On September 28, 2018, S&P Dow Jones Indices and MSCI, Inc. will introduce a new grouping to their Global Industry Classification Standard (GICS) system. This new classification, coded 5020, will be called “Media & Entertainment.” Certain other changes, including renaming the top-level GICS 50 industry, eliminating GICS 2540 (“Media”), and creating six- and eight-digit classifications within GICS 5020, will also be made.
Certain ISS policies, procedures, and products rely on GICS classifications, including executive compensation peer group formation, equity compensation plan evaluation, and Environmental & Social QualityScore. ISS has issued FAQs designed to answer the most frequently asked questions regarding how the adjustment to GICS structure will impact ISS analyses, and when those changes will be effective.
The FAQs address the following questions:
- How will the new GICS code affect the evaluation of equity compensation plans under ISS’ U.S. Equity Plan Scorecard?
- How will the new GICS code affect the evaluation of equity plans under ISS’ burn rate policy for France?
- How will the new GICS code affect the evaluation of executive compensation?
- How will the new GICS code affect the evaluation of director compensation?
- How will the new GICS code affect Environmental & Social QualityScore?
- How will the new GICS code affect ISS policies, such as the director performance evaluation policy, that examine a company’s TSR performance relative to its industry?
- When will Question 130 in Governance QualityScore, which examines each covered company’s burn rate relative to its industry, be updated to reflect the new GICS structure?