ISS Issues Draft 2017 Policy Updates – Comment Period Open Until November 10th

ISS Issues Draft 2017 Policy Updates – Comment Period Open Until November 10th

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On October 27, 2016, ISS released its draft 2017 policy updates.  Overall, for U.S. companies, these draft policy updates do not provide any significant changes related to ISS’s policies related to compensation.  ISS will accept comments until 6 pm Eastern on November 10th. Comments can be sent by email to

The U.S. draft policy updates are:

  • Unilateral Board Actions – Multi Class Capital Structure at IPO – This policy update would allow for adverse director recommendations to be warranted when a company completes its public offering with a multi-class capital structure in which the classes fo not have identical voting rights.
  • Restrictions on Binding Shareholder Proposals -This draft policy would cause ISS to vote against or withhold from members of the governance committee if the company’s charter or articles of incorporation impose undue restrictions (including, but not limited to, outright prohibition on the submission of binding shareholder proposals or share ownership requirements or time holding requirements in excess of SEC Rule 14a-8) on shareholders’ ability to amend the bylaws. Under this policy (if triggered) iSS would vote against/withhold the directors on an ongoing basis.
  • General Share Issuance Mandates for Cross- Market Companies (US-listed, non-US-incorporated companies) – This draft policy would recommend in favor of general share issuance authorities (i.e., those without a specified purpose) up to a maximum of 20 percent of currently issued capital, as long as the duration of the authority is clearly disclosed and reasonable.
  • Executive Pay Assessments (Cross-Market Companies) – This draft policy update is focused on companies that are incorporated in one country and listed in another, e.g., incorporated elsewhere and listed on US exchanges. Under ISS’ current policy, items that are on a proxy solely due to the requirements of another market (listing, incorporation, or national code) may be evaluated under the policy of the relevant market, regardless of the “assigned” market coverage. Therefore, ISS is proposing that U.S. domestic issuers (foreign incorporated companies that have a majority of US shareholders, meet other criteria as determined by the SEC, and are subject to the same disclosure and listing standards as US incorporated companies) with multiple compensation proposals on the proxy pertaining to the same pay program will be assessed on a case-by-case basis using the following guiding principles: (1) align voting recommendations so as to not have inconsistent recommendations on the same pay program, and (2) use the policy perspective of the country in which the company is listed (e.g., US SOP policy for proposals relating to executive pay). But if there is a compensation proposal for which there is no applicable US policy, then ISS would use the policy of the country that is requiring the proposal.

The Canadian draft compensation-related policy update is:

The draft policy updates for the U.K. include these compensation-related policy updates:

All of the draft 2017 ISS policies can be accessed at:

ISS is expected to issue its final 2017 policy updates in the second half of November 2016, with updates to the ISS FAQs expected sometime in December and/or January as in prior years.


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