The Advisors' Blog

Yesterday afternoon (and earlier than usual!), ISS announced final updates to its 2026 benchmark proxy voting policies, which will generally apply to shareholder meetings held on or after February 1, 2026. Based on the handy executive summary of the changes ISS prepares, the final compensation-related updates are largely consistent with those proposed for comment back in October, with one non-substantive addition. The full policy updates document details all the changes (shown in redline).

Below is an excerpt from the executive summary for a reminder of the compensation-related changes that are consistent with the proposal.

– Long-Term Alignment in Pay-for-Performance Evaluation: Updates U.S. pay-for-performance quantitative screens to assess pay for performance alignment over a longer-term time horizon, considering a five-year period, above the current three years, while also maintaining an assessment of pay quantum over the short term.

– Time-Based Equity Awards with Long-Term Time Horizon: This policy update reflects the importance of longer-term time horizons for time-based equity awards and provides for a more flexible approach in evaluating the equity pay mix in pay-for-performance qualitative reviews.

– Company Responsiveness: Expands flexibility for companies to demonstrate responsiveness to low say-on-pay support, in light of recent SEC guidance on 13G vs. 13D filing status that may limit shareholder engagement.

– High Non-Employee Director Pay: Expands existing policy that addresses high NED pay practices, allowing for adverse recommendations in the first year of occurrence if considered highly problematic, or when a pattern emerges across non-consecutive years.

– Enhancements to Equity Plan Scorecard: Adds a new scoring factor under the Plan Features pillar to assess whether plans that include non-employee directors disclose cash-denominated awards, and introduces a new negative overriding factor for equity plans found to be lacking sufficient positive features under the Plan Features pillar despite an overall passing score.

The new change reflects the addition of a cross-reference in the “Compensation Committee Communications and Responsiveness” policy, rather than repeating the factors from the say-on-pay responsiveness policy:

– Compensation Committee Responsiveness: Streamlines policy language by removing duplicated factors for evaluating responsiveness to shareholder input on executive pay. The section now cross-references the factors listed under the Board of Directors policy.

Also, check out Liz’s blog today on TheCorporateCounsel.net for a summary of the corporate governance-related updates for US companies.

Programming Note: You won’t find a blog email in your inbox tomorrow since we’re pausing our blogs for the holiday. Happy Thanksgiving, everyone! We’ll see you back here Monday.

– Meredith Ervine