Heads Up for the 2018 Proxy Season: ISS Proposes Changes to Proxy Voting Policies and Refines QualityScore Factors

ISS has released its key draft proposed proxy voting policy changes for the 2018 proxy season and is seeking comments by 5:00 p.m. EDT on November 9, 2017. ISS’s final 2018 policies are expected to be released during the second week of November, and will apply to meetings held on or after February 1, 2018.

ISS also announced changes to its QualityScore product in order to create greater comparability of core governance practices and risks across global markets. ISS increased the number of uniform global factors from 6 to 21, including 4 new factors related to independent board and key committee composition. ISS signaled that more changes are forthcoming, including rewarding companies for having a higher number and percent of women on their boards.

Further to the results of ISS’s Policy Application Survey, which we blogged about here, ISS is proposing the following policy changes, which are discussed below.

Proposed Changes to ISS Voting Policies for 2018 Proxy Season

Proposed changes for U.S. companies would:

  • Provide more specificity around factors ISS considers when evaluating gender pay gap disclosure shareholder proposals
  • Result in a negative recommendation for compensation committee members when there is a pattern of excessive non-employee director compensation
  • Result in negative recommendations for all board members at companies with poison pills that have not been approved by shareholders – currently 140 companies

Proposed changes for companies incorporated in Continental Europe (including U.S- listed companies) would:

  • Tighten thresholds for general share issuance requests to 10% (from 20%) without preemptive rights and to 50% (from 100%) with preemptive rights

View the alert.