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ISS Releases Guidance on Revised Peer Group Selection Methodology

December 5, 2012

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As discussed in our recent Thoughtful Pay Alert on Institutional Shareholder Services’ updates to its U.S. corporate governance benchmark policy guidelines for 2013, ISS has revised its selection methodology for the peer group that it will use in assessing the alignment of a company’s executive compensation with corporate performance. One of these revisions gives greater weight to the company’s self-constructed compensation peer group. On December 4, 2012, ISS issued a series of “Frequently-Asked Questions” that provides details about how it intends to apply this revised methodology.

ISS will formulate updated peer groups using its revised methodology by early January 2013 to be applied when reviewing the executive compensation programs of companies with Annual Meetings of Shareholders occurring on or after February 1, 2013.

ISS is currently inviting companies to submit their self-constructed compensation peer groups for consideration in advance of this process. Note that this opportunity is only relevant for companies that have updated their compensation peer group since their last proxy statement filing and is intended to ensure that ISS is considering the relevant peer companies in terms of industry, size (that is, revenue and market capitalization), and other key factors when updating the peer group that will be used in its analysis.

If you want to provide ISS with updated compensation peer group information, you can submit this information to ISS using a form that identifies the constituent-companies in the self-constructed compensation peer group that you used in setting the compensation of your chief executive officer for the fiscal year that will be the subject of your next proxy statement filing. ISS has indicated that it will consider this information when formulating its updated peer group. You can find additional information, including detailed instructions on this submission process, at the following link: www.issgovernance.com/PeerFeedbackUS.

Note that, to take advantage of this opportunity, you must submit your compensation peer group information to ISS by December 21, 2012. Following submission, you will receive further instructions via e-mail (including confirmation of the submission) and be asked to provide an electronic copy of the peer group information on your company's letterhead.

Please contact your Compensia engagement manager with any questions on the suitability of this submission for your company and for further assistance.

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