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Yesterday, ISS announced updates to its benchmark voting policies that will apply to shareholder meetings taking place on or after February 1, 2025. As previewed when the proposed changes were released for comment, the updates are pretty light. Here are the highlights from the executive summary with the updated policy language from the updates document following each topic:

– Poison Pills – Updates the policy to increase transparency of the factors considered in the case-by-case evaluation of poison pills.

Vote case-by-case on nominees if the board adopts an initial short-term pill (with a term of one year or less) without shareholder approval, taking into consideration:
▪ The trigger threshold and other terms of the pill;
▪ The disclosed rationale for the adoption;
▪ The context in which the pill was adopted, (e.g., factors such as the company’s size and stage of development, sudden changes in its market capitalization, and extraordinary industry-wide or macroeconomic events);
▪ A commitment to put any renewal to a shareholder vote;
▪ The company’s overall track record on corporate governance and responsiveness to shareholders; and
▪ Other factors as relevant.

– SPAC Extensions – Updates the policy to codify current policy application to recommend support for extension requests of up to one year from the original termination date.

Generally support requests to extend the termination date by up to one year from the SPAC’s original termination date (inclusive of any built-in extension options, and accounting for prior extension requests).

Other factors that may be considered include: any added incentives, business combination status, other amendment terms, and, if applicable, use of money in the trust fund to pay excise taxes on redeemed shares.

– Natural Capital – Terminology update to replace the reference to “General Environmental Proposals” by the updated reference of “Natural Capital-Related and/or Community Impact Assessment Proposals”.

Vote case-by-case on requests for reports on policies and/or the potential (community) social and/or environmental impact of company operations, considering where relevant:
▪ Alignment of current disclosure of applicable policies, metrics, risk assessment report(s) and risk management procedures with relevant, broadly accepted reporting frameworks;
▪ The impact of regulatory non-compliance, litigation, remediation, or reputational loss that may be associated with failure to manage the company’s operations in question, including the management of relevant community and stakeholder relations;
▪ The nature, purpose, and scope of the company’s operations in the specific region(s);
▪ The degree to which company policies and procedures are consistent with industry norms; and
▪ The scope of the resolution.

Also, be sure to check out yesterday’s blog on CompensationStandards.com discussing updates to ISS FAQs on executive compensation policies.

Mark your calendars now for our upcoming webcast scheduled for Wednesday, January 22, 2025 at 2 pm Eastern, “ISS Policy Updates and Key Issues for 2025.”  Marc Goldstein, ISS’s Head of US Research, will share insights with the corporate community. Davis Polk’s Ning Chiu and Jasper Street Partners’ Rob Main will join Marc to provide color commentary.

– Meredith Ervine