Institutional Shareholder Services (ISS) and Glass Lewis recently released their voting guideline updates for the 2016 proxy season. ISS has also released updates to its QuickScore 3.0 product and its Equity Plan Scorecard factors (which includes, among other things, changes to the evaluation methodology for equity plans of "special case" companies (e.g., recent IPO companies, bankruptcy emergent companies, etc.) and changes to ISS's evaluation guidelines for the "CIC Vesting" factor).
The proxy voting guidelines include changes to the director "overboarding" guidelines for both ISS and Glass Lewis, as well as changes related to how ISS and Glass Lewis, as applicable, will evaluate the following matters:
ISS
- Unilateral Board Amendments to Governing Documents;
- Proxy Access (i.e., Shareholder Nominees for Board membership);
- Equity Award Holding Period Proposals;
- Compensation Disclosure for Externally Managed Issuers; and
- Environmental and Social Issue Proposals.
Glass Lewis
- Conflicting Management and Shareholder Proposals;
- Exclusive Forum Provision Proposals;
- Nominating Committee Performance;
- One-time and Transitional Awards; and
- Environmental and Social Risk Oversight Proposals.
Public companies should take these changes into account as they prepare for the 2016 proxy season and develop and refine their 2016 shareholder communication strategy. Additionally, compensation committees that will be conducting a review of their equity compensation plans in 2016 should pay careful attention to the changes to ISS's Equity Plan Scorecard methodology.
The Womble Carlyle Public Company Advisors Team has extensive experience advising public company boards on matters such as these and is available to assist the Firm's clients with interpreting and analyzing these guideline changes for the 2016 proxy season.
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