In addition to AI oversight and board diversity, the results from ISS’s annual global benchmark policy survey included several bread & butter governance topics. For these topics, investor respondents tended to show that they have views about “best practices” – while many companies (non-investors) want flexibility. No surprise there!

Here’s more detail on a few of the governance-related survey topics:

– Multi-Class Capital Structures – ISS asked whether “non-common” shares with more than one vote per share (other than in cases where these shares vote on an “as-converted” basis) should generally be considered the same way as common shares that have more than one vote per share.

– 71% of investors said “Yes.”

– 62% of non-investors said “No.”

As a reminder, ISS’s current benchmark policy is to recommend against directors individually, committee members, or the entire board, if the company has a capital structure with “unequal voting rights” – in the absence of sunset provisions or de minimis super-voting power.

– Independent Board Chairs – ISS noted that “independent chair” proposals seldom receive majority support (the current voting policy generally recommends a vote “for” these proposals and lists factors that the proxy advisor considers). In the survey:

– 43% of investors said an independent chair is best and that shareholder proposals calling for an independent chair are understandable.

– 38% of investors said that having an independent chair is a good practice, and companies should explain why they’re an exception to the rule.

– 51% of non-investors said a board should generally have the flexibility to determine its leadership structure.

– Director Overboarding – ISS noted that it last asked about overboarding in 2019, and some investors have changed their policies since then. Where local market best practice codes and/or regulations provide upper limits for board mandates, ISS policies globally already reflect these limits, but ISS asked about preferences when regulations aren’t in play. Here’s what they found about maximum limits:

– 26% of investors and 19% of non-investors said that 5 total board seats is appropriate.

– 25% of investors and 22% of non-investors said that 4 total board seats is appropriate.

– 9% of investors and 38% of non-investors said there should be no general limit; the board should consider its own circumstances and act accordingly.

– For CEOs, 55% of investors and 34% of non-investors believe 1 external board seat is an appropriate limit, and 39% of non-investors believe no general limit should be applied. The survey also got into other details, like whether board chair positions and connected companies should be treated differently.

The survey also covered views on shareholder proposals, shareholder written consent, say-on-pay responsiveness, director pay, executive incentive awards, and other matters. Meredith will cover the compensation-related items tomorrow on The Advisors’ Blog on CompensationStandards.com!

– Liz Dunshee