ISS Issues Draft 2022 Policy Updates

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On November 4, 2021, ISS issues draft 2022 policy updates. If adopted, these updates will go into effect for shareholder meetings on and after February 1, 2022. ISS has opened the comment period on these possible updates, and it runs through 5 pm Eastern on Tuesday, November 16, 2021.

ISS asks respondents to submit comments via email to policy@issgovernance.com and to include your name and organization in the submission.

Key U.S. Draft ISS policy updates:

  • Board Diversity—On and after February 1, 2023, US companies beyond the Russell 3000 and S&P 1500 indices will be expected to have at least one woman board member. Diversity policy announced last year regarding racial and ethnic diversity goes into effect February 1, 2022.
  • Board Accountability—Unequal Voting Rights—Companies that went public prior to ISS’ change of policy in 2015 with respect o companies that maintain unequal voting rights and were grandfathered, will now be subject to the policy after a one year grace period, whereby ISS would recommend against the responsible director(s) at all US companies with unequal voting rights.
  • Compensation—no updates for US companies. However, I expect ISS will roll some updates out that impact its pay-for-performance (P4P) policy, which, at the very least, is likely to change the time period used for the ISS multiple of median test from the current one-year period to use a three-year period to compare CEO pay versus ISS peers. The updates to the P4P methodology usually get announced in the ISS P4P mechanics document that comes out in December/January.

ISS announcement: https://insights.issgovernance.com/posts/iss-launches-open-comment-period-for-2022-proposed-benchmark-voting-policy-changes/

ISS draft policy updates: https://www.issgovernance.com/policy-gateway/2022-benchmark-policy-consultation/