November 13, 2020

ISS Issues 2021 Policy Updates

Yesterday, ISS announced its policy updates for next year. Here’s the policy document. The big news this year is that ISS is ratcheting up the pressure on companies to improve board diversity, and taking a more accommodating approach to exclusive forum bylaws. Here are a couple of excerpts from ISS’s executive summary of the policy changes:

– For 2021, ISS benchmark research reports for companies in the Russell 3000 or S&P 1500 indexes will highlight boards that lack racial and ethnic diversity (or lack disclosure of such) to help investors identify companies with which they may wish to engage and foster dialogue between investors and companies on this topic.

– For 2022, for companies in the Russell 3000 or S&P 1500 indexes where the board has no apparent racially or ethnically diverse members, ISS will recommend voting against or withhold from the chair of the nominating committee (or other directors on a case-by-case basis).

– Under the new policy, ISS will generally recommend a vote for federal forum selection provisions in the charter or bylaws that specify “the district courts of the United States” as the exclusive forum for federal securities law matters and recommend a vote against provisions that restrict the forum to a particular federal district court.

– Under the updated policy for exclusive forum provisions for state law matters, in the absence of concerns about abuse of the provision or about poor governance more generally, ISS will generally recommend in favor of charter or bylaw provisions designating courts in Delaware as the exclusive forum for state corporate law matters at companies incorporated in that state.

We’ll be posting memos in our “Proxy Advisors” Practice Area. With proxy season just around the corner, check out this Davis Polk blog for a list of key dates on ISS & Glass Lewis’s calendars for the upcoming months.

California Voters Adopt New Privacy Statute

Remember how much fun getting geared up to comply with the CCPA and its seemingly endless rulemaking process was?  Well if you enjoyed that, you’ll be delighted to learn that on election day, California voters passed Proposition 24, the California Privacy Rights Act (CPRA). This intro to Thompson Hine’s memo on the new statute provides an overview of its provisions:

On November 3, California voters approved Proposition 24, also known as the California Privacy Rights and Enforcement Act of 2020 (CPRA), which amends and expands upon California’s other landmark privacy legislation, the California Consumer Privacy Act of 2018 (CCPA). In particular, the CPRA establishes new data privacy rights for California residents, imposes new obligations and liabilities on businesses and service providers, and creates a regulatory agency empowered to enforce California privacy law and prosecute noncompliance. The CPRA becomes operative on January 1, 2023, and, with some exceptions, will apply to California residents’ personal information collected by organizations after January 1, 2022.

The CPRA’s proponents put Proposition 24 on the ballot because of their objections to several legislative amendments to the CCPA & the California AG’s new regulatory framework that they believe “significantly weakened” its safeguards. The memo reviews the key provisions of the CPRA, and notes that approving the CPRA ballot initiative, California voters made several substantive amendments to the CCPA – and effectively prevented California’s state government from undermining them through future legislation.

Post-Election Suggestion: “Look at Mills! Look at Mills!”

There’s a zero percent chance that I’m going to use this blog to wade into the giant cauldron of rage into which our country has descended following last week’s election. I’m also not going to minimize the differences that separate us.  We have a lot of work to do. But, like you, I have friends and family members whose political opinions differ significantly from mine, and I’d kind of like to continue to share the country with them and with all of you.

With that objective in mind, I want to close out the week with a suggestion as to how we might at least start to turn down the temperature. This is going to sound strange, but hear me out – I would like you to watch this video of NBC’s coverage of the final lap of the men’s 10,000 meters at the 1964 Tokyo Olympics. It’s only about a minute long.

I know the video quality is terrible, but I’m guessing that you still felt the same chills that I did watching the last 100 meters of that race. You know what? The people who voted for the other guy felt those chills too, and it’s fair to say that the letters “U.S.A” on the front of Bill Mills’ uniform probably had a lot to do with that. I believe that this kind of shared feeling is what Abraham Lincoln was getting at in his First Inaugural Address, and since there’s no blogger alive who can follow Honest Abe, I’ll let him have the last word:

We are not enemies, but friends. We must not be enemies. Though passion may have strained, it must not break our bonds of affection. The mystic chords of memory, stretching from every battle-field, and patriot grave, to every living heart and hearthstone, all over this broad land, will yet swell the chorus of the Union, when again touched, as surely they will be, by the better angels of our nature.

John Jenkins