It’s November and that means there are proxy advisory policy changes to study as you sip that next pumpkin spice latte.
What does ISS have in store for us this year? Its draft US policy changes were released in late October with comments due by November 10. The single compensation element proposed makes for a pretty short read—that is if you are clear on a “cross-market company.”
According to ISS, a growing number of companies around the world are incorporated in one country but listed in a different country (often the US) and may be required to include multiple compensation proposals on the same ballot relating to the same pay program. For example, a company incorporated in the UK but listed in the US may have a say-on-pay advisory vote on executive compensation mandated by US and UK law as well as the forward-looking binding vote on remuneration policy required only by UK law.
We expect this scenario applies to only a very few companies, but if yours is one, here is what we know:
- This proposed change will be applicable to US domestic issuers that are incorporated elsewhere;
- ISS is considering a change such that multiple compensation proposals that are based on the same program would be evaluated on a case-by-case basis;
- The goal is to line up voting so there are not inconsistent recommendations made regarding the same program; and
- The guidance, if finalized, would be to use whichever policy perspective is aligned with the listing country. (For example, if a company is listed in the US, then say-on-pay would be applicable to its executive compensation program.)
But what happens if a company is listed on multiple exchanges or has dual incorporations? That’s a good question, and ISS would like to have some input; they are seeking guidance on how to handle this situation within their proposed framework.
What’s interesting to note is that in addition to this compensation item and three other governance-based items that were released for comment in October, ISS has said more change is in the air: there will be modifications announced in November and December based on its 2017 survey for which they were not interested in receiving public comment.
Stay tuned – we have more on that and the new ISS QualityScore coming soon!
