ISS: THE GLOBAL LEADER IN GOVERNANCE State of Rhode Island The Office of the General Treasurer in Conjunction with The State Investment Commission Now more than ever, Governance Matters www.issgovernance.com
AGENDA › The ISS Difference › Governance Advisory Services › Proxy Voting Services › Additional ISS Solutions to Meet Your Needs › Concluding Remarks and Next Steps
The Governance Industry Continues to Evolve GOVERNANCE MOVES FROM A BACK OFFICE FUNCTION TO A FRONT OFFICE AND YEAR-ROUND FOCUS Ratings & Analytics Engagement Investors consider & Advisory environmental, social Significant increase in and governance risk Board Oversight issuer-shareholder when analyzing Executive engagement, portfolio companies As investors Compensation particularly around increasingly look at Proxy Advisory pay for performance long-term Plays a central role, & Research and board decision- performance, there is with institutions making greater focus on looking for peer Investors look to Proxy Voting quality of board in benchmarking as well proxy advisors for terms of expertise, as alignment of pay analysis of company Compliance driven track record and with company specific governance mandate for all U.S. performance performance practices and for investment policy-based vote managers. Voting in recommendations international markets driven by market- based codes Focus on Compliance / Annual Meeting Compliance & Investment Decision-Making Transactional, Seasonal Service Year-Round Service Integrated Into Daily Workflows Back / Middle Office Middle / Front Office ISS | Institutional Shareholder Services Inc. 3
ISS: The Global Leader in Governance ISS uniquely delivers comprehensive solutions that enable institutional investors to apply their corporate governance views, identify environmental, social and governance risk, and manage their complete proxy voting needs on a global basis. ISS | Institutional Shareholder Services Inc. 4
ISS: The Global Leader in Governance Innovation Quality & Coverage › Independently profitable › 17 offices, 25 languages spoken Service › Proxy research & vote recommendations on and growing › Over 900 professionals, › Pursuing new 39,000+meetings globally committed to client › SRI research coverage of 13,000+ companies opportunities in adjacent success markets worldwide › Global staff with local › Robust technology & market knowledge & operational infrastructure service Expertise › 94% client retention › Experienced, dedicated leadership team rate with average 15-year tenure › Support for your › Analysts provide insight on ESG landscape, unique corporate local market voting practices, and regulatory governance views requirements › Advanced degrees in business, finance & law ISS | Institutional Shareholder Services Inc. 5
Solutions to Meet Your Needs Governance Advisory & Investment Tools & Data Voting Services ProxyExchange combines ISS’ leading research, DataDesk to support investment decision- proven processes, and advanced technology to making and engagement within portfolio meet your proxy voting needs. companies using global data & analytics. › Governance Research › ISS Governance QuickScore › Voting Workflow & Technology › Executive Compensation Data & Analytics › Policy Consulting › Company Profile Reports › Disclosure Solutions › Governance Data Feeds › Reporting › FactSet Integration ESG Risk Screening, Research Securities Class & Analysis Action Services ISS-Ethix research, analysis and advisory RecoverMax platform and fully outsourced, solutions to align SRI policies and practices with turnkey securities class action services to shareholder interests. maximize recoveries from litigation settlements. › Policy Development › Research & Claims Filing › Research & Analysis and Portfolio Monitoring › Lifecycle Claims Tracking › Engagement support › Options Ingestion › Recognized Loss Calculations RepRisk solutions to identify and assess ESG › Estimated Recovery Calculations risks related to thousands of companies, projects and sectors. › Online Platform, Data Feeds & Company Reports ISS | Institutional Shareholder Services Inc. 6
Independent, Profitable & Growing ISS was acquired in 2014 by Vestar Capital Partners and operates as an independent & growing company Vestar shares ISS’ belief in the importance of corporate governance and in continued investment in the business ISS management team remains in place, and is fully committed to our clients success ISS remains committed to delivering high-quality research, voting, data and service that clients expect from us ISS has implemented an enhanced and fully independent IT infrastructure and data center operation ISS has advanced control regimes and business continuity programs and is adopting ISO 27001:2013 as its security framework ISS | Institutional Shareholder Services Inc. 7
AGENDA › The ISS Difference › Governance Advisory Services › Proxy Voting Services › Additional ISS Solutions to Meet Your Needs › Concluding Remarks and Next Steps
Governance Advisory Services AN UNPARALLELED CHOICE OF RESEARCH SOLUTIONS, AND UNSURPASSED GLOBAL MARKET COVERAGE ENGAGEMENT EXPERTISE › Fact-checking and engagement, before research is › published 30+ years of market leadership and › Draft reports to S&P 500 in the US, S&P/TSX experience Composite companies in Canada, CAC 40 in France › Team of 375+ research and all companies in UK and Ireland, and key professionals, including 225+ companies in select markets where appropriate research analysts, located in ten › Average 1,000+ North America and 1,000+ non markets and fluent in 25 languages › North America engagements each year Specialists in governance, compensation, M&A, ESG and industry-specific issues QUALITY COVERAGE FLEXIBILITY › › › Thorough internal review, ongoing Customized corporate governance Comprehensive global coverage of all of audits and specialized focus on your common equity holdings guidelines to help you convert your complex matters › philosophy into an actionable voting 39,000+ meetings and 330,000+ agenda › policy Continuous product innovation to items covered each year across 115 › enhance research content and Enhanced Custom research reports established and emerging markets timeliness reflect your unique content and layout needs ISS | Institutional Shareholder Services Inc. 9
ISS Provides More Policy Options ISS covers a spectrum of shareholder interests, to align with client philosophies as they serve their underlying clients. Continued enhancements to proxy research reports provide more data, improved formatting and more rigorous analysis of agenda items. BENCHMARK ISS POLICIES SPECIALTY ISS POLICIES CLIENT-SPECIFIC POLICIES › Represents industry best › Taft-Hartley Labor Policy › 400+ client-specific policies practices and is viewed as the › Socially Responsible Policy › Fastest growing area of industry standard research, as clients need to › Faith-based Policy › Often provides the execute votes consistent with › Sustainability Policy foundation for a custom their governance philosophy, policy or that of their client’s › Public Fund Policy ISS | Institutional Shareholder Services Inc. 10
Rigorous & Inclusive Policy Formulation Process A transparent and inclusive approach that includes ongoing market feedback, surveys, roundtables and an open industry comment period. › Annual Policy Survey brings in perspectives from institutional investors, corporate issuers and governance experts. Offers all market constituents the ability to actively participate in ISS’ policy development process. › Extensive In-person Discussion Forums and roundtables augment the policy process. › Balanced Viewpoints through guidelines that strike the right balance between shareholder interests and economic practicality. › Engagement with Issuers on behalf of shareholders ensures a full understanding of the facts and enriches our analysis. ISS | Institutional Shareholder Services Inc. 11
Custom Policy & Research Services TO SUPPORT YOUR UNIQUE VIEWS C OLLABORATIVE G OVERNANCE K NOWLEDGE AND H IGH T OUCH A PPROACH I NSIGHT E XPERTISE S UPPORT ISS analysts can help Ongoing monitoring of Analysts bring expertise Committed to serving develop guidelines new and emerging in areas such as: clients, with personal based on your unique trends and new types of support to develop and › ESG governance philosophy. shareholder proposals, › Social Responsibility implement your voting to help you adapt your policies, across all › Climate Change Risk Team structure ensures policy guidelines. meetings and for all › Labor Standards multiple analysts are markets. › Fair Employment trained on your policy. › Proxy Access › Exec Compensation › Board Practices More than 400 institutions leverage ISS’ Custom Proxy Advisory Services ISS | Institutional Shareholder Services Inc. 12
AGENDA › The ISS Difference › Governance Advisory Services › Proxy Voting Services › Additional ISS Solutions to Meet Your Needs › Concluding Remarks and Next Steps
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