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

ISS has released updates to its 2019 benchmark proxy voting policies.  There is no impact for the upcoming 2019 proxy season for U.S. companies.

Board Gender Diversity

ISS has announced a new voting policy on directors for companies with no female directors serving on their boards, with a year’s grace period before implementation. The new policy will be effective for meetings on or after Feb. 1, 2020, and will be applicable for companies in either the Russell 3000 or S&P 1500 indices. After the year-long grace period, which will allow boards who wish to do so to recruit qualified women candidates, adverse voting recommendations may be issued against nominating committee chairs at boards with no gender diversity. ISS will generally issue recommendations against the election of the chair of the nominating committee, but on a case-by-case basis, the elections of other directors who are responsible for the board nomination process may be impacted (for example, at companies with no formal nominating committee). In exceptional circumstances, the policy would allow the absence of board gender diversity to be temporarily explained and excused.

Economic Value Added (EVA)

ISS has been assessing the potential use of EVA data in the Financial Performance Assessment screen of its pay-for performance model.  ISS has chosen to explore the potential of economic performance (EVA) factors to add insight into company performance beyond market performance (TSR) and accounting performance (GAAP) measures, and that further consideration of the additional insight that EVA could bring to investors as part of financial performance analysis would be welcome. To that end and for informational purposes, EVA metrics will be featured in ISS research reports on a phased-in basis over the 2019 U.S. annual meeting season.  ISS will not be introducing EVA measures into the quantitative pay-for-performance model for 2019 and will continue using accounting performance (GAAP measures) in the Financial Performance Assessment for the 2019 proxy