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Institutional Shareholder Services to Release Updated Governance Ratings
Practical Law Legal Update 2-516-9912 (Approx. 3 pages)
Institutional Shareholder Services to Release Updated Governance Ratings
by PLC Corporate & Securities
| Published on 20 Dec 2011 • USA (National/Federal) |
Institutional Shareholder Services (ISS) will revise the Governance Risk Indicators (GRId) it uses in determining governance ratings.
On December 20, 2011, Institutional Shareholder Services (ISS) announced that it will roll out updates and enhancements to its Governance Risk Indicators (GRId) ratings over the next year.
GRId is a measure of governance-related risk designed to:
- Provide institutional investors with an understanding of high-level areas of concern across a portfolio, together with analytical tools to help them evaluate governance at individual companies.
- Provide companies with a basis for aligning their corporate governance structure and practices with shareholder interests.
GRId ratings identify and evaluate a company's key governance practices across four dimensions:
- Audit.
- Board of directors.
- Compensation/remuneration.
- Shareholder Rights.
Changes to GRId include:
- Additional and revised questions on executive compensation matters, based on ISS's new pay-for-performance methodology, and takeover defenses.
- Reorganization of subcategories of questions.
- Revisions to scoring, including elimination of explicit weights and identification of category scores as well as overall ratings.
The updated GRId (GRId 2.0) will be launched on the following schedule:
- February 2012 for the US market.
- Third quarter of 2012 for the other six current GRId markets (Canada, United Kingdom, France, Netherlands, Germany and Sweden).
- Second half of 2012 for new markets in Europe and Asia-Pacific.
For more detailed information on GRId 2.0, see the GRId 2.0 Technical Document.