ISS has released its 2021 proxy voting guidelines, which are effective for meetings on or after February 1st. As my colleague John blogged on TheCorporateCounsel.net, the biggest changes for US companies relate to board diversity and exclusive forum bylaws. As far as things to watch out for on the compensation front, the policies now explicitly say that directors whose pay is comparable to that of the company’s NEOs will not be considered independent. Here’s ISS’s explanation of that change:
Currently ISS looks at the pay of directors, and in some cases, where the pay is considerable and on par with NEO pay for multiple years, the director has been classified as non-independent under “Other material relationships with the company”. To better ensure data capture and categorization of material relationships, this factor is being made explicit.
In addition, the policies clarify ISS’s position on shareholder proposals for pay gap disclosure — saying that they’ll consider local laws that restrict categorizing employees or impose different definitions of ethnic and/or racial minorities in making their recommendations. See Mike Melbinger’s blog for more detail. And don’t forget to tune in for our webcast this Thursday, “Pay Equity: What Compensation Committees Need to Know” — to hear from Mintz’s Anne Bruno, BlackRock’s Tanya Levy-Odom, Equity Methods’ Jash Schaeffer and Impax Asset Management’s Heather Smith.
-Liz Dunshee, CompensationStandards.com November 16, 2020