New ISS proxy voting guidelines - which generally affect shareholder meetings held on or after February 1, 2013 - may have a significant impact on the outcomes of shareholder Say on Pay advisory votes in the upcoming proxy season. This Client Alert summarizes the most significant compensation and governance changes from the 2012 ISS guidelines.
Among the key updates made to the standards used by ISS in its proxy voting recommendations:
- Changes to the peer group selection methodology in its quantitative test and the inclusion of realizable pay in its qualitative analysis
- Examination of existing and legacy golden parachute arrangements, in addition to new and renewed arrangements
- Possible negative voting recommendations against Director candidates in response to any degree of hedging and any significant pledging of company stock by executives or Directors
- Case-by-case consideration of shareholder proposals to link executive compensation to environmental and social issues
- Recommendations against Boards that fail to act on shareholder proposals approved by a vote of a majority of shares cast in the prior year