On November 12, 2020, ISS announced the release of its 2021 benchmark policy updates that will apply to shareholder meetings occurring on or after February 1, 2021. The updated policies substantially adopt the policies as ISS proposed in October 2020 relating to (1) racial and ethnic diversity, (2) board oversight of environmental and social risks, including climate risks and (3) exclusive forum provisions, which we previously discussed here.
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Subscribe to ISS RSS FeedISS Releases 2021 U.S. Proxy Voting Guidelines Today and other Upcoming Key Dates for ISS and Glass Lewis
ISS and Glass Lewis (GL) have publicly shared some key upcoming dates for the 2021 proxy season. Below is a list of dates the firms have provided and, based on the most recent year(s), our estimated release dates for other frequently-used proxy advisor publications. Unless specified otherwise, the updated policies listed below will be posted on the ISS website or GL website.
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ISS Releases Preliminary FAQs on U.S. Compensation Policies and the COVID-19 Pandemic
On October 15, 2020, ISS released a series of preliminary FAQs on its approach to analyzing pay decisions relating to the COVID-19 pandemic. These FAQs provide general guidance on how ISS Research may approach COVID-related pay decisions in the context of ISS’ pay-for-performance qualitative evaluation. ISS makes clear that the responses to the FAQs should not be construed as a guarantee as to how ISS will consider any particular situation.
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ISS Proposes 2021 Benchmark Voting Policy Changes
On October 14, 2020, ISS released its proposed voting policy changes for 2021. The changes for the United States focus mainly in these three areas: (1) racial and ethnic board diversity, (2) board oversight of environmental, climate and social risks and (3) exclusive forum provisions.
ISS requests feedback on the proposed changes. Market participants can submit comments via email to policy@issgovernance.com
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ISS Releases 2020 Benchmark Policy Survey Results
On September 25, 2020, ISS announced the results of its annual Global Benchmark Policy Survey. ISS, as in prior years, based its results on the survey responses of investors, public company executives, and company advisors. ISS will use these results to inform its policies for shareholder meetings occurring on or after February 1, 2021. ISS plans to request comments on its draft policies scheduled for release in October 2020, and publish its final policies in mid-November 2020.
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ISS Peer Group Submission Window Is Currently Open
Each proxy season, Institutional Shareholder Services Inc. (“ISS”) constructs a peer group for each company prior to the company’s next proxy disclosure. ISS’ methodology for constructing the peer group is based in part on the company’s self-selected peer group. ISS recently invited submissions from certain U.S. and Canadian companies with annual meetings scheduled between September 16, 2020 and January 31, 2021.
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ISS Releases Policy Application Guidance For COVID-19’s Impact
On Wednesday, April 8, 2020, Institutional Shareholder Services Inc. (ISS) issued guidance on voting policies of various corporate governance-related issues that are likely to be implicated by the coronavirus (COVID-19) pandemic during the 2020 proxy season. The guidance does not introduce any new formal policies. Rather, the guidance provides ISS’s perspective on selected market developments and application of several of its existing policies relevant to the U.S.
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ISS Releases Specialty Climate Voting Policy
On Monday, Institutional Shareholder Services Inc. (ISS) announced the launch of a new specialty proxy voting guideline focusing on climate-related issues. ISS explains that the new Climate Voting Policy aids investors in “incorporate[ing] climate-related considerations systematically into their engagement and proxy voting strategies across their portfolios.” This development is likely based on ISS’s 2019 annual policy survey results, which we shared in a prior summary.
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ISS Releases Preliminary Updates to 2020 Compensation-Related Policies
As we previously discussed, ISS recently released its U.S. Preliminary Compensation Policies FAQ, which provides interested parties an advance view of ISS’ answers to select questions posed to ISS regarding potential changes to its U.S. compensation policies. Updated compensation-related FAQ documents and a methodological whitepaper—which will include a detailed introduction of ISS’ new Economic Value Added (EVA) metrics—will be available in mid-December.
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ISS Releases Finalized 2020 U.S. Voting Policies, Preliminary Compensation Policies FAQ & Industry Group TSR Medians
Earlier this week, Institutional Shareholder Services Inc. (ISS) posted its U.S. Proxy Voting Guidelines, which include updates we previously discussed. The 2020 policies are effective for shareholder meetings occurring on or after February 1, 2020.
Also, ISS recently published the U.S. Preliminary Compensation Policies FAQ that is designed to address questions that have been posed to ISS regarding potential changes to its compensation-related policies.
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ISS Releases Final Changes to Its Voting Policies for 2020 Proxy Season – Newly Public Companies, Independent Chair and Share Buyback Proposals, Board Gender Diversity, EVA and More
Today, Institutional Shareholder Services Inc. (ISS) released its 2020 global proxy voting policy updates, which will generally be applicable for shareholder meetings on or after February 1, 2020. Consistent with the preview offered in its proposed 2020 voting policy changes (covered on our blog here), the updates to ISS’ U.S. proxy voting policies apply primarily to the proxy advisory firm’s treatment of (1) certain governance structures at newly public companies, including multi-class shares; and (2) annual meeting proposals calling for independent board chairs and share buybacks.
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ISS Calls for Feedback on Proposed 2020 Voting Policies: Multi-Class Structures, Independent Board Chair and Share Buybacks
Yesterday, Institutional Shareholder Services Inc. (ISS) announced proposed voting policies for 2020 affecting proposals related to three areas: (1) multi-class structures for newly public companies; (2) independent board chair; and (3) share buybacks. ISS states that the proposed changes either clarify an existing policy or largely codify an existing practice.
ISS requests feedback on the proposed rules, and market participants can submit comments until 5:00 PM ET on Friday, October 18, 2019.
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Key Findings of ISS 2019 Benchmarking Policy Survey
Yesterday, Institutional Shareholder Services Inc. (ISS) announced the results of its 2019 Global Policy Survey (a.k.a. ISS 2019 Benchmark Policy Survey) based on respondents including investors, public company executives and company advisors. ISS will use these results to inform its policies for shareholder meetings occurring on or after February 1, 2020. ISS expects to solicit comments in the latter half of October 2019 on its draft policy updates and release its final policies in mid-November 2019.
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ISS Ratings and Data Now Available on Open:FactSet Marketplace
ISS ESG, the responsible investment arm of ISS, is now offering its ESG data on FactSet’s Open:FactSet Marketplace. ISS ESG is the umbrella entity that consists of ISS-ethix, which focuses on responsible investment issues and related screens, ISS-climate, which provides climate data, analytics and services to financial market participants and ISS-oekom, which provides ESG research and ratings, including ISS’s Governance QualityScore and E&S Disclosure QualityScore.
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Next Week SEC Will Consider Issuing Guidance on the Use and Responsibilities of Proxy Advisors
Yesterday, the Securities and Exchange Commission (SEC or Commission) announced that the agenda for the Open Meeting, next Wednesday, August 21, 2019 at 10:00 a.m. E.T., will include consideration by the Division of Corporation Finance on whether to publish an interpretation and related guidance regarding the utilization of proxy advice in the proxy voting process.
In addition, the Division of Investment Management will consider whether to publish guidance on the proxy voting responsibilities of investment advisers under Rule 206(4)-6 of the Investment Advisers Act of 1940.
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ISS Launches Annual Benchmarking Policy Survey
Yesterday, Institutional Shareholder Services Inc. (ISS) announced its annual Benchmarking Policy survey. ISS will use survey responses to inform its policies governing 2020 shareholder meetings. Institutional investors, public companies, board directors, corporate advisors and other market participants are welcome to participate. Participants can make survey submissions until 5:00 PM ET on August 9, 2019. ISS typically publishes the survey results a few weeks thereafter.
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ISS Opens Window Today for Peer Group Submissions
Today begins the window where certain public companies in the U.S. and Canada have the option of submitting changes to their respective peer groups to Institutional Shareholder Services Inc. (“ISS”). The submission window closes next Friday at 8:00 PM EDT, July 19, 2019.
ISS’ invitation is directed to companies with annual meetings scheduled between September 16, 2019 and January 31, 2020 that have changed or anticipate changing their respective peer group from their last proxy disclosures.
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New U.K. Rules for Proxy Advisory Firms
The Proxy Advisors (Shareholders’ Rights) Regulations 2019 (“Regulations”) in the United Kingdom went into effect this past Monday. Proxy advisory services typically include research reports on public companies as well as proxy voting recommendations on how the proxy advisors’ clients, namely shareholders, should vote on all shareholder proposals, including those that are submitted by the public company’s management.
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Is an Eventual Negative Say-on-Pay Recommendation Almost Inevitable?
Results of a study published in April 2019 by the executive compensation consulting firm Pearl Meyer suggest that Russell 3000 companies which have not yet received an “Against” Say-on-Pay (SOP) recommendation will likely receive one down the road. The firm states that “it’s reasonable to expect that at some point in the future, more than 80% of companies will have fallen victim to a negative vote recommendation at least once.”
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A Say-on-Pay Update — Plus Strategies for Responding to a Negative Recommendation by a Proxy Advisory Firm
The proxy season is just around the corner for calendar year public companies. Ahead of the season, two major proxy advisory firms, Institutional Shareholder Services (ISS) and Glass Lewis, recently released their 2019 policy updates to provide guidance on how they will make recommendations on companies’ “say-on-pay” vote. Although a non-binding vote, performing poorly on a say-on-pay vote is not only disheartening, but can impact shareholder votes on election of directors (particularly compensation committee members), result in greater scrutiny of CEO performance, and require management and compensation committee members to expend significant time and resources to address concerns reflected by the vote.
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ISS Issues Benchmark Policies for 2019 and Bipartisan Bill to Regulate Proxy Advisory Firms is Proposed
New ISS Policies. For meetings on or after February 1, 2019, two new and fairly minimal ISS policies will be applied.
As part of ISS’ client roundtables, one-to-one client discussions and public comment period on proposed policy changes, ISS discussed the potential use of Economic Value Added (EVA) metrics to assess company performance in executive compensation evaluations.
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ISS QualityScore Data Verification Opens; New Factors Added
ISS QualityScore Data Verification opened on Monday, November 5. Companies should be aware of the new Board Diversity Subcategory, which consists of four new factors and five existing factors that will take effect on November 29, 2018. The four new factors are:
- How many women serve in leadership roles on the board? The factor evaluates the number of women serving as board chair, chair of key committees or lead director.
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ISS Proposes Limited Policy Updates for 2019 Related to Board Gender Diversity and Say-on-Pay Secondary Screens
Two key, but limited, policy changes for U.S. companies have been proposed by ISS. The open comment period will run through 5:00 p.m. ET on November 1.
Board Gender Diversity. Beginning with meetings on or after February 1, 2020 (providing a year grace period), ISS may issue adverse voting recommendations against nominating committee chairs at boards with no gender diversity.
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CII and ISS Team Up to Oppose House Legislation on Proxy Advisory Firms, Speak for “Real Main Street” Investors
Protect the Voice of Shareholders aims to oppose H.R. 4015, the Corporate Governance Reform and Transparency Act, that passed the House last October. While not effective, the Act is perhaps best known for requiring that the SEC withdraw the no-action letters to Egan Jones and ISS, which the SEC itself undertook recently, as we previously discussed.
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