Institutional Shareholder Services Inc. (“ISS”), the most influential proxy advisory firm, today launched its 10th annual global policy survey. Each year, ISS solicits comments in connection with its review of its proxy voting policies. At the end of this process, in November 2014, ISS will announce its updated proxy voting policies applicable to 2015 shareholders’ meetings.
Results from the policy survey that ISS posted on its website today will be used by ISS to inform its voting policy review. The survey includes questions on a variety of topics involving Say-on-Pay and equity plan approvals, voting recommendations on directors and the selection of auditors, and other governance topics, including the following:
- What relationship should exist between setting performance-based compensation goals and the value of performance-based compensation awards?
- Is there is an absolute magnitude of CEO compensation that causes concern regardless of company performance, and if so, how should that pay magnitude be determined?
- How should disclosures regarding changes made to a company’s current or future compensation program be considered in ISS’s pay-for-performance evaluation, which examines a company’s compensation program based on compensation paid in the prior fiscal year?
- When is it appropriate for companies to use quantitative environmental and social performance goals, and what alternatives might be acceptable?
- In the context of ISS’s stated intention to implement a “balanced scorecard” for evaluating equity plans, how should ISS weigh factors such as plan cost, plan features, and company practices? What other factors should be considered?
- How and under what circumstances should directors be held accountable for adopting bylaw amendments that restrict shareholder rights without obtaining shareholder approval of the amendments?
- How do investors consider gender diversity when evaluating boards?
- What factors should be considered when evaluating a board’s role in risk oversight?
- In making informed voting decisions on the ratification of outside auditors and the re-election of directors that serve on audit committees, are there additional disclosures that would be important?
- How should ISS evaluate companies that have a majority of their shareholders in the U.S. but are incorporated outside of the U.S. and thus have matters on their annual meeting agendas not otherwise seen at U.S. companies?
It is important to note that the ISS annual policy survey does not necessarily address every topic that may be covered by ISS’s 2015 proxy voting policies. In past years, ISS has revised its proxy voting policies on issues that were not covered by its annual survey, and has maintained existing policies on topics for which it sought comment. Nevertheless, the policy survey is an important indication of possible changes and provides interested parties an opportunity to express their views.
The ISS policy survey closes on August 29th. Public companies and others are urged to submit their views by completing the survey as ISS considers the support expressed for the various alternatives set forth in its survey in developing its policies.
ISS also announced that in August and September, it will hold a variety of roundtables and conference calls on specific topics and in the U.S. and other markets in which it operates “to drill into local market best practices.” Survey results will be published in September. ISS then will open a 30-day comment period before releasing the 2015 policy updates in November. The 2015 policy updates will apply to shareholder meetings held on or after February 1, 2015.
More information on ISS’s policy formulation process is available at http://www.issgovernance.com/policy-gateway/policy-formulation-application/. To download the ISS 2015 policy survey, visit http://www.issgovernance.com/file/publications/2015-iss-policy-survey.pdf. To complete the 2015 policy survey, visit https://www.surveymonkey.com/s/2015_ISS_Policy_Survey.