The Voice of Corporate Governance
ISS Recommendations and Compensation Pactices with Professor Susanna Gallani
Apr 23, 2020
Professor Susanna Gallani discusses her research on ISS recommendations and compensation practices, revealing a lack of clear association between ISS recommendations and return on assets. The podcast also explores how the timing of a company's fiscal year end influences the quality of ISS assessments, discrepancies between shareholder evaluations and ISS recommendations, and the potential impact of SEC rules on proxy advisors and research quality.
17:33
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Quick takeaways
- ISS recommendations may be more accurate in assessing compensation practices during off-seasons.
- Large institutional investors like BlackRock and Vanguard sometimes outperform ISS in evaluating compensation practices.
Deep dives
ISS and Compensation Practices Analysis
The podcast episode delves into an analysis of ISS recommendations on company say-on-pay proposals and their impact on compensation practices. Through a recent paper, researchers assessed whether ISS can identify poor compensation practices. Although initial findings did not show a direct correlation between ISS recommendations and return on assets, a deeper investigation revealed that ISS performed better in evaluating compensation practices during off-seasons, suggesting improved discernment in those periods.
