Developments in Securities Regulation, Corporate Governance, Capital Markets, M&A and Other Topics of Interest. MORE

ISS has made available for public comment certain proposed voting policies for 2016. In the United States ISS has proposed policies relating to unilateral board actions, director overboarding and compensation at externally-managed issuers.

Unilateral Board Actions

The proposed policy update will explicitly state that when a board unilaterally amends the company bylaws or charter to either classify the board or establish supermajority vote requirements in any period after completion of a company’s initial public offering (IPO), ISS will generally issue adverse vote recommendations for director nominees until such time as the unilateral action is either reversed or is ratified by a shareholder vote.

ISS is also considering implementing a policy providing that, when a board amends the bylaws or charter prior to or in connection with the company’s initial public offering to classify the board and establish supermajority vote requirements to amend the bylaws or charter, ISS will generally issue adverse vote recommendations for director nominees at subsequent annual meetings following completion of the initial public offering.

Director Overboarding

ISS proposes to revise the ISS US policy on overboarded directors to lower the acceptable numbers of board positions as follows:

  • For CEOs with outside directorships, a limit of one outside public company directorship besides their own – still to withhold only at their outside boards.
  • For directors who are not the CEO, ISS is evaluating two options, that would lower the acceptable number of total public boards from the current six (the board under consideration plus five others) to a total of either:
    • Five (the board under consideration plus four others), or
    • Four (the board under consideration plus three others).

Compensation at Externally-Managed Issuers

ISS is proposing to update its pay-for-performance analysis policy with respect to externally-managed issuers that do not provide sufficient compensation disclosure to make a comprehensive assessment for pay-for-performance and potential conflicts of interest.

Under the proposed policy change, ISS would generally recommend “Against” the say-on-pay proposal (or compensation committee members, the compensation committee chair, or the entire board, as appropriate, in the absence of a say-on-pay proposal on ballot) in cases where a comprehensive pay analysis is impossible because the externally-managed issuer provides insufficient disclosure about compensation practices and payments made to executives on the part of the external manager.


Stinson Leonard Street LLP provides sophisticated transactional and litigation legal services to clients ranging from individuals and privately held enterprises to national and international public companies. As one of the 100 largest firms in the U.S., Stinson Leonard Street has offices in 14 cities, including Minneapolis, Mankato and St. Cloud, Minn.; Kansas City, St. Louis and Jefferson City, Mo.; Phoenix, Ariz.; Denver, Colo.; Washington, D.C.; Decatur, Ill.; Wichita and Overland Park, Kan.; Omaha, Neb.; and Bismarck, N.D.

The views expressed herein are the views of the blogger and not those of Stinson Leonard Street or any client.