Yesterday, ISS announced the launch of its comment period on proposed changes (shown in redlines) to its benchmark voting policies. During this open comment period, ISS gathers views from stakeholders (investors, companies, and other market participants) on its proposed voting policy changes for the next proxy season.
For 2026, comments are being sought on 19 proposed policy changes. Here is a summary of the changes applicable to the U.S. market from the press release:
Capital structures – unequal voting rights: Capital structures with unequal voting rights to be considered problematic regardless of whether shares with superior voting rights are classified as “common” or “preferred.”
Non-employee director (NED) compensation practices – problematic high NED pay: Expands existing policy addressing problematic high NED pay practices, allowing for adverse vote recommendations in the first year of occurrence or when a pattern emerges across non-consecutive years.
Executive compensation – company responsiveness: In light of recent SEC guidance on Schedule 13G (passive) versus Schedule 13D (active) filing status for institutional investors, which may create legal uncertainties when companies seek to obtain feedback from shareholders, this proposed policy change allows more flexibility for companies to demonstrate responsiveness to low say-on-pay support.
Executive compensation – long-term alignment in pay-for-performance evaluation: Updates U.S. pay-for-performance quantitative screens to assess pay-for-performance alignment over a longer-term time horizon, considering a five-year period, compared to the current three years, while maintaining an assessment of pay quantum over the short term.
Executive compensation – time-based equity awards with long-term time horizon: This proposed policy update reflects the importance of a longer-term time horizon for time-based equity awards and represents a more flexible approach in evaluating equity pay mix in the pay-for-performance qualitative review.
Executive compensation – enhancements to equity plan scorecard: Adds a new scored factor under the Plan Features pillar to assess whether plans that include non-employee directors disclose cash-denominated award limits and introduces a new negative overriding factor for equity plans found to be lacking sufficient positive features under the Plan Features pillar.
U.S. Environmental and Social-related (E&S) shareholder proposals: Updates U.S. policy on four E&S-related shareholder proposal topics to reflect fully case-by-case assessments of each situation.
Global – shareholder proposals: Updates to all market and regional policies globally to reinforce a consistent case-by-case approach, and to provide a baseline for shareholder proposal topics not explicitly covered in some market and regional policies.
The announcement notes that no changes are being proposed to director overboarding policy parameters for 2026.
The comment period opened yesterday and will run through 5 p.m. ET on November 11.
Comments received will be considered as ISS Governance finalizes the changes for its 2026 Benchmark voting policies, which will be announced in late November, and will generally be applicable for shareholder meetings taking place on or after 1 February, 2026.
The latest issue of The Corporate Executive newsletter has been sent to the printer. It is also available online to members of TheCorporateCounsel.net who subscribe to the electronic format. In this issue, we take a deeper dive into the topics covered at the SEC’s Executive Compensation Roundtable, as well as the many issues that commenters have been raising for the SEC’s consideration in its retrospective review of executive compensation disclosure requirements.
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I love Halloween! I grew up on a block with a million kids my age. Trick-or-treating was my favorite activity of the year. It felt like everything was for and about kids, fun and candy and the whole big world was ours for one night only. I’m happy to say that my kids get to experience that too. There are tons of families on our street, and we trick-or-treat with a big group of neighbors — the bigger kids sprinting for hours and the smaller kids eventually getting carried home.
On top of that fun, our neighbors really understand the assignment. We live in an old neighborhood where the houses are a bit eerie already, and lots of houses really go all out with decor to make the night memorable for the kids (and kids at heart). There are smoke machines, graveyards, giant skeletons, coffins, light-up skull arches, and every kind of Halloween song and sound effect you can imagine. (Toccata and Fugue in D Minor is my favorite.) Five houses down, two families dress up in old diner uniforms and serve hot dogs from their shared driveway.
Like many of you, probably, it made me both sad and thankful last year when Dave reminded those of us raising little kids that this period of life is fleeting. This year, with busy school schedules and our conferences falling in October, my husband and I looked at the calendar at the beginning of the month and realized that there weren’t any good days to do our annual pilgrimage to the pumpkin patch, where we all obsess over each pumpkin’s stem and make sure we go home with at least one Bert and one Ernie. We ended up finding a one-hour window late one Sunday afternoon and snuck it in. But then we were in for another surprise when one kid wanted to recycle last year’s costume, and the other chose a costume just 4 days ago. What is happening?
I hate to admit it, but our years of both kids excitedly skipping from door to door are numbered. And, more broadly, I find myself constantly thinking about how short this time with “little” kids is and feeling so thankful for the stage we’re in — all while I look forward to (hopefully) a little more sleep and a little less laundry in my future.
Anyway, this is all to say, I echo Dave’s encouragement: “If you are still in the mode of celebrating Halloween with your family and neighbors, I encourage you to enjoy those moments while you still can!” The days are long, but the years are short. Happy Halloween!
I’ve been having a lot of conversations recently about how the stewardship landscape is undergoing major shifts, and it seems like shareholder engagement and vote solicitation are going to look very different a few years from now than they looked a few years ago. We’ve covered many of these developments in greater detail here and on The Proxy Season blog, but this ICR blog brings it all together. Here are excerpts on each topic with links to our prior blogs:
The Post-Benchmark Era: According to Reuters reporting, Glass Lewis’ will sunset its “benchmark” or “house-view” voting recommendations by 2027, establishing a clear turning point. Instead of a default recommendation, beginning that year, clients will choose from customizable “perspectives” aligned with their governance philosophies—such as “management-aligned,” “governance fundamentals,” “active owner,” and “sustainability.”
ISS STOXX and the Modular Research Model: ISS STOXX is evolving from a vote recommendation engine to a data and research infrastructure provider. Its new offerings, Gov360 and Custom Lens, support proprietary stewardship programs for institutional investors.
Broadridge: Infrastructure Becomes Policy: Broadridge is expanding beyond proxy voting infrastructure into the policy layer . . . Its institutional platform will now support customizable rule engines, pass-through voting logic, and integrated services across reconciliation, reporting, and disclosure.
But that’s not all! Vanguard, BlackRock and State Street are splitting their proxy voting teams into two separate groups. Voting choice programs have come a long way in a short time. Then there’s the change in the nature of engagement meetings, given the 2025 Schedule 13G eligibility guidance.
The blog says the “combined effect of these developments is eroding the shared ‘benchmark anchor’” and:
– Greater diversity in stewardship frameworks, shaped by regional norms and client mandates.
– Increased operational complexity, as investors reconcile custom logic across platforms.
– New emphasis on stewardship design, based on the sophistication of stewardship design rather than vote recommendation simplicity.
For public companies, that means, “investor communications will need to resonate across multiple customized frameworks, and companies will need strong proxy advice that enables them to translate conviction into customized, data-backed governance decisions.”
If you do not have access to The Proxy Season Blog and all of the other practical guidance that is available here on TheCorporateCounsel.net, I encourage you to email info@ccrcorp.com to sign up today, or sign up online.
Here’s another stewardship update, but this one is more in line with the incremental updates we’re accustomed to seeing annually. Yesterday, ISS Sustainability Solutions, the sustainable investment arm of ISS STOXX, announced updates to its Governance QualityScore for institutional investors. The updates introduce several new factors and extend existing factors to new markets. The major update for the U.S. is the addition of new factors that assess oversight of AI. Based on the detailed new Methodology Highlights (available for download), the new questions are:
Does the board have oversight over artificial intelligence? (Q468)
How many directors have artificial intelligence skills? (Q469)
Does the company have policies and procedures related to artificial intelligence development, deployment, and monitoring? (Q4 70)
Four new questions for the U.S. market also address vesting periods for variable pay plans (CEO vesting period for time-based options, SARs and restricted stock and performance-based options, SARs and restricted stock).
At the same time, ISS announced a data verification period from November 10 to 21 during which companies can verify and submit changes to their data on all factors, new and old, before scores are made available under the updated methodology.
As Zachary shared on PracticalESG.com earlier this week, California’s climate disclosure laws face new legal challenges. ExxonMobil has filed a lawsuit arguing that the laws violate the First Amendment and the National Securities Market Improvement Act. Zachary reminded us that the California Chamber of Commerce has an ongoing lawsuit also challenging the constitutionality of SB 253 and SB 261 under the First Amendment. (First Amendment challenges were successful in lawsuits involving the SEC’s conflict minerals disclosure rules a decade ago.) A differentiator of the new lawsuit is that it also challenges the disclosure requirements as preempted under NSMIA.
As a reminder on the scope of the California laws, the WSJ says:
The rules are specific to California but their oversight reaches businesses across the globe. Under SB 253, companies doing business in the state with an annual total revenue exceeding $1 billion, be they public or private, will have to disclose their greenhouse gas emissions—the ones from their immediate operations, such as electricity intake, and those from their sprawling supply chain. Even if they are based elsewhere in the U.S. or overseas, the rules will apply.
The climate risk reporting rule, SB 261, will affect more companies. It requires public and private firms doing business in California with annual revenue of more than $500 million to disclose climate-related financial risks, along with the measures they are taking to mitigate and adapt to such risks, starting Jan. 1.
At the end of last month, the California Air Resources Board (CARB) posted a preliminary list of companies that it believes fall within the scope of the state’s Climate Corporate Data Accountability Act. The list is not determinative — and CARB is seeking feedback on covered entities through a voluntary survey.
Members of PracticalESG.com can learn more about SB 253 and SB 261. Interested in a full membership with access to the complete range of benefits and resources? Sign up now and take advantage of our no-risk “100-Day Promise” – during the first 100 days as an activated member, you may cancel for any reason and receive a full refund.
The Center for Audit Quality (CAQ) recently analyzed S&P 500 company 10-Ks available as of June 2025 to assess how disclosures regarding digital assets, AI and climate are evolving, and summarized their findings in three reports — one for each topic. Let’s take a look at the trends in today’s blogs – beginning with digital assets.
47 S&P 500 companies, approximately 9%, mentioned digital asset-related information in their 2024 10-K.
More than half of these companies operate in the financial services sector, while the remainder span the information technology, energy and utilities, and consumer discretionary sectors.
Most companies that mentioned digital asset-related information in their 10-K did so in Item 1A. Risk Factors. Some companies also mentioned digital asset-related information within Item 8. Financial Statements, Item 1. Business, and Item 7. MD&A. A few companies also mentioned digital asset-related information in Item 1C. Cybersecurity.
Most of the companies that provided disclosure within Item 1. Business were financial institutions, exchanges, or payment processors. These companies discussed their platforms and products that enable customers to buy, sell, and hold their digital assets. Additionally, there were a few companies that discussed regulation around digital assets or noted risks to their competitiveness resulting from digital asset-related products offered by competitors.
Most mentions of digital asset-related information in Item 8. Financial Statements fell within notes discussing the company’s significant accounting policies. While less common, we also observed mention of digital asset-related matters in footnotes covering commitments and contingencies, fair value measurement, goodwill and other intangibles, segments, revenue, and various others.
On this topic, in particular, I wonder how much disclosures have expanded in the 10-Qs filed this year, even in the S&P 500 (Coinbase Global just joined the S&P 500 in May), and if they haven’t yet, it sure seems like they will soon.
Moving on to AI, the CAQ reports: “448 S&P 500 companies, or 90%, mentioned AI-related information in their 2024 10-K. This was an increase of almost 25% from the 359 companies that did so in 2023.” Of those companies, AI was usually mentioned in Item 1A. Risk Factors or Item 1. Business, but it was also mentioned in Item 7. MD&A, Item 8. Financial Statements, and Item 1C. Cybersecurity plus — but less often — in Item 11. Executive Compensation, Item 2. Properties, and Item 3. Legal Proceedings
– Within Item 1. Business, companies discussed their use of and investments in AI-related technologies often indicating how they had incorporated it into new or existing products or services or into their own internal operations. Companies also discussed current and potential regulation in the US and the EU around AI and related technologies.
– Within Item 7. MD&A disclosures, companies often discussed their adoption and use of AI through AI-related acquisitions, investments in AI-related products or services, or AI-related enhancements to their internal operations and infrastructure. Some companies also provided information about their governance and risk management processes around AI and its rapid advancement.
– AI-related mentions in the financial statements increased by more than 50% from the prior year. While companies increased disclosures across a variety of footnotes, we observed the greatest increase in disclosures related to acquisitions, description of business, and significant accounting policies.
In addition to risk factor disclosure, an increasing number of companies mentioned AI in their Cautionary Note Regarding Forward-Looking Information.
With respect to climate, the CAQ looked at what S&P 500 companies said in their 10-Ks about:
– Greenhouse gas emissions (scope 1, 2, and 3),
– Net zero, carbon neutral commitments, and other emissions reduction commitments, and
– Related reporting standards, frameworks, or requirements.
Almost all (494) S&P 500 companies mention climate change in their 10-K filings, and this number held steady year over year (after increasing since 2021 10-Ks). Not surprisingly, risk factor disclosure was most common (but slightly down year over year), while the number of companies mentioning climate in Item 1. Business and Item 7. MD&A was up.
In 2024, we observed a roughly 16% decrease in companies that disclosed a net zero or carbon neutral commitment compared with 2023. 74 companies (roughly 19% fewer than the prior year) indicated that they had a GHG emissions reduction goal.
[A] number of companies associated dollar amounts with their climate-related information. These disclosures varied and included capital expenses, research and development (R&D) costs, losses associated with severe weather events, investments, green bonds or sustainability-linked debt, and regulatory and compliance costs.
Financial statement disclosure also increased by 18% — usually related to significant accounting policies, commitments and contingencies or litigation, debt or borrowing arrangements and income taxes. There were even some CAMs (the critical audit matters section of the auditor’s report), for example:
Regulatory Assets and Liabilities – Impact of Rate Regulation on the Consolidated Financial Statements: “These analyses are generally based on … considerations around the likelihood of impacts from events such as unusual weather conditions, extreme weather events and other natural disasters, and unplanned outages of facilities.”
Wildfire-Related Contingencies and Recoveries: “We identified wildfire-related contingencies and related-recoveries, specifically the WEMA, as well as the related disclosures as a critical audit matter because (1) of the significant judgments made by management to estimate losses, (2) the outcome of the wildfire-related contingencies materially affects the Company’s financial position, results of operations, and cash flows and (3) the significant judgments made by management in determining whether recoveries from WEMA are probable.”
As reported yesterday by Reuters, a California-based biotech company just priced an IPO after its registration statement went effective — during the government shutdown and 20 calendar days after filing in accordance with Section 8(a) of the Securities Act. The offering was already publicly flipped on September 19, before the shutdown, starting the 15-day clock (and suggesting there were likely few, if any, Staff comments still outstanding). Having filed on October 6 before the Corp Fin Staff’s updated guidance, the S-1/A contained a pinpoint price. It also, of course, removed the delaying amendment and included the magic words from Rule 473(b).
The commencement press release included the following:
MapLight has included in the registration statement the proposed public offering price and the number of shares offered and specific language under Rule 473(b) promulgated under the Securities Act of 1933, as amended (the “Securities Act”), such that the registration statement is expected to become automatically effective 20 calendar days after today’s filing, or October 26, 2025, pursuant to Section 8(a) of the Securities Act. MapLight expects to complete the pricing of the proposed public offering on or after such date. In the event that the federal government and the SEC resume normal operations prior to October 26, 2025, MapLight will re-evaluate the use of Section 8(a) in connection with the proposed public offering.
As a result of the shutdown of the federal government, we have determined to rely on Section 8(a) of the Securities Act to cause the registration statement of which this prospectus forms a part to become effective automatically. Our reliance on Section 8(a) could result in a number of potential adverse consequences, including the need for us to file a post-effective amendment and distribute an updated prospectus to investors, or a stop order issued preventing use of the registration statement, and a corresponding substantial stock price decline, litigation, reputational harm or other negative results.
The registration statement of which this prospectus forms a part is expected to become automatically effective by operation of Section 8(a) of the Securities Act on the 20th calendar day after the most recent amendment of the registration statement filed with the SEC, in lieu of the SEC declaring the registration statement effective following the completion of its review. Although our reliance on Section 8(a) does not relieve us and other parties from the responsibility for the adequacy and accuracy of the disclosure set forth in the registration statement and for ensuring that the registration statement complies with applicable requirements, use of Section 8(a) poses a risk that, after the date of this prospectus, we may be required to file a post-effective amendment to the registration statement and distribute an updated prospectus to investors, or otherwise abandon this offering, if changes to the information in this prospectus are required, or if a stop order under Section 8(d) of the Securities Act prevents continued use of the registration statement. These or similar events could cause the trading price of our common stock to decline substantially, result in securities class action or other litigation, and subject us to significant monetary damages, reputational harm and other negative results.
I *think* this is the first operating company IPO to price during the shutdown. (It seems there have been twoSPACs.) We don’t know of any IPOs that priced during the 2018-2019 government shutdown. Numerous companies had removed their delaying amendments, but most (like this one) added the delaying amendment back on the registration statement when the SEC reopened. If anyone knows of a prior instance of an IPO pricing after the S-1 went effective under Section 8(a), please reach out!
