The Advisors' Blog

Last week, ISS launched its Annual Global Benchmark Policy Survey. The survey is open for comment until August 22 at 5 p.m. ET. As usual, this is a key step in ISS’s formulation of voting policies for 2026 AGMs. As Dave pointed out on TheCorporateCounsel.net, this year’s survey addresses non-executive director pay and numerous executive compensation topics, including time-vs. performance-based long-term incentives, ISS’s say-on-pay responsiveness policy and the modification or removal of ESG metrics for in-flight awards.

Here is some more information on the related questions, which are available to review in full:

Non-executive director pay – In accordance with its Benchmark voting policy, ISS’s reports include cautionary language if high (outlier) non-employee director pay levels and/or other problematic director pay practices are identified at a company. It will generally make adverse recommendations for the committee members approving director pay after two consecutive years, absent disclosure of a reasonable rationale. ISS notes concern that waiting two consecutive years might result in missing single or non-consecutive years of problematic director pay practices and asks for input on whether any specific problematic director pay practices may warrant immediate adverse recommendations (even in year one).

Time- vs. performance-based equity – Recognizing that some investors have advocated for reducing the emphasis on performance-based equity awards while others continue to believe that performance-based equity programs can provide insight into performance expectations and meaningful incentives, ISS asks whether respondents’ organizations consider time-based equity acceptable for all or part of executive long-term incentive awards. It then asks some follow-up questions, including:

– What vesting and/or post-vesting retention periods the organization considers sufficiently long-term for a company to move to time-based equity for part or all of its long-term incentives. When I’ve spoken to compensation consultants about this, they’ve identified this time-period as a key factor in understanding whether any policy shift to further embrace time-based awards would be welcome to corporate boards, so I’ll highlight that the multiple-choice responses in the survey (to the extent they provide a period) range from 3 to 7 years.

– In a program with a mix of time- and performance-based awards, what the organization considers a reasonable mix. The multiple choice responses in the survey (to the extent they provide a percentage) range from 25% to 50%.

– To solicit more detailed input on preferences for the breakdown between the vesting period and a post-vest holding period and what constitutes meaningful stock retention requirements.

Say-on-pay responsiveness policy – This question recognizes that companies might have a harder time meeting ISS’s say-on-pay responsiveness policy following the SEC’s February 2025 Schedule 13D/G guidance and asks how ISS should view (1) disclosures that a company was unable to obtain shareholder feedback after attempting to engage plus (2) whether pay program changes at a company with a low say-on-pay vote can be viewed as responsive even if the company was unable to get feedback from shareholders.

Modification or removal of ESG metrics – ISS asks how it should assess the removal of ESG or DEI metrics from in-flight awards.

As Liz shared today on TheCorporateCounsel.net, Glass Lewis is out with its policy survey as well.

– Meredith Ervine