ISS releases updates to its 2019 proxy voting policies

Following our update of new voting policies from Glass Lewis in October, Institutional Shareholder Services Inc. (ISS), released updates to its 2019 benchmark proxy voting policies.  The updated policies will generally be applied for shareholder meetings on or after Feb. 1, 2019.

Changes for Canadian issuers include updated policies on gender diversity. The 2018 policy that effected S&P/TSX Composite index issuers has been expanded with some exceptions to a more widely group of TSX listed issuers. ISS will generally vote withhold for the Chair of the Nominating Committee, where there is no disclosure of a formal written gender diversity policy and no female directors on the board. ISS expectation is there will not be a boiler plate gender diversity policy and demonstrate a commitment to women on the board.

As announced last year, ISS will be implementing their new definition of overboarded directors. ISS will no longer take into consideration attendance in determining if a director is overboarded.

ISS can be expected to recommend withhold on director nominees that are non-CEO directors and serve on more than five public company boards. ISS will consider CEOs of public companies who serve on the boards of more than two public companies besides their own to be overboarded but will only withhold on their outside boards.

ISS will vote on E&S shareholder proposals on a case by case basis but has modified their policy to include an examination of whether there are significant controversies, fines, penalty or litigation associated with the company’s environmental or social practices.

During the 2019 annual meeting season, ISS research reports on companies in the U.S. and Canada will feature Economic Value Added (EVA) data as a supplement to GAAP-based measures. Moving into 2020, ISS will consider the inclusion of EVA-based measurements as part of its Financial Performance Assessment methodology.

Recommendations from proxy advisory firms such as ISS and Glass Lewis can have a significant impact on your voting results. Canadian public companies should consult with legal counsel and their proxy solicitor to determine the potential impact of a negative recommendation.