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ISS Proposes Proxy Voting Policy Updates for 2013

On October 16th, Institutional Shareholder Services (ISS) proposed updates to its proxy voting guidelines for the 2013 proxy season.   According to a client memorandum by Davis Polk, the proposed policies would:

  • Recommend voting against boards of directors who do not act on shareholder proposals that were approved by the vote of a majority of shares cast in the prior year;
  • Revise ISS’s say-on-pay criteria by refining the peer group selection methodology, incorporating “realizable pay” analysis into the qualitative evaluation of pay-for-performance and designating pledging shares as a problematic pay practice;
  • Extend the analysis of golden parachute arrangements to existing and legacy arrangements rather than just new or renewed arrangements; and
  • Provide for a case-by-case assessment of shareholder proposals to link executive compensation to environmental and social “sustainability metrics.”

The proposed updates are open to public comment until October 31, and the final policies are expected to be released in November. Additional information can be found in Davis Polk’s memorandum, accessible here.