ISS Quickscore 3.0 – Review Validation Data Before November 14th
Oct 31 2014
Proxy advisory firm Institutional Shareholder Services, Inc. (“ISS”) recently rolled out an updated version of its governance rating system called QuickScore 3.0. In connection with QuickScore 3.0’s roll out, ISS will open a free data verification site1 to all covered corporate issuers to correct factual errors in company data used in ISS’ ratings. In order to update data prior to QuickScore 3.0’s launch, companies must provide feedback through the verification portal beginning November 3rd and no later than November 14th. The new governance ratings under QuickScore 3.0 will be included in proxy research reports starting November 24th.
QuickScore 3.0 includes new and updated data points to provide for broader and deeper portfolio coverage. ISS has released a technical document that details the changes to QuickScore along with an appendix that shows the new QuickScore factors by region, both of which are available on ISS’ website. Since the QuickScore methodology is aligned with ISS’ benchmark proxy voting policy, a favorable QuickScore suggests that the company is more likely to receive favorable ISS proxy review on the covered items as well. Companies should review the QuickScore 3.0 governance factors to assess potential areas of ISS and investor scrutiny, particularly as companies focus on effective disclosures for the upcoming proxy season. QuickScore 3.0 highlights are found below.
QuickScore, which was designed to help institutional investors identify and monitor potential governance risk in their portfolios and identify possible investor concerns, replaced ISS’ GRId scoring method in February 2013. A revised version of QuickScore, QuickScore 2.0, was launched in February 2014. QuickScore measures a company’s perceived level of risk based on market practices covering over 200 governance factors grouped into the four areas of (i) audit and risk oversight, (ii) board structure, (iii) compensation/remuneration and (iv) shareholder rights, using a hybrid qualitative and quantitative approach. Under QuickScore, companies receive overall and pillar scores based upon a company’s raw score calculations against those of other companies in the company’s relative index or capital markets region. Scores range from 1 to 10 (with 1 indicating lower governance risk and 10 indicating higher governance risk) and are presented using a standardized appearance.
QuickScore 3.0 updates include:
Given the changes to be made in the scoring of companies under QuickScore 3.0, companies should plan to verify their ISS data once the verification portal opens on November 3rd and prior to November 14th.
If you have any questions regarding QuickScore 3.0, please contact Janet Lowder, the principal drafter of this client alert, or you may contact the Womble Carlyle attorney with whom you usually work or one of our Corporate and Securities attorneys.
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1Access to company data will require a user name and password. Companies with an ISS user name and password will not need to request new login information; companies without a user name or password will need to request a login. Information regarding data verification may be found here: http://www.issgovernance.com/governance-solutions/investment-tools-data/quickscore/.