ISS Issues Proxy Voting Guidelines for the 2020 Proxy Season

White & Case LLPOn November 11, 2019, Institutional Shareholder Services, Inc. (“ISS”) published its proxy voting guidelines updates1 (the “2020 Updates”) for the 2020 proxy season, effective for meetings on or after February 1, 2020. The changes notably establish new policies that address the governance of newly public companies, as well as clarify certain other existing policies that apply to all public companies. A summary of the new and revised policies is below.

Problematic Capital Structure – Newly Public Companies2

Under this newly-created separate policy for newly public companies, ISS will generally vote against or withhold from the entire board (except new nominees, who will be considered on a case-by-case basis) if, prior to or in connection with the company's IPO, the company or its board implemented a multi-class capital structure with unequal voting rights (e.g., dual class stock), unless this structure is subject to a “reasonable time-based sunset.” Factors that ISS will consider when assessing the reasonableness of a time-based sunset provision include the company’s lifespan, its post-IPO ownership structure and the board’s rationale for the period selected. However, “[n]o sunset period of more than seven years from the date of the IPO will be considered to be reasonable.”

Unless the problematic structure is changed, ISS will continue to vote against or withhold from incumbent directors in subsequent years.

ISS’ rationale for this change included the increasing prevalence of multi-class capital structure companies with disparate voting rights among newly-listed entities in the US and the results of ISS’ 2019 Global Policy Survey, in which 55 percent of investor respondents agreed that a maximum seven-year sunset is appropriate. The ISS policy, however, is unlikely to impact the prevalence of companies with dual class stock, since the high voting stock means that the “no” votes of public shareholders have little impact on the outcome of director elections.

Problematic Governance Provisions – Newly Public Companies

For newly public companies, ISS will generally vote against or withhold from directors, committee members, or the entire board (except new nominees, who will be considered on a case-by-case basis) if, in connection with an IPO, the company or its board adopted certain bylaw or charter provisions that are considered to be materially adverse to shareholder rights. The revised policy replaces the previously-included list of factors ISS would consider when evaluating such governance provisions with a list of specific provisions which will presumptively be considered materially adverse to shareholders rights as follows:

  • Supermajority vote requirements to amend the bylaws or charter;
  • A classified board structure; or
  • Other egregious provisions.

A reasonable sunset provision will be considered a mitigating factor, and unless the adverse provision is reversed or removed, the 2020 Updates indicate voting on director nominees in subsequent years will be done on a case-by-case basis.

Board Accountability – Restrictions on Shareholders’ Rights to Amend Bylaws

Under existing ISS policy, ISS generally recommends against or withholding from members of the governance committee, if the company’s governing documents impose “undue restrictions on shareholders’ ability to amend the bylaws.” Such “undue restrictions” include an “outright prohibition on the submission of binding shareholder proposals” or having “share ownership requirements, subject matter restrictions, or time holding requirements in excess of [Securities and Exchange Commission (“SEC”)] Rule 14a-8.”

In response to an increase in the number of companies submitting proposals that would establish requirements in governing documents that exceed the requirements of SEC Rule 14a-8 for shareholders to submit binding bylaw amendments, ISS added the following to its existing policy:

  • Submission of management proposals that would approve or ratify requirements in excess of SEC Rule 14a-8 for a shareholder to submit a binding bylaw amendment will generally be viewed as an insufficient restoration of shareholders’ rights; and
  • ISS will generally recommend shareholders vote against or withhold from members of the governance committee until shareholders are provided with “an unfettered ability to amend the bylaws” or until a proposal providing for such unfettered right is submitted for shareholder approval.

Board Diversity

The one-year transition period for the US gender diversity policy has now passed, and absent a firm commitment from the company to achieve gender diversity within a year, ISS will recommend against the chair of the nominating committee (or other directors as appropriate) if the board lacks a female director. In addition, ISS clarified a commitment to achieve gender diversity from a board with no prior women directors will only be a mitigating factor for 2020, not beyond.

In addition, going forward, a company that had board gender diversity in the previous year but not in the current year will need to acknowledge the current lack of a gender-diverse board, and provide a firm commitment to re-achieving board gender diversity by the following year in order to avoid a withhold/against recommendation. To constitute a “firm commitment”, there must be a plan, with measurable goals, outlining how the board will achieve gender diversity.

Board of Directors – Independent Board Chair

In response to the fact that shareholder proposals for independent board chairs remain among the most common type of proposal offered for consideration at US companies’ annual general meetings, as well as responses to ISS' 2019 Global Policy Survey, ISS explicitly codified its approach to evaluating independent chair proposals.

The new policy specifically identifies the factors that will be given substantial weight as part of ISS’ holistic approach to these proposals, including a “majority non-independent board”, a “weak or poorly defined lead independent director role”, the “evidence that the board has failed to oversee and address material risks facing the company”, and a “material governance failure”.3  While ISS notes it will maintain a “holistic approach” to evaluating these proposals, the policy now explicitly states that these are the factors that will be given substantial weight. In addition to these factors, ISS will also consider the scope of the proposal, overall company performance and additional “overriding” factors which will be updated and relocated to ISS’s Policy FAQ document.

Share Repurchase Programs

In the 2020 Updates, ISS revised its policy of generally voting “for” open-market share repurchase plans by explicitly adding safeguards against the use of certain abusive practices.4 In the absence of these practices, support will generally be warranted for a grant of authority to the board to engage in a buyback.5

Notably, this policy will not affect most US domestic issuers, which can and do implement share buyback programs via board resolutions without shareholder votes. However, the policy change will affect those companies that are required by their regulators (such as certain financial institutions) or by the laws of their country of incorporation (such as certain companies incorporated in European countries) to receive shareholder approval to grant the board authority to repurchase shares. ISS explicitly notes this policy will also cover foreign-incorporated US domestic issuers if they are listed solely in the United States, regardless of their country of incorporation.

Other Changes

ISS Approach to “New Nominees”

In addition to the changes above, ISS made three clarifications with respect to its approach to “new nominees.” Specifically, the 2020 Updates:

  1. Revised the definition of “new nominee” to clarify this is a director who is being presented for election by shareholders for the first time, rather than only a person who just joined the board (e.g., if a board is classified, a new nominee could have served on the board for up to three years depending on the class, and for newly-public companies, the director may have served for years on the board prior to the IPO);
  2. Clarified ISS policy that only the subset of new nominees who have served on the board for less than one year will be evaluated on a case-by-case basis under ISS’s Board Accountability policy, depending on the timing of their appointment and the problematic governance issue in question; and
  3. Removed the term “new nominee” from the director attendance policy, because the issue for recently-added directors under this policy is whether they served the entire fiscal year under review, not whether they have been previously elected by shareholders.

Equity Compensation Plans

In addition, the 2020 Updates specifically add the existence of an “evergreen (automatic share replenishment) feature” to its list of egregious factors that will lead to a vote “against” an equity-based compensation plan.6

Gender Pay Gap Proposals

The 2020 Updates add a specific reference to “race or ethnicity” to its policy on gender-pay gap proposals, to better align it with the requests of filed shareholder proposals.


Notably, in contrast to Glass Lewis,7 ISS did not address the new SEC policy on Rule 14a-8 no-action requests or provide any insight into how it will respond if a company chooses to exclude a shareholder proposal where the SEC has declined to state a view on the company’s no action request.

The 2020 Updates are effective for meetings on or after February 1, 2020, and the fully revised guidelines for 2020, incorporating the changes described above, are expected to be posted on the ISS website by January 2020.

1 Policy updates for the Americas, which are described herein, available here. ISS posts 2020 policy updates for additional regions here. Current voting policies are available here.
2 ISS policy states that “[n]ewly-public companies generally include companies that emerge from bankruptcy, spin-offs, direct listings, and those who complete a traditional initial public offering (“IPO”).”
3 The complete list of factors that will increase the likelihood of a “for” recommendation in favor of a shareholder proposal calling for an independent board chair are as follows:

  • “a majority non-independent board and/or the presence of non-independent directors on key board committees;
  • weak or poorly-defined lead independent director role that fails to serve as an appropriate counterbalance to a combined CEO/chair role;
  • the presence of an executive or non-independent chair in addition to the CEO;
  • a recent recombination of the role of CEO and chair; and/or departure from a structure with an independent chair;
  • evidence that the board has failed to oversee and address material risks facing the company;
  • a material governance failure, particularly if the board has failed to adequately respond to shareholder concerns or if the board has materially diminished shareholder rights; or
  • evidence that the board has failed to intervene when management’s interests are contrary to shareholders' interests.”

4 These practices include: (1) the use of targeted share buybacks as greenmail or to reward company insiders by purchasing their shares at a price higher than they could receive in an open market sale, (2) the use of buybacks to inappropriately manipulate incentive compensation metrics (i.e. boost EPS or other compensation metrics to increase payouts to executives or other insiders), and 3) repurchases that threaten a company's long-term viability (or a bank's capitalization level).
5 The 2020 Updates also state ISS will vote case-by-case on proposals to repurchase shares directly from specified shareholders, “balancing the stated rationale against the possibility for the repurchase authority to be misused, such as to repurchase shares from insiders at a premium to market price.”
6 This is responsive to the Tax Cuts and Jobs Act’s repeal of the performance-based pay exemption, which then eliminated the need for companies to obtain shareholder regular re-approval of plans. As a result of the tax reform, ISS found there has been a significant drop in the number of equity plans brought to shareholder vote (a 27 percent year-over-year drop from 2017 to 2018), and the number of such proposals in 2018 and 2019 has remained significantly below levels seen before the tax reform.
7 For information Glass Lewis’ policy, see our prior alert “Glass Lewis Issues Proxy Voting Guidelines for the 2020 Proxy Season.”

[View source.]

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.

© White & Case LLP | Attorney Advertising

Written by:

White & Case LLP

White & Case LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide

JD Supra Privacy Policy

Updated: May 25, 2018:

JD Supra is a legal publishing service that connects experts and their content with broader audiences of professionals, journalists and associations.

This Privacy Policy describes how JD Supra, LLC ("JD Supra" or "we," "us," or "our") collects, uses and shares personal data collected from visitors to our website (located at (our "Website") who view only publicly-available content as well as subscribers to our services (such as our email digests or author tools)(our "Services"). By using our Website and registering for one of our Services, you are agreeing to the terms of this Privacy Policy.

Please note that if you subscribe to one of our Services, you can make choices about how we collect, use and share your information through our Privacy Center under the "My Account" dashboard (available if you are logged into your JD Supra account).

Collection of Information

Registration Information. When you register with JD Supra for our Website and Services, either as an author or as a subscriber, you will be asked to provide identifying information to create your JD Supra account ("Registration Data"), such as your:

  • Email
  • First Name
  • Last Name
  • Company Name
  • Company Industry
  • Title
  • Country

Other Information: We also collect other information you may voluntarily provide. This may include content you provide for publication. We may also receive your communications with others through our Website and Services (such as contacting an author through our Website) or communications directly with us (such as through email, feedback or other forms or social media). If you are a subscribed user, we will also collect your user preferences, such as the types of articles you would like to read.

Information from third parties (such as, from your employer or LinkedIn): We may also receive information about you from third party sources. For example, your employer may provide your information to us, such as in connection with an article submitted by your employer for publication. If you choose to use LinkedIn to subscribe to our Website and Services, we also collect information related to your LinkedIn account and profile.

Your interactions with our Website and Services: As is true of most websites, we gather certain information automatically. This information includes IP addresses, browser type, Internet service provider (ISP), referring/exit pages, operating system, date/time stamp and clickstream data. We use this information to analyze trends, to administer the Website and our Services, to improve the content and performance of our Website and Services, and to track users' movements around the site. We may also link this automatically-collected data to personal information, for example, to inform authors about who has read their articles. Some of this data is collected through information sent by your web browser. We also use cookies and other tracking technologies to collect this information. To learn more about cookies and other tracking technologies that JD Supra may use on our Website and Services please see our "Cookies Guide" page.

How do we use this information?

We use the information and data we collect principally in order to provide our Website and Services. More specifically, we may use your personal information to:

  • Operate our Website and Services and publish content;
  • Distribute content to you in accordance with your preferences as well as to provide other notifications to you (for example, updates about our policies and terms);
  • Measure readership and usage of the Website and Services;
  • Communicate with you regarding your questions and requests;
  • Authenticate users and to provide for the safety and security of our Website and Services;
  • Conduct research and similar activities to improve our Website and Services; and
  • Comply with our legal and regulatory responsibilities and to enforce our rights.

How is your information shared?

  • Content and other public information (such as an author profile) is shared on our Website and Services, including via email digests and social media feeds, and is accessible to the general public.
  • If you choose to use our Website and Services to communicate directly with a company or individual, such communication may be shared accordingly.
  • Readership information is provided to publishing law firms and authors of content to give them insight into their readership and to help them to improve their content.
  • Our Website may offer you the opportunity to share information through our Website, such as through Facebook's "Like" or Twitter's "Tweet" button. We offer this functionality to help generate interest in our Website and content and to permit you to recommend content to your contacts. You should be aware that sharing through such functionality may result in information being collected by the applicable social media network and possibly being made publicly available (for example, through a search engine). Any such information collection would be subject to such third party social media network's privacy policy.
  • Your information may also be shared to parties who support our business, such as professional advisors as well as web-hosting providers, analytics providers and other information technology providers.
  • Any court, governmental authority, law enforcement agency or other third party where we believe disclosure is necessary to comply with a legal or regulatory obligation, or otherwise to protect our rights, the rights of any third party or individuals' personal safety, or to detect, prevent, or otherwise address fraud, security or safety issues.
  • To our affiliated entities and in connection with the sale, assignment or other transfer of our company or our business.

How We Protect Your Information

JD Supra takes reasonable and appropriate precautions to insure that user information is protected from loss, misuse and unauthorized access, disclosure, alteration and destruction. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. You should keep in mind that no Internet transmission is ever 100% secure or error-free. Where you use log-in credentials (usernames, passwords) on our Website, please remember that it is your responsibility to safeguard them. If you believe that your log-in credentials have been compromised, please contact us at

Children's Information

Our Website and Services are not directed at children under the age of 16 and we do not knowingly collect personal information from children under the age of 16 through our Website and/or Services. If you have reason to believe that a child under the age of 16 has provided personal information to us, please contact us, and we will endeavor to delete that information from our databases.

Links to Other Websites

Our Website and Services may contain links to other websites. The operators of such other websites may collect information about you, including through cookies or other technologies. If you are using our Website or Services and click a link to another site, you will leave our Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We are not responsible for the data collection and use practices of such other sites. This Policy applies solely to the information collected in connection with your use of our Website and Services and does not apply to any practices conducted offline or in connection with any other websites.

Information for EU and Swiss Residents

JD Supra's principal place of business is in the United States. By subscribing to our website, you expressly consent to your information being processed in the United States.

  • Our Legal Basis for Processing: Generally, we rely on our legitimate interests in order to process your personal information. For example, we rely on this legal ground if we use your personal information to manage your Registration Data and administer our relationship with you; to deliver our Website and Services; understand and improve our Website and Services; report reader analytics to our authors; to personalize your experience on our Website and Services; and where necessary to protect or defend our or another's rights or property, or to detect, prevent, or otherwise address fraud, security, safety or privacy issues. Please see Article 6(1)(f) of the E.U. General Data Protection Regulation ("GDPR") In addition, there may be other situations where other grounds for processing may exist, such as where processing is a result of legal requirements (GDPR Article 6(1)(c)) or for reasons of public interest (GDPR Article 6(1)(e)). Please see the "Your Rights" section of this Privacy Policy immediately below for more information about how you may request that we limit or refrain from processing your personal information.
  • Your Rights
    • Right of Access/Portability: You can ask to review details about the information we hold about you and how that information has been used and disclosed. Note that we may request to verify your identification before fulfilling your request. You can also request that your personal information is provided to you in a commonly used electronic format so that you can share it with other organizations.
    • Right to Correct Information: You may ask that we make corrections to any information we hold, if you believe such correction to be necessary.
    • Right to Restrict Our Processing or Erasure of Information: You also have the right in certain circumstances to ask us to restrict processing of your personal information or to erase your personal information. Where you have consented to our use of your personal information, you can withdraw your consent at any time.

You can make a request to exercise any of these rights by emailing us at or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

You can also manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard.

We will make all practical efforts to respect your wishes. There may be times, however, where we are not able to fulfill your request, for example, if applicable law prohibits our compliance. Please note that JD Supra does not use "automatic decision making" or "profiling" as those terms are defined in the GDPR.

  • Timeframe for retaining your personal information: We will retain your personal information in a form that identifies you only for as long as it serves the purpose(s) for which it was initially collected as stated in this Privacy Policy, or subsequently authorized. We may continue processing your personal information for longer periods, but only for the time and to the extent such processing reasonably serves the purposes of archiving in the public interest, journalism, literature and art, scientific or historical research and statistical analysis, and subject to the protection of this Privacy Policy. For example, if you are an author, your personal information may continue to be published in connection with your article indefinitely. When we have no ongoing legitimate business need to process your personal information, we will either delete or anonymize it, or, if this is not possible (for example, because your personal information has been stored in backup archives), then we will securely store your personal information and isolate it from any further processing until deletion is possible.
  • Onward Transfer to Third Parties: As noted in the "How We Share Your Data" Section above, JD Supra may share your information with third parties. When JD Supra discloses your personal information to third parties, we have ensured that such third parties have either certified under the EU-U.S. or Swiss Privacy Shield Framework and will process all personal data received from EU member states/Switzerland in reliance on the applicable Privacy Shield Framework or that they have been subjected to strict contractual provisions in their contract with us to guarantee an adequate level of data protection for your data.

California Privacy Rights

Pursuant to Section 1798.83 of the California Civil Code, our customers who are California residents have the right to request certain information regarding our disclosure of personal information to third parties for their direct marketing purposes.

You can make a request for this information by emailing us at or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

Some browsers have incorporated a Do Not Track (DNT) feature. These features, when turned on, send a signal that you prefer that the website you are visiting not collect and use data regarding your online searching and browsing activities. As there is not yet a common understanding on how to interpret the DNT signal, we currently do not respond to DNT signals on our site.

Access/Correct/Update/Delete Personal Information

For non-EU/Swiss residents, if you would like to know what personal information we have about you, you can send an e-mail to We will be in contact with you (by mail or otherwise) to verify your identity and provide you the information you request. We will respond within 30 days to your request for access to your personal information. In some cases, we may not be able to remove your personal information, in which case we will let you know if we are unable to do so and why. If you would like to correct or update your personal information, you can manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard. If you would like to delete your account or remove your information from our Website and Services, send an e-mail to

Changes in Our Privacy Policy

We reserve the right to change this Privacy Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our Privacy Policy will become effective upon posting of the revised policy on the Website. By continuing to use our Website and Services following such changes, you will be deemed to have agreed to such changes.

Contacting JD Supra

If you have any questions about this Privacy Policy, the practices of this site, your dealings with our Website or Services, or if you would like to change any of the information you have provided to us, please contact us at:

JD Supra Cookie Guide

As with many websites, JD Supra's website (located at (our "Website") and our services (such as our email article digests)(our "Services") use a standard technology called a "cookie" and other similar technologies (such as, pixels and web beacons), which are small data files that are transferred to your computer when you use our Website and Services. These technologies automatically identify your browser whenever you interact with our Website and Services.

How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

  1. Improve the user experience on our Website and Services;
  2. Store the authorization token that users receive when they login to the private areas of our Website. This token is specific to a user's login session and requires a valid username and password to obtain. It is required to access the user's profile information, subscriptions, and analytics;
  3. Track anonymous site usage; and
  4. Permit connectivity with social media networks to permit content sharing.

There are different types of cookies and other technologies used our Website, notably:

  • "Session cookies" - These cookies only last as long as your online session, and disappear from your computer or device when you close your browser (like Internet Explorer, Google Chrome or Safari).
  • "Persistent cookies" - These cookies stay on your computer or device after your browser has been closed and last for a time specified in the cookie. We use persistent cookies when we need to know who you are for more than one browsing session. For example, we use them to remember your preferences for the next time you visit.
  • "Web Beacons/Pixels" - Some of our web pages and emails may also contain small electronic images known as web beacons, clear GIFs or single-pixel GIFs. These images are placed on a web page or email and typically work in conjunction with cookies to collect data. We use these images to identify our users and user behavior, such as counting the number of users who have visited a web page or acted upon one of our email digests.

JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit
  • New Relic - For more information on New Relic cookies, please visit
  • Google Analytics - For more information on Google Analytics cookies, visit To opt-out of being tracked by Google Analytics across all websites visit This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at:

- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.