Institutional Shareholder Services Inc. ("ISS") has published the updates to its UK benchmark proxy voting policies for 2017, which includes changes to the following policies:
- Overboarding
definition. The policy has been
amended to clarify potentially ambiguous language as to the
acceptable number of directorships. Under the revised policy, where
directors have multiple board appointments, ISS may recommend a
vote against directors who appear to hold an excessive number of
board roles at publicly listed companies.
- An adverse vote recommendation will not be applied to a director within a company where they serve as CEO. Rather, it would apply to their additional seats on other company boards.
- The same applies to chairs, except where they exclusively hold other chair and/or executive positions or where they are elected as chair for the first time.
-
Remuneration. Sections
will be amended to reflect developments in UK market practice and
investor expectations, including the introduction of:
- A direct reference to companies that seek to implement pay structures (for example non-performance related restricted shares) which sit outside of the typical UK model; a greater level of certainty of reward should be matched by lower award levels.
- A reference to a potential recommendation against the chair of the remuneration committee when serious issues are identified.
- For the remuneration report resolution, a reference to the use of ISS' Pay-for-Performance methodology (defined), and clarification that appropriate pro-rating on outstanding share awards should be applied in termination scenarios.
- Board and Committee Composition—UK Smaller Companies. The policy for AIM companies also applies to certain other companies. ISS has also brought the policy into line with the Quoted Companies Alliance Code by specifying that audit and remuneration committees should be fully independent.
The policies will be applied to shareholder meetings taking place on or after 1 February 2017, other than the policy with respect to the board and committee composition of smaller companies, which will apply with effect from February 2018 to give small companies time to comply with this significant change.
The EMEA Proxy Voting Guidelines Updates can be accessed here:
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