The Advisors' Blog

In late December, Dave shared a holiday miracle on TheCorporateCounsel.net blog: ISS Governance announced its 2024 Benchmark Policy Updates effective for meetings on or after February 1, 2024, and no updates are contemplated for the U.S. Benchmark Proxy Voting Guidelines. There’s only one clarification to the U.S. policy shown in Appendix B to this summary:

[The clarification] codifies the case-by-case approach when analyzing shareholder proposals requiring that executive severance arrangements or payments be submitted for shareholder ratification. The updated policy (i) harmonizes the factors used to analyze both regular termination severance as well as change-in-control related severance (golden parachutes) and (ii) clarifies the key factors considered in such case-by-case analysis.

The edits resulting from this codification are detailed on page 3 of this document describing Benchmark Policy Changes for the Americas for 2024. The policy in effect for 2023 annual meetings stated that ISS would recommend voting for shareholder proposals requiring that golden parachutes or executive severance agreements be submitted for shareholder ratification unless they would require approval before entering into employment contracts. Then ISS would apply a case-by-case approach to the proposals to ratify or cancel golden parachutes. It also listed terms that an acceptable parachute should include.

The new policy reads as follows:

Vote case-by-case on shareholder proposals requiring that executive severance (including change-in-control related) arrangements or payments be submitted for shareholder ratification.

Factors that will be considered include, but are not limited to:
– The company’s severance or change-in-control agreements in place, and the presence of problematic features (such as excessive severance entitlements, single triggers, excise tax gross-ups, etc.);
– Any existing limits on cash severance payouts or policies which require shareholder ratification of severance payments exceeding a certain level;
– Any recent severance-related controversies; and
– Whether the proposal is overly prescriptive, such as requiring shareholder approval of severance that does not exceed market norms.

– Meredith Ervine