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OverviewandUpdates
Published:November2016
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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
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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
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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.
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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
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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
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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);
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› 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).
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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
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› 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
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“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.
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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
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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
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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
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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.
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› 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).
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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
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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
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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
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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
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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.
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› 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
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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
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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.
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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
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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)
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› 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)
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› 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)
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› 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.
OverviewandUpdates
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› 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.
OverviewandUpdates
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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.
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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)
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› 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
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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)
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› 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.
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› 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.
OverviewandUpdates
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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.
OverviewandUpdates
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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
OverviewandUpdates
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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
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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)
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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).
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› 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
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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)
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› 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.
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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)
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› 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.
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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
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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.
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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
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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.
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› 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
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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)
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› 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
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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)
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› 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.
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› 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.
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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
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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.
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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
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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)
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› 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
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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
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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
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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)
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› 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
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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.
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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.
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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)
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› 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
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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)
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› 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
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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)
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› 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
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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.
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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
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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.
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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)
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› 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.
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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.
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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
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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.
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› 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;
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› 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
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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
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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.
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› 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.
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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.
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
* *
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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?*
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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?
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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?*
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300 HasISS'qualitativereviewidentifiedapay-for-performancemisalignment?
301 HasISSidentifiedaproblematicpaypracticeorpolicythatraisesconcerns?
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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?
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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?
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153 Doequitybasedplansorotherlongtermawardsvestcompletelyuponachangeincontrol?
161 WhatisthemultipleofpayintheseveranceagreementsfortheCEO(uponachange-in-control)?
247 Whatisthebasisforthechange-in-controlorseverancepaymentfortheCEO?
162 Doesthecompanyprovideexcisetaxgross-upsforchange-in-controlpayments?
300 HasISS'qualitativereviewidentifiedapay-for-performancemisalignment?
301 HasISSidentifiedaproblematicpaypracticeorpolicythatraisesconcerns?
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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?
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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?
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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?
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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?
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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?
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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?
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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?
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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?
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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?
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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?
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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)?
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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?
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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?
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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?
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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?
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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?
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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?
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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?
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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)?
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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?
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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)?
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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?
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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)?
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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?
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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?
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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?
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112 Doesthecompanydisclosedetailsofindividualexecutives’remuneration?
122 Doesthecompanydiscloseaperformancemeasureforstockoptionsplans(forexecutives)?
246 Whatisthelevelofdisclosureonperformancemeasuresforthelatestactiveorproposedlongterm
incentiveplan?
301 HasISSidentifiedaproblematicpaypracticeorpolicythatraisesconcerns?
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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.
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› 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.
OverviewandUpdates
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› 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.
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©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.
OverviewandUpdates
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› 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).
OverviewandUpdates
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