& Securities

ISS launched its annual global benchmark policy survey this week as part of the review of its proxy voting policies. The survey will be open until Tuesday, August 30, 2016 at 5pm ET. ISS will then review the results to inform any updates to its policies ahead of 2017 annual shareholder meetings.

For U.S. companies, the survey questions seem to foreshadow a further evolution of, rather than significant departures from, ISS’s current policies. They address the following:

Board Refreshment and Over-Boarding of Executive Chairs

• What factors are or should be considered in assessing whether a board’s nominating and refreshment process is adequate — including, lengthy average tenure (e.g., average director tenure greater than 10 years, an individual with tenure greater than 15 years) or high proportion of directors with long tenure (e.g., 3/4 of the board having a tenure of 10 years or more), absence of newly-appointed directors in recent years (e.g., within the past five years).
• Whether non-CEO executive chairs should be evaluated for over-boarding purposes under the same standards as CEOs.

Shareholder Rights — Focus on Newly Public Companies and REITs

• Whether ISS should oppose the election of directors at newly public companies and companies emerging from bankruptcy that have multiple stock classes of stock with unequal voting rights.
• Whether ISS should oppose the election of directors (or the governance committee or its chair) at REITs or other Maryland companies that have not opted-out of the provisions under Maryland’s REIT law that give the board the ability to, without shareholder approval: (1) amend the company’s bylaws and/or increase the number of authorized shares or (2) re-classify a board, set the number of directors, and limit shareholders’ ability to call a special meeting to a threshold of at least a majority of shares.

Executive Compensation: Metrics, Cross-Border Executive Pay and Say-on-Frequency

• Whether additional financial metrics beyond total shareholder return (TSR) should be considered in ISS’s pay for performance analysis.
• How ISS should evaluate executive compensation and make its voting recommendations on say-on-pay proposals based on laws of different countries when companies are incorporated in one country but listed on an exchange in a different country and are therefore subject to multiple say-on-pay shareholder votes (i.e., whether inconsistent evaluations or recommendations that reflect the underlying policies of the relevant countries are acceptable).
• In light of the fact that the 2017 proxy season will include the next round of say-on-frequency votes, ISS has asked whether companies prefer a say-on-pay proposal every one, two or three years.

ISS typically announces its proposed policy changes and seeks further comment approximately two months after the survey closes. More information on ISS’s policy development process is available here.