26 November 2017

US Corporate Law News: ISS releases 2018 policy voting updates

Gregory Pun
Associate | US

On November 16, 2017, Institutional Shareholder Services (ISS) released its revised voting policy guidelines for 2018, effective for meetings on or after February 1, 2018. The revised guidelines address shareholder rights plans, with ISS recommending against all board nominees at companies that maintain long-term poison pills that have not been approved by shareholders. Such updated policy is intended to simplify ISS's approach to poison pills and strengthen the principle that poison pills should be approved by shareholders in a timely fashion. To prevent excessive non-employee director (NED) compensation, ISS will recommend voting against Board or committee members responsible for setting non-employee director compensation when there is a recurring pattern of excessive NED pay magnitude without a compelling rationale or other mitigating factors. In determining how to vote for compensation committee members where the company's say-on-pay proposal received less than 70% of the vote, the ISS will consider disclosure of engagement efforts with major institutional investors concerning the low level of support. ISS will vote on a case-by-case basis in connection with proposals relating to gender pay-gap proposals, specifically on requests for reports on a company's pay data by gender, or a report on a company's policies and goals to reduce any existing gender pay gaps, taking into account matters such as current policies and disclosures related to diversity, whether the company has been the subject of recent controversy connected to gender pay gaps, and how the company's reporting of such pay gap policies compares to its peers. In connection with pay-for-performance, ISS will consider the CEO's compensation and the company's financial performance compared to peers in a three-year period. ISS also revised its voting recommendations as to proposals relating to climate change to better align them with the 2017 recommendations of The Task Force on Climate-Related Financial Disclosures (TCFD). For more information, see https://www.issgovernance.com/file/policy/2018-Americas-Policy-Updates.pdf.

Gregory Pun Associate | Greenwich