The Advisors' Blog

– Liz Dunshee

Yesterday, ISS opened its “Annual Policy Survey.” Like last year, it consists of two parts. The first is a “Governance Principles Survey” – which consists of 10 questions on high-profile topics including auditor independence & quality, audit committee evaluations, board gender diversity and the “one-share, one-vote” principle. This blog from Mike Melbinger highlights that one of the high-profile topics has a relationship to executive compensation:

If ISS assesses that an individual director has failed in his or her oversight responsibilities at one company and this has resulted in a negative ISS vote recommendation, do you consider it appropriate and useful for shareholders for ISS to note this in the proxy research of other companies where that director serves on the board? . . . What types of oversight shortfalls would you consider to be relevant to the assessment in such a situation,” e.g., pattern of poor stewardship of compensation practices, risk oversight failures relating to fraud, or other forms of corporate malfeasance, risk oversight failures related to business operations (such as cyber security), and/or oversight failures regarding protection of shareholder rights or shareholder value.

The second part is a “Policy Application Survey” that allows respondents to drill down on key issues by region. This Weil blog says that the key issues for the Americas region include excessive non-executive director compensation & pay-for-performance metrics.

As always, this is the first step for ISS as it formulates its 2019 voting policies. In addition to the two-part survey, ISS will gather input via regionally-based, topic-specific roundtables & calls and a comment period on the final proposed changes to the policies.