SAY-ON-PAY, BOARD QUESTIONS ABOUND IN PROXY ADVISORY FIRM’S ANNUAL SURVEY

 

Boardroom

The leading proxy advisory firm this week launched its annual policy survey, seeking feedback on its voting policies in advance of next year’s annual shareholder meetings.

For Institutional Shareholder Services Inc., which advises institutional investors such as asset managers, hedge funds and mutual funds on how to vote their securities, the survey offers a chance to hear from all concerned parties—institutional investors, companies, corporate directors, etc.  ISS uses the survey results to update its voting guidelines and inform future voting recommendations.  The corporate governance and executive compensation-related issues ISS is seeking feedback on this year include: 

  • Overboarding – Addressing the issue of an executive chair who is not also the CEO, ISS asks, “Should executive chairs be evaluated for overboarding purposes under the same standard as a CEO (no more than three total boards) or under the same standard as the non-executive directors (no more than five total boards)?”

  • Board Refreshment – The survey inquires as to which board tenure factors would cause concern regarding “a board's nominating and refreshment processes.”

  • Multi-Class Structure for IPO Companies – Should ISS recommend “voting against the directors if the company, when it goes public or emerges from bankruptcy, has a structure that includes multiple classes of stock with unequal voting rights?”

  • Say-on-Pay Frequency – Next year marks the second “say-on-pay” frequency votes for many companies on the minimally required six-year voting cycle.  As such, ISS is seeking feedback on the frequency of the vote and factors that should impact that frequency.

  • Executive Pay Assessments for International Companies – ISS is seeking feedback on how to evaluate companies that are required to hold multiple say-on-pay votes as a result of being incorporated in one country, but listed in another.

  • Metrics Used in Pay-for-Performance Assessments – Should ISS incorporate financial metrics, other than total shareholder return, to identify misalignment in pay for performance?

All survey responses are due by Aug. 30 at 5 p.m. ET.  Look for ISS to publish any updates to its benchmark policies in the fall.

More information on the survey is available here.  The survey itself can be accessed here.