TheCorporateCounsel.net

This is a biggie. Yesterday, ISS announced that it would halt consideration of gender and racial and/or ethnic diversity of a company’s board when making vote recommendations on director elections. The change applies to the proxy advisor’s Benchmark policies – as well as all of its Specialty policies – for U.S. companies. Here’s an excerpt from the press release:

ISS will indefinitely halt consideration of certain diversity factors in making vote recommendations with respect to directors at U.S. companies under its proprietary Benchmark and Specialty policies. Specifically and for shareholder meeting reports published on or after February 25th, ISS will no longer consider the gender and racial and/or ethnic diversity of a company’s board when making vote recommendations with respect to the election or re-election of directors at U.S. companies under its Benchmark and Specialty policies.

Assessments and vote recommendations on directors of U.S. companies will continue to be evaluated under the other considerations outlined in the Benchmark and Specialty voting guidelines (accessible here) including independence, accountability and responsiveness.

It’s rare for ISS to update its voting policies after the annual updates have been released. As I noted earlier this week and as Dave shared last week, companies have been caught between a rock and a hard place on diversity-related disclosures in their Form 10-K and proxy statement. The pendulum is swinging quickly away from “box checking” after last month’s Executive Orders and last week’s AG memo. Two big asset managers had already shifted their policy language, and now ISS is following suit.

– Liz Dunshee