Institutional Shareholder Services (ISS) is one
of the leading proxy advisory firms that makes voting
recommendations on public companies' proxy resolutions. In
Canada, ISS' recommendations on transactions and governance
issues can have a significant impact on many shareholders'
opinions, and particularly the opinions of institutional
ISS publishes its proxy voting guidelines which explain the policies
underlying its recommendations. For 2016, ISS updated certain items in guideline. The
updates, as described below, are good indicators of investors'
views toward current issues in the corporate governance
In response to information about the average workload for
directors (over 300 hours a year, on average), ISS has revised its
overboarding policy to lower the number of boards a director should
sit on. For directors who:
are not CEOs, the number of board has
been lowered from 6 boards to 4; and
do hold CEO roles, the number has
been lowered from 2 other boards to 1.
ISS did not make negative recommendations based on this revised
"overboarding" definition in the 2016 proxy year.
However, for meetings held after February 1, 2017, this policy
update will result in a "withhold" recommendation if the
director (i) is overboarded and (ii) attends fewer than 75% of its
board or committee meetings.
Externally Managed Issuers
ISS has updated its voting recommendation policy for
externally-managed issuers (EMIs), being issuers
that have management services provided by external management
Where an EMI provides insufficient disclosure about management
services agreements and how management is compensated, ISS will
make case-by-case voting recommendations for say-on-pay resolutions
and director nominations. Where an EMI does not propose a
say-on-pay resolution, the updated policy allows ISS to evaluate
other factors, including: the size and scope of the management
services agreement; executive compensation in relation to similar
issuers; related-party transactions and independence; and
historical compensation concerns for the issuer.
In Canada, this policy update will likely affect ISS'
recommendations on the election of individual directors of
Management and Director Equity Plans
ISS has also updated its regime for evaluating equity plans.
Whereas ISS' former system was based on a series of standalone
pass/fail tests, the new evaluation system uses an Equity Plan
Scorecard (Scorecard) with a holistic approach to
evaluating equity plans. The Scorecard considers equity plans'
strengths and weaknesses based on plan cost, plan features and
historic grant practices. The Scorecard takes into account
considerations such as: the viability of risk-mitigating measures;
the strength of vesting provisions; and the use of
Further information on this Scorecard is available here.
Issuers should be mindful of the updates to ISS' guidelines
and the ways such updates might affect the ISS' voting
recommendations on meeting proposals in 2017.
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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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