The Advisors' Blog

As Meredith and I noted when ISS published its 2026 benchmark voting policies and compensation FAQs, this year’s analysis of equity plan proposals will include a new negative overriding factor for plans found to be lacking sufficient positive features under the “Plan Features” pillar. In other words, an equity plan proposal could receive an “against” recommendation even if it would otherwise have a passing score.

The new factor builds on a handful of overriding factors that already existed – e.g., an evergreen share reserve. Some of those factors are more “black & white” than others. With the new factor, the policies and FAQs don’t parse out exactly how the calculation will shake out. This Cooley memo shares more detail:

It is important to note that, in December 2025, ISS added an additional negative overriding factor, where a plan has an “insufficient” score under the Plan Features pillar (i.e., if the plan “lacks sufficient positive features,” as ISS puts it). As a result, ISS may recommend a vote against an equity plan proposal where the EPSC evaluation results in a Plan Features pillar score of less than seven points.

Because ISS does not specify how many points are available under each of the various design aspects evaluated under the Plan Features pillar, it is not immediately clear what combination of features will avoid a potential negative override, but legal practitioners and consultants familiar with the EPSC model should be able to offer helpful guidance in that regard.

In light of this new factor, it’s extra important this year to understand whether ISS recommendations tend to affect your voting outcomes – and if so, to model how much breathing room you’ll have under the Equity Plan Scorecard. See the FAQs starting with #35 to understand which factors can help or hurt your score.

– Liz Dunshee