ISS recently released draft proxy voting policy changes for the 2017 proxy season and is seeking comments on the proposals by November 10, 2016. Among the proposed changes is a provision related to restrictions on shareholders’ rights to amend company bylaws. ISS notes that some states allow companies to restrict this shareholder right in their charters. Under its proposed voting policy, ISS would recommend a vote against or withheld from members of a board’s governance committee if the company’s charter contains provisions that “unduly” restrict shareholders’ ability to amend the company’s bylaws. Undue restrictions include, but are not limited to: outright prohibition on the submission of binding shareholder proposals, or share ownership requirements, or time holding requirements in excess of limits established by SEC rules. ISS would continue to issue the negative voting recommendation until the “undue” restrictions were removed from the charter. ISS seeks specific comments on whether the negative recommendation relating to members of the governance committee on an on-going basis is sufficient and how boards should address this issue.
