Late last year, both ISS and Glass Lewis issued their policy updates for all annual meetings after Feb. 1. The updates are generally limited in scope, but you should familiarize yourself with them nonetheless.
A full breakdown of the ISS updates is available from the Georgeson website
; highlights include:
- Shareholder engagement following low say-on-pay votes. Companies should be prepared to provide detailed disclosure regarding investor engagement efforts if their prior year's say-on-pay vote received less than 70% support.
- Pay for performance. ISS has moved from the qualitative section to the quantitative section of its compensation evaluation framework a test that ranks CEO total pay and company financial performance, within a peer group, over a three-year period.
- Non-employee director (NED) pay. ISS will make adverse vote recommendations, beginning in 2019, for board/committee members who approve or set NED compensation when there is a recurring pattern of excessive NED pay without a compelling rationale or other mitigating factors.
- Executive or director share pledging. ISS has codified as a policy its current approach in cases when a company executive or director pledges a quantity of company stock significant enough to raise concerns.
- Gender pay gap proposals. Given the expected increase in proposal volume, ISS has added a new policy to provide more clarity to its current approach to gender pay gap shareholder proposals.
- Climate change risk proposals. ISS has broadened the circumstances under which it will recommend in favor of shareholder proposals requesting a company disclose information on operational and investment risk related to climate change.
- Poison pills. ISS will now recommend against all board nominees, every year, at a company that maintains a "long-term" (defined as greater than one year) poison pill that has not been approved by shareholders.
A full breakdown of the Glass Lewis updates is also available from the Georgeson website
, highlights include:
- Board responsiveness. Glass Lewis lowered the shareholder dissent threshold in its board responsiveness policy and now provides that boards should demonstrate some responsiveness to shareholder concerns when a ballot item receives more than 20% approval.
- Virtual-only meetings. Beginning in 2019, Glass Lewis will recommend voting against the members of the governance committee at companies that hold virtual-only meetings without a live component.
- Board gender diversity. Beginning in 2019, Glass Lewis will generally recommend voting against the chair of a nominating committee (and potentially other nominating committee members) at a company with no female directors on the board.
- Dual-class share structures. Glass Lewis will generally recommend in favor of proposals that would eliminate a dual-class share structure to allow for all shareholders to have one vote per share.
- Director over-boarding. Glass Lewis clarified its approach to evaluating outside commitments of directors who serve in executive roles other than CEO.
- Pay-for-performance. Glass Lewis clarified the grading system it uses to rank companies in its pay-for-performance model.
- CEO pay ratio disclosure. The company's disclosed ratio will be displayed in Glass Lewis's report as a data point
- Proxy Access "Fix It" Shareholder Proposals. Glass Lewis clarified its approach to proxy access "fix it" proposals
Clients are encouraged to contact their relationship manager if they have any questions about these policy changes or would like to speak with one of our experts at Georgeson.