ISS Releases 2014 Proxy Voting Policies


On November 21, Institutional Shareholder Services Inc. issued updates to its benchmark proxy voting policies for the U.S. The updated policies will be effective for shareholder meetings on or after February 1, 2014. The updates include changes to ISS policy on board responsiveness to majority-supported shareholder proposals and its policy on pay-for-performance quantitative screen.

With respect to its policy on board responsiveness to majority-supported shareholder proposals, ISS will in the future review the responsiveness of a board to any shareholder proposal supported by a majority of votes cast (rather than the previous policy of reviewing a board’s responsiveness to either (i) a proposal supported by a majority of votes cast in the last year and one of the two prior years or (ii) a proposal supported by a majority of outstanding shares). In addition, when recommending voting on director nominees, ISS adopted a case-by-case approach when considering a board’s responsiveness to shareholder proposals, including a list of factors to consider in assessing implementation of majority vote proposals. Finally, ISS clarified that the board’s rationale as provided in the proxy statement for the level of implementation of a shareholder proposal is one of the factors in such a case-by-case analysis.

In addition, ISS modified its methodology for calculating the relative degree of alignment pay-for-performance screen for a CEO’s pay rank within a peer group. The current calculation uses the difference between a company’s TSR rank and the CEO’s total pay rank within a peer group, as measured over one-year and three-year periods (weighted 40%/60%). The revised calculation will measure this difference simply over a three-year period, which will, among other things, eliminate the effects of over-weighting the most recent year’s pay.

To view the ISS 2014 updates, click here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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