ISS proxy season report

By: Cydney Posner

Attached is a report from ISS on the most recent proxy season. Among other things, the report indicates that, this proxy season, there were more proposals submitted by management to declassify boards than submitted by shareholders. The issue of majority vote for directors was also prominent. The report indicates that, at almost 60 annual meetings, the average level of support for majority vote shareholder proposals increased to 44%, compared to 12% at 12 meetings last year (before the issue had really come to the fore). ISS also analyzed executive compensation and disclosure practices of more than 162 U.S. companies under its pay-for-performance policy. The report states that, as of June 30, ISS had issued "withhold" vote recommendations against compensation committee members at 56 companies. ISS has also modified its pay-for-performance policy to "allow companies the opportunity" to provide "specific public disclosure that demonstrates enhanced transparency and a commitment to performance-based compensation." The additional disclosure must address in detail all components of the CEO's compensation (including dollar amounts of salary, bonus and other incentive payments and perks, qualitative and quantitative performance criteria for short- and long-term incentive pay, projected payments under retirement programs and other termination scenarios, etc.). The disclosure must also "effectively commit" the compensation committee to "improving its own performance in fulfilling its fiduciary duties in connection with CEO pay."

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