Nearly two-thirds of investors say executive chairs who aren’t also CEOs should face the same limits on the number of boards they can serve on as chief executives, according to a survey conducted by a leading proxy advisory firm.
The investor preference for tighter overboarding standards for executive chairs is among the most interesting findings in Institutional Shareholder Services Inc.’s annual Global Benchmark Voting Policy Survey. The results are likely to inform any changes that ISS makes to its voting policies later this year.
The 2016 survey, which solicited feedback on a variety of corporate governance and executive compensation-related issues, reflects 439 total responses, “of which 120 were from institutional investors, one-third of whom each own or manage assets in excess of $100 billion,” according to an ISS press release. In addition, ISS received responses from 270 members of the corporate community.
Some of the key findings include:
Overboarding – Addressing the issue of an executive chair who is not also the CEO, ISS asked, “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)?”
Multi-Class Structure for IPO Companies – ISS asked whether they should vote “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?”
Board Refreshment – The survey inquired as to which board tenure factors would cause concern regarding “a board's nominating and refreshment processes.”
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 sought feedback on the frequency of the vote and factors that should impact that frequency.
In late October, ISS will release and seek public comment on a draft of its revised voting policies. The final policies will be released in mid-November and be applicable to annual meetings occurring on or after Feb. 1, 2017.
The full survey results are available here.
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