TheCorporateCounsel.net

Last week, ISS launched its Annual Benchmark Policy Survey and development process, inviting companies, investors, corporate directors and other stakeholders to respond to a series of questions, then using those responses to inform the annual policy development process. In its release announcing the survey, ISS notes:

This year’s survey begins by seeking feedback on several topics specific to the U.S. market, including poison pills and executive compensation. The survey then moves on to elicit views with regard to EMEA markets. Questions cover general share issuances in France, virtual meetings and auditor rotation topics throughout Continental Europe, and cumulative voting for the election of directors in Middle Eastern and North African markets. Finally, the survey invites views on global environmental and social topics, specifically the disclosure of Scope 3 GHG emissions targets and workforce diversity.

More specifically, with respect to the US market, ISS asks a series of questions regarding the adoption of poison pills to inform its voting guidance, including;

– Is the adoption by a board of a short-term poison pill to defend against an activist campaign acceptable?
– Should pre-revenue or other early-stage companies be entitled to greater leeway than mature companies when it comes to the adoption of a short-term poison pill?
– Is it ever acceptable for a board to set the trigger of a short-term poison pill below 15 percent?
– Some companies have adopted a two-tier trigger threshold, with a higher trigger for passive investors (13G filers). Do you consider this to be a mitigating factor for a low trigger?
– How important is it that a poison pill include a “qualifying offer clause”, giving shareholders the ability to bypass the pill in the event of an offer that is deemed beneficial?

On the topic of executive compensation, ISS focuses its questions on, among other things, the relevance of the ratio of performance-based to time-based equity awards as a focal point of ISS’ qualitative review in the pay-for-performance analysis (given growing investor skepticism about performance equity practices), whether discretionary annual incentive programs are problematic and what approach ISS should take when compensation is tied to profits from managed funds.

The Annual Benchmark Policy Survey will close at 5:00 pm Eastern time on September 5, 2024.

– Dave Lynn