotherlongtermplans(forexecutives)?
150 Intheeventofterminationofthecontractofexecutives,doestheequitybasedremunerationvest?
161 WhatisthemultipleofpayintheseveranceagreementsfortheCEO(uponachange-in-control)?
247 Whatisthebasisforthechange-in-controlorseverancepaymentfortheCEO?
160 Whatisthemultipleofthechangeincontrol/severancepaymentforexecutivesexcludingtheCEO
(uponachange-in-control)?
248 Whatisthebasisforthechange-in-controlorseverancepaymentforexecutivesexcludingtheCEO?
152 HowlongisthenoticeperiodfortheCEOifthecompanyterminatesthecontract?
301 HasISSidentifiedaproblematicpaypracticeorpolicythatraisesconcerns?
![Page 139: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/139.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 139of159
©2016ISS|InstitutionalShareholderServices
Nordic1 Non-Auditfeesrepresentwhatpercentageoftotalfees?
2 Didtheauditorissueanadverseopinioninthepastyear?
5 Hasaregulatorinitiatedenforcementactionagainstthecompanyinthepasttwoyears?
9 Howmanydirectorsserveontheboard?
304 Whatisthenumberofwomenontheboard?
354 Whatistheproportionofwomenontheboard?
10 WhatistheindependentdirectorcompositionoftheBoardaccordingtoISSclassification?
11 WhatistheindependentdirectorcompositionoftheBoard(shareholderelectedboardmembers)?
14 WhatistheclassificationoftheChairmanoftheBoard?
17 Whatisthetermofmandateproposedforsupervisoryboardmembers(atthelatestgeneral
meeting)?
207 Doesthecompanymaintainaformalnominatingcommittee?
208 Arethereanyboardmembersonthenominatingcommittee?
210 Istheremorethanoneboardmemberwhoisdependentonmajorshareholdersonthenominating
committee?
27 Arethereexecutivesonthecompensationcommittee?
33 Arethereexecutivesontheauditcommittee?
36 Dotheexecutivesserveonasignificantnumberofoutsideboards?
37 DoestheCEOserveonasignificantnumberofoutsideboards?
38 Howmanynon-executivesserveonasignificantnumberofoutsideboards?
39 Doesthechairserveonasignificantnumberofoutsideboards?
41 Doesthecompanydiscloseapolicyrequiringanannualperformanceevaluationoftheboard?
54 Doesthecompanyhaveclassesofstockwithdifferentvotingrights?
57 Whatistheproportionofmultiplevotingrights(orvotingcertificates)relativetothetotalnumber
ofvotingrights?
58 Whatistheleveloffreefloatofthemultiplevotingrightsorvotingcertificates?
63 Whatpercentageofthecompany'ssharecapitalismadeupofnon-votingshares?
64 Whatistheleveloffreefloatofvotingsharesinrelationtothenon-votingshares?
65 Doesthecompanyhaveanabsolutevotingrightceiling?
66 Doesthecompanyhavearelativevotingrightceiling?
67 Doesthecompanyhaveanownershipceiling?
68 Doesthecompanyhaveownershipceilingsforspecificparties?
69 DoshareholdersortheStatehavethepriorityright?
74 Canthecompanytargetrepurchasedsharesintheeventofatakeoverbid
218 Arethereownershipfactorsthataffectthetakeoverdefenses?
219 Aretherepriorityrightsthataffectthetakeoverdefenses?
114 IsthereacaponCEO'sannualbonus?
115 Isthereacaponexecutives'(excludingtheCEO)annualbonus?
228 WhatisthesizeoftheCEO's1-yearpay,asamultipleofthemedianpayforcompanypeers?
229 Whatisthedegreeofalignmentbetweenthecompany'sTSRandchangeinCEOpayoverthepast
fiveyears?
329 Whatisthedegreeofalignmentbetweenthecompany'sannualized3-yearpaypercentilerank,
relativetopeers,andits3-yearannualizedTSRrank,relativetopeers?
![Page 140: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/140.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 140of159
©2016ISS|InstitutionalShareholderServices
127 Whatisthetotalproportionofalloutstandingequitybasedplanstowardsthesharecapital?
136 Whatarethepricingconditionsforstockoptionsgrantedtoexecutives?
155 Didthecompanydiscloseaclawbackormalusprovision?
131 Whatarethevestingperiodsmandatedintheplandocumentsforexecutives'stockoptionsorSARS
intheequityplans(adopted/amendedinthelast3years)?
132 Whatarethevestingperiodsmandatedintheplandocumentsforexecutives'restrictedstock/
stockawards(adopted/amendedinthelastthreeyears)?
133 Whatarethevestingperiodsmandatedintheplandocuments,adopted/amendedinthelastthree
years,forexecutives'otherlong-termplan?
109 Dodirectorsparticipateinequitybasedplans?
113 Doesthecompanydiscloseaperformancemeasurefortheshorttermincentiveplan(for
executives)?
121 Doesthecompanydiscloseaperformancemeasureformatching?
122 Doesthecompanydiscloseaperformancemeasureforstockoptionsplans(forexecutives)?
123 Doesthecompanydiscloseaperformancemeasureforrestrictedshare/stockawardplans(for
executives)?
125 Doesthecompanydiscloseaperformancemeasureforotherlongtermplans(forexecutives)?
161 WhatisthemultipleofpayintheseveranceagreementsfortheCEO(uponachange-in-control)?
247 Whatisthebasisforthechange-in-controlorseverancepaymentfortheCEO?
160 Whatisthemultipleofthechangeincontrol/severancepaymentforexecutivesexcludingtheCEO
(uponachange-in-control)?
248 Whatisthebasisforthechange-in-controlorseverancepaymentforexecutivesexcludingtheCEO?
301 HasISSidentifiedaproblematicpaypracticeorpolicythatraisesconcerns?
![Page 141: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/141.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 141of159
©2016ISS|InstitutionalShareholderServices
Germanic1 Non-Auditfeesrepresentwhatpercentageoftotalfees?
2 Didtheauditorissueanadverseopinioninthepastyear?
5 Hasaregulatorinitiatedenforcementactionagainstthecompanyinthepasttwoyears?
6 Howmanyfinancialexpertsserveontheauditcommittee?
9 Howmanydirectorsserveontheboard?
304 Whatisthenumberofwomenontheboard?
354 Whatistheproportionofwomenontheboard?
10 WhatistheindependentdirectorcompositionoftheBoardaccordingtoISSclassification?
14 WhatistheclassificationoftheChairmanoftheBoard?
16 HasthecompanyidentifiedaSeniorIndependentDirectororanindependentLeadDirector?
19 Whatistheindependentstatusofthenominatingcommitteemembers?
23 What'stheclassificationofthechairmanofthenominatingcommittee?
25 Whatistheindependentstatusofthecompensationcommitteemembers?
27 Arethereexecutivesonthecompensationcommittee?
28 What'stheclassificationofthechairmanofthecompensationcommittee?
31 Whatistheindependentstatusoftheauditcommitteemembers?
33 Arethereexecutivesontheauditcommittee?
34 What'stheclassificationofthechairmanoftheauditcommittee?
36 Dotheexecutivesserveonasignificantnumberofoutsideboards?
37 DoestheCEOserveonasignificantnumberofoutsideboards?
38 Howmanynon-executivesserveonasignificantnumberofoutsideboards?
39 Doesthechairserveonasignificantnumberofoutsideboards?
43 Whatpercentageofallmeetingswereattendedbyatleast50%ofthesupervisoryboard?
140 Whatistheaggregatelevelofstockownershipoftheofficersanddirectors,asapercentageof
sharesoutstanding?
41 Doesthecompanydiscloseapolicyrequiringanannualperformanceevaluationoftheboard?
54 Doesthecompanyhaveclassesofstockwithdifferentvotingrights?
57 Whatistheproportionofmultiplevotingrights(orvotingcertificates)relativetothetotalnumber
ofvotingrights?
58 Whatistheleveloffreefloatofthemultiplevotingrightsorvotingcertificates?
63 Whatpercentageofthecompany'ssharecapitalismadeupofnon-votingshares?
64 Whatistheleveloffreefloatofvotingsharesinrelationtothenon-votingshares?
65 Doesthecompanyhaveanabsolutevotingrightceiling?
66 Doesthecompanyhavearelativevotingrightceiling?
67 Doesthecompanyhaveanownershipceiling?
68 Doesthecompanyhaveownershipceilingsforspecificparties?
69 DoshareholdersortheStatehavethepriorityright?
218 Arethereownershipfactorsthataffectthetakeoverdefenses?
219 Aretherepriorityrightsthataffectthetakeoverdefenses?
53 Didthecompanyhaveaslateballotatitslastshareholders'meeting?
114 IsthereacaponCEO'sannualbonus?
115 Isthereacaponexecutives'(excludingtheCEO)annualbonus?
116 WhatpercentageoftheannualbonusforCEOisorcanbedeferred?
![Page 142: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/142.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 142of159
©2016ISS|InstitutionalShareholderServices
117 Whatpercentageoftheannualbonusforexecutives(excludingtheCEO)isorcanbedeferred?
228 WhatisthesizeoftheCEO's1-yearpay,asamultipleofthemedianpayforcompanypeers?
229 Whatisthedegreeofalignmentbetweenthecompany'sTSRandchangeinCEOpayoverthepast
fiveyears?
329 Whatisthedegreeofalignmentbetweenthecompany'sannualized3-yearpaypercentilerank,
relativetopeers,andits3-yearannualizedTSRrank,relativetopeers?
154 Doesthecompanyprovideloanstoexecutives?
118 Ispartofthebonusgrantedortobegrantedguaranteed?
127 Whatisthetotalproportionofalloutstandingequitybasedplanstowardsthesharecapital?
128 Isthereamaximumlevelofdilutionperyear?*
136 Whatarethepricingconditionsforstockoptionsgrantedtoexecutives?
155 Didthecompanydiscloseaclawbackormalusprovision?
131 Whatarethevestingperiodsmandatedintheplandocumentsforexecutives'stockoptionsorSARS
intheequityplans(adopted/amendedinthelast3years)?
132 Whatarethevestingperiodsmandatedintheplandocumentsforexecutives'restrictedstock/
stockawards(adopted/amendedinthelastthreeyears)?
133 Whatarethevestingperiodsmandatedintheplandocuments,adopted/amendedinthelastthree
years,forexecutives'otherlong-termplan?
134 Whatistheholding/retentionperiodforstockoptions(forexecutives)?
135 Whatistheholding/retentionperiodforrestrictedshares/stockawards(forexecutives)?
109 Dodirectorsparticipateinequitybasedplans?
110 Donon-executivedirectorsparticipatetoperformancerelatedremuneration?
113 Doesthecompanydiscloseaperformancemeasurefortheshorttermincentiveplan(for
executives)?
121 Doesthecompanydiscloseaperformancemeasureformatching?
122 Doesthecompanydiscloseaperformancemeasureforstockoptionsplans(forexecutives)?
123 Doesthecompanydiscloseaperformancemeasureforrestrictedshare/stockawardplans(for
executives)?
125 Doesthecompanydiscloseaperformancemeasureforotherlongtermplans(forexecutives)?
250 WhatisthelevelofdisclosureonCEOownershipguidelines?
161 WhatisthemultipleofpayintheseveranceagreementsfortheCEO(uponachange-in-control)?
247 Whatisthebasisforthechange-in-controlorseverancepaymentfortheCEO?
160 Whatisthemultipleofthechangeincontrol/severancepaymentforexecutivesexcludingtheCEO
(uponachange-in-control)?
248 Whatisthebasisforthechange-in-controlorseverancepaymentforexecutivesexcludingtheCEO?
301 HasISSidentifiedaproblematicpaypracticeorpolicythatraisesconcerns?
![Page 143: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/143.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 143of159
©2016ISS|InstitutionalShareholderServices
Australasia1 Non-Auditfeesrepresentwhatpercentageoftotalfees?
2 Didtheauditorissueanadverseopinioninthepastyear?
5 Hasaregulatorinitiatedenforcementactionagainstthecompanyinthepasttwoyears?
6 Howmanyfinancialexpertsserveontheauditcommittee?
9 Howmanydirectorsserveontheboard?
304 Whatisthenumberofwomenontheboard?
10 WhatistheindependentdirectorcompositionoftheBoardaccordingtoISSclassification?
13 Whatproportionofnon-executivedirectorsontheboardhaslengthytenure?*
14 WhatistheclassificationoftheChairmanoftheBoard?
19 Whatistheindependentstatusofthenominatingcommitteemembers?
23 What'stheclassificationofthechairmanofthenominatingcommittee?
25 Whatistheindependentstatusofthecompensationcommitteemembers?
27 Arethereexecutivesonthecompensationcommittee?
28 What'stheclassificationofthechairmanofthecompensationcommittee?
31 Whatistheindependentstatusoftheauditcommitteemembers?
33 Arethereexecutivesontheauditcommittee?
34 What'stheclassificationofthechairmanoftheauditcommittee?
37 DoestheCEOserveonasignificantnumberofoutsideboards?
38 Howmanynon-executivesserveasignificantnumberofoutsideboards?
39 Doesthechairserveonasignificantnumberofoutsideboards?
44 Whatpercentageofthedirectorsattendedlessthan75%ofboardand/orkeycommitteemeetings?
140 Whatistheaggregatelevelofstockownershipoftheofficersanddirectors,asapercentageof
sharesoutstanding?
144 Doalldirectorswithmorethanoneyearofserviceownstock?
41 Doesthecompanydiscloseapolicyrequiringanannualperformanceevaluationoftheboard?
143 Aredirectorssubjecttostockownershipguidelines?
244 Doesthecompanyhavearobustpolicyprohibitinghedgingofcompanysharesbyemployees?
54 Doesthecompanyhaveclassesofstockwithdifferentvotingrights?*
67 Doesthecompanyhaveanownershipceiling?
68 Doesthecompanyhaveownershipceilingsforspecificparties?
290 Doesthecompanyhaveacontrollingshareholder?*
262 Whatisthenumberofvacanciesontheboard?
263 ArethereRPTswithsignificantshareholders?
318 Whatisthedilutionlimitofthegeneralmandatetoissueshares?
319 Whatisthediscountlimitofthegeneralmandatetoissueshares?
114 IsthereacaponCEO'sannualbonus?
115 Isthereacaponexecutives'(excludingtheCEO)annualbonus?
116 WhatpercentageoftheannualbonusforCEOisorcanbedeferred?
117 Whatpercentageoftheannualbonusforexecutives(excludingtheCEO)isorcanbedeferred?
233 Whatistheperformanceperiodforthelatestactivelongtermincentiveplan(ortheproposedplan)
forexecutives?
154 Doesthecompanyprovideloanstoexecutives?
118 Ispartofthebonusgrantedortobegrantedguaranteed?
![Page 144: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/144.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 144of159
©2016ISS|InstitutionalShareholderServices
159 Didthecompanygrantaone-offrewardtoanyofitsexecutives?
127 Whatisthetotalproportionofalloutstandingequitybasedplanstowardsthesharecapital?
136 Whatarethepricingconditionsforstockoptionsgrantedtoexecutives?
155 Didthecompanydiscloseaclawbackormalusprovision?
131 Whatarethevestingperiodsmandatedintheplandocumentsforexecutives'stockoptionsorSARS
intheequityplans(adopted/amendedinthelast3years)?
132 Whatarethevestingperiodsmandatedintheplandocumentsforexecutives'restrictedstock/
stockawards(adopted/amendedinthelastthreeyears)?
133 Whatarethevestingperiodsmandatedintheplandocuments,adopted/amendedinthelastthree
years,forexecutives'otherlong-termplan?
134 Whatistheholding/retentionperiodforstockoptions(forexecutives)?
135 Whatistheholding/retentionperiodforrestrictedshares/stockawards(forexecutives)?
145 Whatproportionofthesalaryissubjecttostockownershiprequirements/guidelinesfortheCEO?
146 Whatproportionofthesalaryissubjecttostockownershiprequirements/guidelinesforexecutives
(excludingtheCEO)?
110 Donon-executivedirectorsparticipatetoperformancerelatedremuneration?
113 Doesthecompanydiscloseaperformancemeasurefortheshorttermincentiveplan(for
executives)?
246 Whatisthelevelofdisclosureonperformancemeasuresforthelatestactiveorproposedlongterm
incentiveplan?
153 Doequitybasedplansorotherlongtermawardsvestcompletelyuponachangeincontrol?
150 Intheeventofterminationofthecontractofexecutives,doestheequitybasedremunerationvest?
152 HowlongisthenoticeperiodfortheCEOifthecompanyterminatesthecontract?
301 HasISSidentifiedaproblematicpaypracticeorpolicythatraisesconcerns?
![Page 145: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/145.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 145of159
©2016ISS|InstitutionalShareholderServices
LatinAmerica1 Non-Auditfeesrepresentwhatpercentageoftotalfees?
2 Didtheauditorissueanadverseopinioninthepastyear?
5 Hasaregulatorinitiatedenforcementactionagainstthecompanyinthepasttwoyears?
288 Hasthecompanychangeditsauditfirmduetoinvalidorquestionablereasonsinthepasttwo
years?
9 Howmanydirectorsserveontheboard?
304 Whatisthenumber/proportionofwomenontheboard?
304 Whatisthenumberofwomenontheboard?
354 Whatistheproportionofwomenontheboard?
14 WhatistheclassificationoftheChairmanoftheBoard?
205 Whatpercentageoftheboardconsistsofimmediatefamilymembersofmajorityshareholders,
executivesandformerexecutives(withinthepastfiveyears)?
206 Whatpercentageoftheboardareformerorcurrentemployeesofthecompany?
207 Doesthecompanymaintainaformalnominatingcommittee?
330 Doesthecompanymaintainaformalremunerationcommittee?
331 Doesthecompanymaintainaformalauditcommittee?
332 Doesthecompanymaintainaformalfiscalcouncil?
36 Dotheexecutivesserveonasignificantnumberofoutsideboards?*
37 DoestheCEOserveonasignificantnumberofoutsideboards?*
38 Howmanynon-executivesserveonasignificantnumberofoutsideboards?*
39 Doesthechairserveonasignificantnumberofoutsideboards?*
140 Whatistheaggregatelevelofstockownershipoftheofficersanddirectors,asapercentageof
sharesoutstanding?
54 Doesthecompanyhaveclassesofstockwithdifferentvotingrights?
65 Doesthecompanyhaveanabsolutevotingrightceiling?
67 Doesthecompanyhaveanownershipceiling?
68 Doesthecompanyhaveownershipceilingsforspecificparties?
69 DoshareholdersortheStatehavethepriorityright?
218 Arethereownershipfactorsthataffectthetakeoverdefenses?
219 Aretherepriorityrightsthataffectthetakeoverdefenses?
77 Arealldirectorselectedannually?*
290 Doesthecompanyhaveacontrollingshareholder?
333 Whatistheleveloftagalongrightsforminorityshareholders?
53 Didthecompanyhaveaslateballotatitslastshareholders'meeting?
263 ArethereRPTswithsignificantshareholders?
322 Doesthecompanyhaveanequity-basedcompensationplan?
127 Whatisthetotalproportionofalloutstandingequitybasedplanstowardsthesharecapital?
136 Whatarethepricingconditionsforstockoptionsgrantedtoexecutives?
131 Whatarethevestingperiodsmandatedintheplandocumentsforexecutives'stockoptionsorSARS
intheequityplans(adopted/amendedinthelast3years)?
132 Whatarethevestingperiodsmandatedintheplandocumentsforexecutives'restrictedstock/
stockawards(adopted/amendedinthelastthreeyears)?
![Page 146: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/146.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 146of159
©2016ISS|InstitutionalShareholderServices
133 Whatarethevestingperiodsmandatedintheplandocuments,adopted/amendedinthelastthree
years,forexecutives'otherlong-termplan?
134 Whatistheholding/retentionperiodforstockoptions(forexecutives)?
135 Whatistheholding/retentionperiodforrestrictedshares/stockawards(forexecutives)?
110 Donon-executivedirectorsparticipatetoperformancerelatedremuneration?
325 Aredirectorswhoareeligibletoreceivegrants/awardsundertheplanalsoinvolvedinthe
administrationoftheplan?
112 Doesthecompanydisclosedetailsofindividualexecutives’remuneration?
122 Doesthecompanydiscloseaperformancemeasureforstockoptionsplans(forexecutives)?
123 Doesthecompanydiscloseaperformancemeasureforrestrictedshare/stockawardplans(for
executives)?
125 Doesthecompanydiscloseaperformancemeasureforotherlongtermplans(forexecutives)?
153 Doequitybasedplansorotherlongtermawardsvestcompletelyuponachangeincontrol?
301 HasISSidentifiedaproblematicpaypracticeorpolicythatraiseconcerns?
![Page 147: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/147.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 147of159
©2016ISS|InstitutionalShareholderServices
Africa1 Non-Auditfeesrepresentwhatpercentageoftotalfees?
2 Didtheauditorissueanadverseopinioninthepastyear?
5 Hasaregulatorinitiatedenforcementactionagainstthecompanyinthepasttwoyears?
8 Hasthecompanydisclosedanymaterialweaknessesinitsinternalcontrolsinthepasttwofiscal
years?
6 Howmanyfinancialexpertsserveontheauditcommittee?
9 Howmanydirectorsserveontheboard?
304 Whatisthenumberofwomenontheboard?
354 Whatistheproportionofwomenontheboard?
10 WhatistheindependentdirectorcompositionoftheBoardaccordingtoISSclassification?
14 WhatistheclassificationoftheChairmanoftheBoard?
19 Whatistheindependentstatusofthenominatingcommitteemembers?
306 Arethereexecutivesonthenominatingcommittee?
25 Whatistheindependentstatusofthecompensationcommitteemembers?
27 Arethereexecutivesonthecompensationcommittee?
28 What'stheclassificationofthechairmanofthecompensationcommittee?
31 Whatistheindependentstatusoftheauditcommitteemembers?
34 What'stheclassificationofthechairmanoftheauditcommittee?
44 Whatpercentageofthedirectorsattendedlessthan75%ofboardand/orkeycommitteemeetings?
140 Whatistheaggregatelevelofstockownershipoftheofficersanddirectors,asapercentageof
sharesoutstanding?
54 Doesthecompanyhaveclassesofstockwithdifferentvotingrights?
57 Whatistheproportionofmultiplevotingrights(orvotingcertificates)relativetothetotalnumber
ofvotingrights?
58 Whatistheleveloffreefloatofthemultiplevotingrightsorvotingcertificates?
63 Whatpercentageofthecompany'ssharecapitalismadeupofnon-votingshares?
64 Whatistheleveloffreefloatofvotingsharesinrelationtothenon-votingshares?
67 Doesthecompanyhaveanownershipceiling?
68 Doesthecompanyhaveownershipceilingsforspecificparties?
69 DoshareholdersortheStatehavethepriorityright?
218 Arethereownershipfactorsthataffectthetakeoverdefenses?
219 Aretherepriorityrightsthataffectthetakeoverdefenses?
290 Doesthecompanyhaveacontrollingshareholder?
233 Whatistheperformanceperiodforthelatestactivelongtermincentiveplan(ortheproposedplan)
forexecutives?
154 Doesthecompanyprovideloanstoexecutives?
118 Ispartofthebonusgrantedortobegrantedguaranteed?
159 Didthecompanygrantaone-offrewardtoanyofitsexecutives?
127 Whatisthetotalproportionofalloutstandingequitybasedplanstowardsthesharecapital?
136 Whatarethepricingconditionsforstockoptionsgrantedtoexecutives?
131 Whatarethevestingperiodsmandatedintheplandocumentsforexecutives'stockoptionsorSARS
intheequityplans(adopted/amendedinthelast3years)?
![Page 148: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/148.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 148of159
©2016ISS|InstitutionalShareholderServices
132 Whatarethevestingperiodsmandatedintheplandocumentsforexecutives'restrictedstock/
stockawards(adopted/amendedinthelastthreeyears)?
133 Whatarethevestingperiodsmandatedintheplandocuments,adopted/amendedinthelastthree
years,forexecutives'otherlong-termplan?
110 Donon-executivedirectorsparticipatetoperformancerelatedremuneration?
113 Doesthecompanydiscloseaperformancemeasurefortheshorttermincentiveplan(for
executives)?
121 Doesthecompanydiscloseaperformancemeasureformatching?
122 Doesthecompanydiscloseaperformancemeasureforstockoptionsplans(forexecutives)?
123 Doesthecompanydiscloseaperformancemeasureforrestrictedshare/stockawardplans(for
executives)?
125 Doesthecompanydiscloseaperformancemeasureforotherlongtermplans(forexecutives)?
166 Hasthecompanyvoluntarilyadoptedamanagement'sayonpay'advisoryvoteresolutionforthe
mostrecentannualmeeting?
161 WhatisthemultipleofpayintheseveranceagreementsfortheCEO(uponachange-in-control)?
247 Whatisthebasisforthechange-in-controlorseverancepaymentfortheCEO?
160 Whatisthemultipleofthechangeincontrol/severancepaymentforexecutivesexcludingtheCEO
(uponachange-in-control)?
248 Whatisthebasisforthechange-in-controlorseverancepaymentforexecutivesexcludingtheCEO?
301 HasISSidentifiedaproblematicpaypracticeorpolicythatraisesconcerns?
![Page 149: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/149.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 149of159
©2016ISS|InstitutionalShareholderServices
Russia1 Non-Auditfeesrepresentwhatpercentageoftotalfees?
2 Didtheauditorissueanadverseopinioninthepastyear?
5 Hasaregulatorinitiatedenforcementactionagainstthecompanyinthepasttwoyears?
6 Howmanyfinancialexpertsserveontheauditcommittee?
9 Howmanydirectorsserveontheboard?
304 Whatisthenumberofwomenontheboard?
354 Whatistheproportionofwomenontheboard?
10 WhatistheindependentdirectorcompositionoftheBoardaccordingtoISSclassification?
13 Whatproportionofnon-executivedirectorsontheboardhaslengthytenure?
14 WhatistheclassificationoftheChairmanoftheBoard?
16 HasthecompanyidentifiedaSeniorIndependentDirectororanindependentLeadDirector?
205 Whatpercentageoftheboardconsistsofimmediatefamilymembersofmajorityshareholders,
executivesandformerexecutives(withinthepastfiveyears)?
206 Whatpercentageoftheboardareformerorcurrentemployeesofthecompany?
19 Whatistheindependentstatusofthenominatingcommitteemembers?
306 Arethereexecutivesonthenominatingcommittee?
23 What'stheclassificationofthechairmanofthenominatingcommittee?
25 Whatistheindependentstatusofthecompensationcommitteemembers?
28 What'stheclassificationofthechairmanofthecompensationcommittee?
31 Whatistheindependentstatusoftheauditcommitteemembers?
34 What'stheclassificationofthechairmanoftheauditcommittee?
140 Whatistheaggregatelevelofstockownershipoftheofficersanddirectors,asapercentageof
sharesoutstanding?
41 Doesthecompanydiscloseapolicyrequiringanannualperformanceevaluationoftheboard?
336 DoesthecompanydiscloseinformationonRelatedPartyTransactions?
54 Doesthecompanyhaveclassesofstockwithdifferentvotingrights?
63 Whatpercentageofthecompany'ssharecapitalismadeupofnon-votingshares?
64 Whatistheleveloffreefloatofvotingsharesinrelationtothenon-votingshares?
67 Doesthecompanyhaveanownershipceiling?
68 Doesthecompanyhaveownershipceilingsforspecificparties?
69 DoshareholdersortheStatehavethepriorityright?
218 Arethereownershipfactorsthataffectthetakeoverdefenses?
219 Aretherepriorityrightsthataffectthetakeoverdefenses?
290 Doesthecompanyhaveacontrollingshareholder?
334 Arethenamesofthenomineedirectorsdisclosed?
335 Didthecompanyfileitsproxymaterialslateinthepastyear?
263 ArethereRPTswithsignificantshareholders?
154 Doesthecompanyprovideloanstoexecutives?
322 Doesthecompanyhaveanequity-basedcompensationplan?
127 Whatisthetotalproportionofalloutstandingequitybasedplanstowardsthesharecapital?
131 Whatarethevestingperiodsmandatedintheplandocumentsforexecutives'stockoptionsorSARS
intheequityplans(adopted/amendedinthelast3years)?
![Page 150: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/150.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 150of159
©2016ISS|InstitutionalShareholderServices
132 Whatarethevestingperiodsmandatedintheplandocumentsforexecutives'restrictedstock/
stockawards(adopted/amendedinthelastthreeyears)?
133 Whatarethevestingperiodsmandatedintheplandocuments,adopted/amendedinthelastthree
years,forexecutives'otherlong-termplan?
104 Doesthecompanyprovideloanstodirectors?
109 Dodirectorsparticipateinequitybasedplans?
110 Donon-executivedirectorsparticipatetoperformancerelatedremuneration?
112 Doesthecompanydisclosedetailsofindividualexecutives’remuneration?
113 Doesthecompanydiscloseaperformancemeasurefortheshorttermincentiveplan(for
executives)?
246 Whatisthelevelofdisclosureonperformancemeasuresforthelatestactiveorproposedlongterm
incentiveplan?
161 WhatisthemultipleofpayintheseveranceagreementsfortheCEO(uponachange-in-control)?
247 Whatisthebasisforthechange-in-controlorseverancepaymentfortheCEO?
160 Whatisthemultipleofthechangeincontrol/severancepaymentforexecutivesexcludingtheCEO
(uponachange-in-control)?
248 Whatisthebasisforthechange-in-controlorseverancepaymentforexecutivesexcludingtheCEO?
301 HasISSidentifiedaproblematicpaypracticeorpolicythatraisesconcerns?
![Page 151: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/151.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 151of159
©2016ISS|InstitutionalShareholderServices
SouthKorea1 Non-Auditfeesrepresentwhatpercentageoftotalfees?
2 Didtheauditorissueanadverseopinioninthepastyear?
3 Hasthecompanyrestatedfinancialsforanyperiodwithinthepasttwoyears?
4 Hasthecompanymadenon-timelyfinancialdisclosurefilingsinthepasttwoyears?
302 HasthecompanymadelatefilingofAnnualReportforthemostrecentfiscalyear?
5 Hasaregulatorinitiatedenforcementactionagainstthecompanyinthepasttwoyears?
200 Hasaregulatorinitiatedenforcementactionagainstadirectororofficerofthecompanyinthepast
twoyears?
201 Isthecompany,oranyofitsdirectorsandofficers,currentlyunderinvestigationbyaregulatory
body?
6 Howmanyfinancialexpertsserveontheauditcommittee?
9 Howmanydirectorsserveontheboard?
304 Whatisthenumberofwomenontheboard?
354 Whatistheproportionofwomenontheboard?
10 WhatistheindependentdirectorcompositionoftheBoardaccordingtoISSclassification?
14 WhatistheclassificationoftheChairmanoftheBoard?
19 Whatistheindependentstatusofthenominatingcommitteemembers?
23 What'stheclassificationofthechairmanofthenominatingcommittee?
25 Whatistheindependentstatusofthecompensationcommitteemembers?
28 What'stheclassificationofthechairmanofthecompensationcommittee?
31 Whatistheindependentstatusoftheauditcommitteemembers?
34 What'stheclassificationofthechairmanoftheauditcommittee?
44 Whatpercentageofthedirectorsattendedlessthan75%ofboardand/orkeycommitteemeetings?
144 Doalldirectorswithmorethanoneyearofserviceownstock?
72 Doesthecompanyhavetargetedstockplacementthatcanbeusedasatakeoverdefense?
83 Istheboardauthorizedtoissueblankcheckpreferredstock?
290 Doesthecompanyhaveacontrollingshareholder?
285 Doesthecompanyhavediscretionoverdividendpayments?
53 Didthecompanyhaveaslateballotatitslastshareholders'meeting?
338 Doesthecompanyusecumulativevotingfordirectorelection?
335 Didthecompanyfileitsproxymaterialslateinthepastyear?
287 Doesthecompanyholditsgeneralmeetingonapeakdate?
263 ArethereRPTswithsignificantshareholders?
318 Whatisthedilutionlimitofthegeneralmandatetoissueshares?
322 Doesthecompanyhaveanequity-basedcompensationplan?
127 Whatisthetotalproportionofalloutstandingequitybasedplanstowardsthesharecapital?
136 Whatarethepricingconditionsforstockoptionsgrantedtoexecutives?
131 Whatarethevestingperiodsmandatedintheplandocumentsforexecutives'stockoptionsorSARS
intheequityplansadopted/amendedinthelast3years?
341 DoesthecompanydisclosetheremunerationpaidtotheboardinAGMproxyfilings?
![Page 152: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/152.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 152of159
©2016ISS|InstitutionalShareholderServices
India1 Non-Auditfeesrepresentwhatpercentageoftotalfees?
2 Didtheauditorissueanadverseopinioninthepastyear?
302 HasthecompanymadelatefilingofAnnualReportforthemostrecentfiscalyear?
5 Hasaregulatorinitiatedenforcementactionagainstthecompanyinthepasttwoyears?
200 Hasaregulatorinitiatedenforcementactionagainstadirectororofficerofthecompanyinthepast
twoyears?
201 Isthecompany,oranyofitsdirectorsandofficers,currentlyunderinvestigationbyaregulatory
body?
9 Howmanydirectorsserveontheboard?
304 Whatisthenumberofwomenontheboard?
354 Whatistheproportionofwomenontheboard?
10 WhatistheindependentdirectorcompositionoftheBoardaccordingtoISSclassification?
13 Whatproportionofnon-executivedirectorsontheboardhaslengthytenure?
14 WhatistheclassificationoftheChairmanoftheBoard?
16 HasthecompanyidentifiedaSeniorIndependentDirectororanindependentLeadDirector?
19 Whatistheindependentstatusofthenominatingcommitteemembers?
306 Arethereexecutivesonthenominatingcommittee?
23 What'stheclassificationofthechairmanofthenominatingcommittee?
25 Whatistheindependentstatusofthecompensationcommitteemembers?
27 Arethereexecutivesonthecompensationcommittee?
28 What'stheclassificationofthechairmanofthecompensationcommittee?
31 Whatistheindependentstatusoftheauditcommitteemembers?
33 Arethereexecutivesontheauditcommittee?
34 What'stheclassificationofthechairmanoftheauditcommittee?
340 Hasthecompanydisclosedinformationonkeycommitteeattendance?
337 Hasthecompanydisclosedtheattendanceofeachdirector?
44 Whatpercentageofthedirectorsattendedlessthan75%ofboardand/orkeycommitteemeetings?
144 Doalldirectorswithmorethanoneyearofserviceownstock?
336 DoesthecompanydiscloseinformationonRelatedPartyTransactions?
290 Doesthecompanyhaveacontrollingshareholder?
335 Didthecompanyfileitsproxymaterialslateinthepastyear?
263 ArethereRPTswithsignificantshareholders?
318 Whatisthedilutionlimitofthegeneralmandatetoissueshares?
319 Whatisthediscountlimitofthegeneralmandatetoissueshares?
322 Doesthecompanyhaveanequity-basedcompensationplan?
127 Whatisthetotalproportionofalloutstandingequitybasedplanstowardsthesharecapital?
136 Whatarethepricingconditionsforstockoptionsgrantedtoexecutives?
131 Whatarethevestingperiodsmandatedintheplandocumentsforexecutives'stockoptionsorSARS
intheequityplansadopted/amendedinthelast3years?
132 Whatarethevestingperiodsmandatedintheplandocuments,adopted/amendedinthelastthree
years,forexecutives'restrictedstock/stockawards?
110 Donon-executivedirectorsparticipatetoperformancerelatedremuneration?
325 Aredirectorseligibletoreceivegrants/awardsundertheplaninvolvedinitsadministration?
![Page 153: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/153.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 153of159
©2016ISS|InstitutionalShareholderServices
112 Doesthecompanydisclosedetailsofindividualexecutives’remuneration?
122 Doesthecompanydiscloseaperformancemeasureforstockoptionsplans(forexecutives)?
246 Whatisthelevelofdisclosureonperformancemeasuresforthelatestactiveorproposedlongterm
incentiveplan?
301 HasISSidentifiedaproblematicpaypracticeorpolicythatraisesconcerns?
![Page 154: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/154.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 154of159
©2016ISS|InstitutionalShareholderServices
Addendum› November24,2014:Updatedtextonpage7forquestion99,whichwasnotedinconsistentlyinthe
documentandintheappendices.Thefactoris,“Hastheboardadequatelyaddressedashareholder
resolutionsupportedbyamajorityvote?(Q99).”
› November24,2014:Updatedthetextforquestion130,basedonISS2015policyupdates.Thefactoris,
“Doesthecompany’sequitygrantrateexceedthemeanplusonestandarddeviationofits
industry/indexpeers?(Q130).”
› November24,2014:Additionalnoteisprovidedforquestion41regardingtheperformanceevaluation
oftheboardforU.S.companies.
› November24,2014:ThefactorsconsideredunderthePayforPerformancesubcategoryarescored
basedontheISS2015PolicyUpdates.Noteisaddedtoquestions228,229and329.
› November24,2014:AdditionalinformationonthescoringintheAudit&RiskOversightpillarisincluded
onpage8.
› November24,2014:RemovedCanadafromtheMarketApplicabilitysectioninthefactordescriptionof
question201.
› November24,2014:Removedthereferenceto“VoteResults”inAppendixI,asthe“inprogress”
considerationofvoteresultcollectionisnotedinthefactordescriptioninthedocumentforquestions
49,312and328.
› November24,2014:AddedexplanationunderMajorityVoteStandard,question52,howa“Majority
VotePolicy”intheU.S.isnotequivalenttoamajorityvotestandard.ClarifiedapplicationinCanada.
› November24,2014:Removedquestion21fromthetext,“Arethereemployeerepresentativesonthe
nominatingcommittee?”asitisnolongeranalyzedinQuickScore3.0.
› November24,2014:Correctedtextonquestion288fromthreefiscalyearstotwofiscalyears,added
Asia-Pacificregion.
› May26,2015:Removedquestion342forSouthKorearegardingtheavailabilityofproxymaterialin
English.
› October30,2015:Removedinformationoncoverageinthe1stparagraphoftheoverviewonpage4.
Thisinformationistakenuponpage5.
› October30,2015:Updatedtextoncoverageinthe1stparagraphregardingthecoverageofQuickScore
onpage5.
› October30,2015:Updatedtexton“SummaryofUpdatesinQuickScore3.0”onpage6toreflectthe
updatedmethodology.
› October30,2015:Removedtablesonpage5and6andreplacedwithtextofthenewfactoronproxy
accessonpage6.
› October30,2015:Updatedtexton“OthernotableQuickScore3.0updates”onpage6and7toreflect
theupdatedmethodology.
› October30,2015:AddedaparagraphoutliningthedifferenceinstandardsbetweenFTSE350companies
inUKandISEQ20companiesinIrelandandtheremainingcompaniesintheAngloregionintermsof
independenceonpage10.
![Page 155: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/155.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 155of159
©2016ISS|InstitutionalShareholderServices
› October30,2015:Addedaparagraphoutliningthedifferenceinstandardsbetweenconstituentsofthe
differentlistingsegmentsinBrazilintermsofindependenceonpage10.
› October30,2015:AddedW.Europetothemarketapplicabilitysectioninthefactordescriptionof
question11onpage10.
› October30,2015:AddedfurtherexplanationinthefirstparagraphofthefactordescriptiononQ212
outliningthedifferenceinstandardsbetweenFTSE350companiesinUKandISEQ20companiesin
IrelandandtheremainingcompaniesintheAngloregion,onpage16.
› October30,2015:AddedfurtherexplanationinthefirstparagraphofthefactordescriptiononQ213
outliningthedifferenceinstandardsbetweenFTSE350companiesinUKandISEQ20companiesin
IrelandandtheremainingcompaniesintheAngloregion,onpage18.
› October30,2015:Removedreferencetopreviousthresholdinthesecondparagraphofthefactor
descriptiononQ312onpage22.
› October30,2015:AddedasentenceinthelastparagraphofthefactordescriptiononQ143forAustralia
takingintoaccountsignificantshareownershipofdirectors,onpage25.
› October30,2015:RemoveddatereferenceinthelastparagraphofthefactordescriptiononQ228on
page29.
› October30,2015:RemoveddatereferenceinthelastparagraphofthefactordescriptiononQ229on
page30.
› October30,2015:RemoveddatereferenceinthelastparagraphofthefactordescriptiononQ329on
page31.
› October30,2015:Removedquestion158fromthetext,“Didthecompanydiscloseaperformance
overviewforitslong-termincentiveplans?”asitisnolongeranalyzedinQuickScore3.0.
› October30,2015:RemovedS.Europefromthemarketapplicabilitysectioninthefactordescriptionof
question153onpage44.
› October30,2015:AddedCanadatothemarketapplicabilitysectioninthefactordescriptionofquestion
77onpage53.
› October30,2015:Movedfactordescriptionofquestion52topage60.
› October30,2015:AddedCanadatothemarketapplicabilitysectioninthefactordescriptionofquestion
89onpage57.
› October30,2015:AddedCanadatothemarketapplicabilitysectioninthefactordescriptionofquestion
90onpage58.
› October30,2015:RemovedS.Europefromthemarketapplicabilitysectioninthefactordescriptionof
question53onpage59.
› October30,2015:AddedCanadatothemarketapplicabilitysectioninthefactordescriptionofquestion
97onpage60.
› October30,2015:AddedCanadatothemarketapplicabilitysectioninthefactordescriptionofquestion
98onpage60.
› October30,2015:Movedfactordescriptionofquestion225topage61.
› October30,2015:Addednewfactordescriptiononquestion346onproxyaccessonpage62.
› October30,2015:RemovedsentenceontheUSinthefactordescriptiononQ13onpage13.
![Page 156: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/156.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 156of159
©2016ISS|InstitutionalShareholderServices
› October30,2015:UpdatedinformationontheUSinthefactordescriptiononQ45onpage24.
› October30,2015:RemovedsentenceinthelastparagraphontheUSinthefactordescriptiononQ228
onpage33.
› October30,2015:RemovedsentenceinthelastparagraphontheUSinthefactordescriptiononQ229
onpage33.
› October30,2015:RemovedlasttwoparagraphsontheUSinthefactordescriptiononQ329onpage34.
› February2016:AmendedcoveragetableentryforIreland.
› April2016:AmendedcoveragetableentriesforBrazil,China,HongKong,India,Japan,Singaporeand
SouthKorea.
› September2016:AmendedtheUS-specificsectionofQ131andQ132onpages34and35.
› November2016:ReviseddocumenttoreflectISSQualityScorebranding.
› November2016:AmendedthenumberofglobalmarketsundertheOverviewSectiononpage4.
› November2016:AddeddecileclarificationundertheOverviewSectiononpage4.
› November2016:AmendedAsia-Pacificcoveragetableonpage5.
› November2016:ReplacedSummaryofUpdateswithrenewedsectiononpage7.
› November2016:RemovedsectiononOthernotable3.0Updates.
› November2016:AmendednumberofQuickScorefactorsonpage10.
› November2016:AmendedquestiontextandexplanationonQ304onpage12.
› November2016:AddedquestionandexplanationonnewQ354onpage12.
› November2016:AmendedquestiontextandaddedexplanationonCanada(majorityexemption)for
Q10onpage13.
› November2016:UpdatedexplanationonQ289onpage14.
› November2016:AmendedexplanationonQ282onpage14.
› November2016:InsertedandupdatedexplanationonQ281onpage15.
› November2016:Replaced9yeartenurebytenureasrecommendedbylocalpracticeonQ13onpage
15.
› November2016:AddednewQ355andexplanationonpage15.
› November2016:AmendedexplanationonQ14andupdatedmarketapplicabilitytoallregionsonpage
16.
› November2016:AddednewQ367andexplanationonpage17.
› November2016:AddedexplanationonCanada(majorityexemption)forQ19andupdatedmarket
applicabilitytoincludeJapanonpage18.
› November2016:AmendedexplanationonQ23andupdatedmarketapplicabilitytoincludeSouthKorea
andJapanonpage19.
› November2016:AddedexplanationonCanada(majorityexemption)forQ25andupdatedmarket
applicabilitytoincludeJapanonpage21.
› November2016:AmendedexplanationonQ28andupdatedmarketapplicabilitytoincludeJapanon
page21.
![Page 157: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/157.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 157of159
©2016ISS|InstitutionalShareholderServices
› November2016:AddedexplanationonCanada(majorityexemption)forQ31andupdatedmarket
applicabilitytoincludeJapanonpage24.
› November2016:AmendedmarketapplicabilityonQ34toincludeJapanonpage24.
› November2016:UpdatedquestiontextandexplanationonQ283onpage25.
› November2016:UpdatedquestiontextandmarketapplicbilitytoincludeAngloonQ36onpage26.
› November2016:UpdatedquestiontextandmarketapplicabilitytoincludeAngloonQ37onpage27.
› November2016:Updatedquestiontext,explanationsandmarketapplicabilitytoincludeAngloonQ38
onpage27.
› November2016:UpdatedquestiontextandmarketapplicabilitytoincludeAngloonQ39onpage27.
› November2016:UpdatedmarketapplicabilityonQ44toexcludeAngloandincludeJapanonpage28.
› November2016:UpdatedmarketapplicabilityonQ45toincludeAngloonpage28.
› November2016:AddednewQ366andexplanationonpage29.
› November2016:AddednewQ348andexplanationonpage30.
› November2016:AddednewQ368andexplanationonpage30.
› November2016:AmendedquestiontextandexplanationonQ144onpage31.
› November2016:AmendedexplanationonQ243onpages31and32.
› November2016:AmendedmarketapplicabilityonQ41toincludeJapanonpage32.
› November2016:AddednewQ349andexplanationonpage33.
› November2016:AddednewQ350andexplanationonpage37.
› November2016:UpdatedquestiontextandexplanationonQ345onpage37.
› November2016:AddedexplanationonAustralAsiaandAngloonQ116onpage38.
› November2016:AddedexplanationonAustralAsiaandAngloonQ117onpage39.
› November2016:UpdatedexplanationonQ228andamendmarketapplicabilitytoincludeW.Europe,
Germanic,Anglo,S.EuropeandNordiconpage40.
› November2016:UpdatedexplanationonQ229andamendmarketapplicabilitytoincludeW.Europe,
Germanic,Anglo,S.EuropeandNordiconpage40.
› November2016:UpdatedexplanationonQ329andamendmarketapplicabilitytoincludeW.Europe,
Germanic,Anglo,S.EuropeandNordiconpage41.
› November2016:AmendedmarketapplicabilityonQ322toincludeJapanonpage42.
› November2016:AddednewQ375andexplanationonpage42.
› November2016:UpdatedquestiontextandexplanationsonQ131onpage46.
› November2016:UpdatedquestiontextandexplanationsonQ132onpage47.
› November2016:UpdatedmarketapplicabilityonQ325toincludeIndiaonpage51.
› November2016:UpdatedmarketapplicabilityonQ112toincludeJapanonpages51and52.
› November2016:AddednewQ376andexplanationonpage52.
› November2016:AmendedmarketapplicabilityonQ246toexcludeIndiaonpage53.
› November2016:AmendedmarketapplicabilityonQ122toincludeIndiaonpage53.
› November2016:RemovedQ326andQ327onpage54.
![Page 158: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/158.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 158of159
©2016ISS|InstitutionalShareholderServices
› November2016:AddednewQ353andexplanationonpage54.
› November2016:AmendedmarketapplicabilityonQ166toincludeAfricaonpage54.
› November2016:AmendedquestiontextandexplanationonQ328onpages54and55.
› November2016:AmendedmarketapplicabilityonQ301toincludeIndiaonpage59.
› November2016:RemovedQ307andQ308.
› November2016:AddednewQ369onpage60.
› November2016:AmendedmarketapplicabilityonQ77toexcludeAsiaPaconpage66.
› November2016:AmendedmarketapplicabilityonQ83toincludeSouthKoreaonpage66.
› November2016:RemovedQ317.
› November2016:AmendedmarketapplicabilityonQ285toincludeSouthKoreaonpage71.
› November2016:AmendedmarketapplicabilityonQ262toincludeJapanonpage72.
› November2016:AddednewQ371andexplanationonpage76.
› November2016:AddednewQ373andexplanationonpage76.
› November2016:AddednewQ370andexplanationonpage76.
› November2016:AddednewQ372andexplanationonpage77.
› November2016:AddednewQ374andexplanationonpage77.
› November2016:AddednewQ351andexplanationonpage77.
› November2016:AddednewQ363andexplanationonpage78.
› November2016:AddednewQ364andexplanationonpage78.
› November2016:AmendedexplanationonQ346onpage78.
› November2016:AddednewQ359andexplanationonpage79.
› November2016:AddednewQ360andexplanationonpage79.
› November2016:AddednewQ361andexplanationonpage79.
› November2016:AddednewQ362andexplanationonpage80.
› November2016:AddednewQ352andexplanationonpage80.
› November2016:AmendedmarketapplicabilityonQ319toincludeIndiaonpage81.
› November2016:AddednewQ347andexplanationonpage82.
› November2016:AddednewQ365andexplanationonpage82.
› November2016:AmendedmarketapplicabilityonQ3toincludeSouthKoreaonpage83.
› November2016:AmendedmarketapplicabilityonQ4toincludeSouthKoreaonpages84.
› November2016:AmendedmarketapplicabilityonQ302toincludeSouthKoreaonpage84.
› November2016:AmendedmarketapplicabilityonQ200toincludeIndiaonpages84to85.
› November2016:AmendedmarketapplicabilityonQ201toincludeIndiaandSouthKoreaonpage85.
› November2016:RemovedQ281(movedtoboardsection).
![Page 159: Overview and Updates - ISS](https://reader031.vdocuments.net/reader031/viewer/2022020620/61e5a055232a87412678be0c/html5/thumbnails/159.jpg)
OverviewandUpdates
TheGlobalLeaderinCorporateGovernance&ResponsibleInvestments 159of159
©2016ISS|InstitutionalShareholderServices
GetstartedonISSQualityScore.Emailsales@issgovernance.comorvisitwww.issgovernance.com/solutions/iss-analyticsformore
information.
ABOUTISSFoundedin1985asInstitutionalShareholderServicesInc.,ISSistheworld’sleadingproviderofcorporate
governanceandresponsibleinvestment(RI)solutionsforassetowners,assetmanagers,hedgefunds,andasset
serviceproviders.ISS’solutionsinclude:objectivegovernanceresearchandrecommendations;RIdata,
analytics,andresearch;end-to-endproxyvotinganddistributionsolutions;turnkeysecuritiesclass-actionclaims
management(providedbySecuritiesClassActionServices,LLC);andreliableglobalgovernancedataand
modelingtools.ClientsrelyonISS'expertisetohelpthemmakeinformedcorporategovernancedecisions.For
moreinformation,pleasevisitwww.issgovernance.com.Thisdocumentandalloftheinformationcontainedinit
isthepropertyofInstitutionalShareholderServicesInc.(“ISS”)oritssubsidiaries.TheInformationmaynotbe
reproducedordisseminatedinwholeorinpartwithoutpriorwrittenpermissionofISS.ISSMAKESNOEXPRESS
ORIMPLIEDWARRANTIESORREPRESENTATIONSWITHRESPECTTOTHEINFORMATION.