September 10, 2013
As in prior years, Institutional Shareholder Services (ISS) has invited input from companies, investors and other corporate governance market constituents to be used in formulating its proxy voting policy guidelines applicable to the 2014 proxy season. The survey closes on Friday, September 13, 2013 and can be accessed at http://www.surveymonkey.com/s/13PolicySurvey.
In contrast to the heavy focus on compensation in previous surveys, this year ISS is soliciting views on issues that relate to director performance and service, equity-based compensation plans and share issuance authorizations, as follows:
- Impact of tenure on director independence
- Tenure and rotation of independent lead directors and board and committee chairs
- Evaluation of director performance in light of company performance and service on the boards of other companies
- Board responsiveness to majority-approved shareholder proposals, including timeframe for response
- Weight of factors to be considered in evaluating equity-based compensation plans
- Consideration of factors in voting on increases to authorized share capital
- Differentiation of policy by size or type of company
These topics provide insight into policies that ISS may adopt or amend for the 2014 proxy season. For example, it is possible that ISS may be considering adding years of service to the list of factors it considers in determining whether directors of US companies are "independent." ISS already considers tenure when evaluating director independence in several European and Asian markets. Note that the issue of director tenure is also on the agenda of the Council of Institutional Investors, which is considering amending its corporate governance guidelines to include tenure as a factor in evaluating director independence.
ISS has indicated that it will release its survey results at the end of September 2013. It has also announced that it will "make every effort" to release its policy updates for 2014 one to two weeks earlier than in previous years, in November 2013. At that time, we will provide guidance on understanding and addressing ISS proxy voting policies applicable to the upcoming proxy season.