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ISS Releases Survey for 2016 Policy Updates

Institutional Shareholder Services (“ISS”) today launched its annual global policy survey.  Each year, ISS solicits comments in connection with the review of its proxy voting policies. At the end of this process, in November 2015, ISS will announce its updated proxy voting policies applicable to 2016 shareholders’ meetings. 

ISS will publish the results from the policy survey and use them to inform its voting policy review.  The survey includes questions on a variety of governance and compensation topics relevant to U.S. companies, including: 


  • the types of restrictions in a board-adopted proxy access provision that should be viewed as not sufficiently responsive to a majority vote on a proxy access shareholder proposal (e.g., ownership thresholds, ownership duration, aggregation limits below 20 shareholders, limit on number of nominees, more restrictive advance notice requirements, re-nomination restrictions and restrictions on compensation of proxy access nominees);
  • whether ISS should extend the period of time it recommends votes “against” directors when a board unilaterally adopts bylaw/charter amendments that “materially diminish shareholder rights” and, if so, for how long (e.g., until the rights are restored) and in what circumstances (e.g., increasing advance notice requirements);
  • whether boards of IPO companies should be held accountable for adopting pre-IPO bylaw amendments that “materially diminish shareholder rights”;
  • when non-executive directors and directors who are active CEOs should be considered “overboarded” (the current ISS policy permits service on six and three public company boards, respectively) and whether overboarding limits should apply to directors with “demanding full-time jobs (e.g., CFOs, law firm partners, etc.)”;
  • when the five-year “cooling off” period should start before former executives serving on the board may be considered independent, and whether a similar “cooling off period” should apply to former service providers to the company (e.g., auditor or outside counsel);
  • the impact of controlled company status on investors’ proxy voting decisions and degree of engagement;
  • the company financial metrics and ratios that, if included in ISS reports, would be helpful to investors in assessing capital allocation decisions, including share buybacks, and the efficacy of board stewardship;
  • how often Net Operating Loss Poison Pills (“NOL pills”) should be renewed and what company governance features should weigh against support for a NOL pill proposal;


  • whether non-GAAP and other adjusted performance metrics are acceptable in the incentive compensation context, and (if so) what types of items are appropriate to exclude from incentive compensation performance measures (e.g., acquisition expenses, charges from non-recurring or extraordinary items, litigation expenses);
  • whether non-executive directors should be compensated with various types of equity (including performance-based awards); and
  • what votes ISS should recommend on say-on-pay proposals at externally-managed issuers (such as many REITs) that provide minimal or no executive compensation-related disclosure.

It is important to note that the ISS annual policy survey does not necessarily address every topic that may be covered by ISS’s new proxy voting policies applicable to 2016 shareholders’ meetings.  In past years, ISS has revised its proxy voting policies on issues that were not covered by its annual survey.  Nevertheless, the policy survey is an important indication of possible changes and provides interested parties an opportunity to express their views.  It also provides an opportunity to comment on other proxy voting policies. 

The ISS policy survey closes on September 4 at 5:00 p.m. ET.  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 during August and September it will hold a series of roundtables and conference calls to “examine local market best practices.”  ISS then will open a comment period on its proposed 2016 policy updates before releasing the final 2016 policy updates in November.

More information on ISS’s policy development process is available at the ISS policy gateway, available here.  The ISS policy survey is available at here


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