& Securities

Institutional Shareholder Services (ISS) has released results of its annual Global Benchmark Policy Survey (available here and discussed in our prior blog), which, for U.S. companies, provide perspectives on board tenure, shareholder rights, executive compensation and environmental and social topics. ISS received 253 responses, including from 141 investors (primarily comprised of asset managers) and 112 non-investors (primarily comprised of public companies).

The survey results are expected to inform policy changes for the upcoming 2027 proxy season. ISS expects to release key draft policy updates based on these results in the coming weeks and, after a public comment period, to announce final policy updates in late November or early December. The final policies will be effective for shareholder meetings occurring on or after February 1, 2027.

Highlights of survey results that may inform changes to ISS’s policies for 2027 are discussed below.

Board Matters

Director Tenure (U.S.). ISS asked respondents whether long director tenure should be a factor in assessing director independence, noting that tenure is currently not considered in independence assessments under its U.S. Benchmark Policy. Investors and non-investors differed in their opinion on this matter with most investors (64%) responding that tenure should be a factor in considering director independence and most non-investor respondents (74%) responding that tenure, regardless of length, should not be a factor and that a board’s independence determination is generally sufficient. Among investor respondents who considered tenure to be relevant, 10 and 12 years were the most frequently selected thresholds after which a director would generally no longer be considered independent on grounds of tenure. A majority of both investor and non-investor respondents (54% and 72%, respectively) preferred a broader assessment that considers multiple factors, rather than tenure alone, including board refreshment and length of overlap with the CEO or board chair.

Slate Elections (Global). ISS asked respondents whether – on its own – the use of slate elections, in which shareholders vote on multiple director nominees as a single item, is a governance concern that should justify opposing the election of such directors. Investor and non-investor responses differed. Investor respondents were somewhat split with 40% preferring a market-specific approach with slate elections considered problematic only in markets where they are not the prevalent practice and 32% considering slate elections a concern regardless of local market practice. Meanwhile, non-investor respondents were evenly divided, but with 40% favoring the market-specific approach and 40% indicating that slate elections alone should not justify opposition to directors.

Shareholder Rights

“Problematic” Governance Provisions (U.S. and Canada). ISS’s current policy generally results in continued adverse vote recommendations for directors for as long as provisions identified as problematic, such as multi-class share structures, supermajority voting requirements and restrictions on shareholder proposals or derivative suits, remain in place without shareholder ratification or approval or the implementation of measures to phase them out. ISS asked respondents whether these “perpetual withhold” recommendations should continue. The vast majority of investor respondents (76%) believed that adverse recommendations should continue for as long as the provisions remain in place. On the other hand, non-investor respondents were more varied, with 33% indicating that adverse recommendations should be issued only for the first director elections following adoption of the provisions, 29% responding that it depends on the circumstances, and 22% indicating that such provisions are not problematic. ISS also asked about the application of adverse recommendations. The most common investor response (47%) was an escalating approach, with adverse recommendations applied first to the chair of the committee responsible for governance oversight and, when warranted, expanded to all committee members based on the nature, duration, severity or number of governance concerns, an approach supported by 18% of non-investor respondents. Non-investor respondents most commonly (38%) favored applying adverse recommendations solely to the committee chair.

Reincorporation and Changes to Corporate Laws of Location (U.S. and Canada). ISS sought views on how it should evaluate a company’s change in its place of incorporation, or changes to its governing documents following changes to corporate laws in its existing jurisdiction. The most common response among both investor and non-investor respondents (44% and 58%, respectively) was that all significant changes should be taken into account, including the benefits identified by the company and any positive or negative changes to shareholder rights. Approximately 30% of investor respondents indicated that changes that weaken shareholders’ ability to hold company insiders accountable should generally be given greater weight than benefits in other areas, and a further 19% supported giving changes to shareholder rights greater weight than other factors. Meanwhile, 26% of non-investor respondents favored giving greater weight to the significant benefits identified by the company than to changes in shareholder rights.

Semiannual Reporting (U.S. and Canada). In light of recent proposals by U.S. and Canadian regulators that would allow public companies to report financial results semiannually rather than quarterly, ISS asked respondents for their views on semiannual reporting. Investor and non-investor responses largely differed. Investors and non-investors had different views on this topic. Approximately half of investor respondents (50%) believed that semiannual reporting would be a negative change, as less frequent reporting may heighten volatility and tilt the playing field away from public investors and toward those with access to non-public information or sophisticated data analysis capabilities, compared to 10% of non-investor respondents. Most non-investor respondents (54%) noted that semiannual reporting would not be a concern and that boards should be trusted to make the right decision for the company, a view held by just 15% of investor respondents. Nineteen percent of non-investor respondents and 12% of investor respondents considered semiannual reporting to be a positive change that may reduce short-termism.

Executive Compensation

Say-on-Pay and Board Responsiveness (U.S. and Canada). Following the SEC’s May 2026 proposal that would significantly expand the number of companies exempt from say-on-pay requirements, ISS asked respondents how its policy should signal significant executive pay concerns when no say-on-pay vote is on the ballot. Under the current ISS policy, adverse recommendations that would typically apply to the say-on-pay proposal are directed instead at the election of incumbent compensation committee members. Half of investor respondents (50%) favored a more targeted approach, under which an adverse recommendation would apply in the first year of concern only to the compensation committee chair, with escalation to other committee members only if concerns continue for multiple years, while 41% favored continuing the current approach of applying adverse recommendations to the full compensation committee. A majority of non-investor respondents (54%) believed that adverse recommendations on compensation committee members would not be appropriate if a company is not required to hold a say-on-pay vote, a view held by only 5% of investor respondents. ISS also asked which responsiveness threshold should apply to compensation committee members who received low support at the prior annual meeting when no say-on-pay vote was held. Most investor respondents (67%) preferred ISS’s existing say-on-pay responsiveness thresholds (70% in the U.S. and 80% in Canada), while the most common non-investor response (46%) was ISS’s 50% director election threshold, which was supported by 18% of investor respondents.

Long-Term Incentive Performance Goal Disclosure (U.S.). ISS currently treats non-disclosure of forward-looking long-term incentive performance targets as a negative factor in its qualitative pay-for-performance evaluation, and asked respondents whether and under what conditions the risk of competitive harm may be a compelling rationale for non-disclosure. Half of investor respondents (50%) noted that competitive harm could be a reasonable rationale but should be assessed case by case based on the company’s explanation and circumstances, while only 4% believed it was reasonable for any company. Conversely,  the most common non-investor response (49%) was that competitive harm is a reasonable rationale for non-disclosure by any company. Importantly, consistent with general practice, 21% of investors and 31% of non-investors consider it compelling if the company commits to retrospective disclosure of targets and results after the award cycle closes. ISS further asked whether competitive harm should be viewed differently for relative and absolute performance metrics, and 79% of investor respondents agreed with ISS’s existing distinction under which it is a less compelling rationale for relative metrics, while non-investor respondents were evenly divided.

Discretionary Bonus Programs at Financial Services Companies (U.S.). Under the current ISS policy, fully discretionary bonus programs are generally identified as a concern in the qualitative pay-for-performance evaluation, although mitigating weight may be given to disclosures about the use of discretion. In light of feedback from financial services companies that formulaic bonus structures are incompatible with industry regulatory requirements, ISS asked whether such programs should continue to be viewed as a structural concern for U.S. financial services companies. Most investor respondents (71%) believed that they should, while most non-investor respondents (85%) believed that, given prevailing market practice and regulatory considerations, such programs should not in isolation be viewed as a concern. Among respondents who answered a follow-up question, more than 80% of both investor and non-investor respondents indicated that enhanced disclosures may mitigate concerns, although relatively few non-investor respondents answered that question.

Environmental and Social Topics

Reduced Climate-Related Disclosures (Global). In light of regulatory changes that may lead companies to reduce climate-related disclosures, ISS asked how shareholders should assess reduced disclosure in two scenarios. Where the reduction results from regulatory changes that make disclosure requirements less stringent, the most common investor response (43%) was that directors should be considered accountable for reduced transparency even if the company is in regulatory compliance, while 85% of non-investor respondents indicated that directors should not be considered accountable if the company continues to meet applicable regulatory requirements, a view shared by 24% of investor respondents. Where the company indicates that reduced disclosure is driven by legal or financial risks it has identified, the most common investor response (43%) was that directors should not be considered accountable provided that the company discloses the reasonable steps it is taking to continue to assess the risks and its expectation of resuming at least prior disclosure levels. Twenty-four percent of investor respondents believed directors should be considered accountable in this scenario, while 75% of non-investor respondents believed they should not because companies are best positioned to assess disclosure-related risks.

Nature-Related Risks (Global). ISS asked whether it is appropriate at this time to expect companies with significant exposure to nature-related risks to disclose according to a recognized framework, such as the Taskforce on Nature-related Financial Disclosures (TNFD). Most investor respondents (68%) believed that it is, while half of non-investor respondents (50%) believed that such disclosure should be at each company’s discretion and another 24% noted that voluntary frameworks and regulation remain too fragmented.