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ISS Launches Annual Global Policy Survey

by   |   July 30, 2018

ISS has launched its annual global policy survey which often foreshadows changes to its voting guidelines. As in 2017, this year’s survey is being conducted in two parts, starting with a high-level ISS Governance Principles Survey covering a small number of global high-profile governance topics. The second part of the survey is the ISS Policy Application Survey, a more expansive and detailed set of questions, broken down by region.

Highlights of the Governance Principles Survey include:

Auditor Ratification.  The survey notes in a number of developed markets around the world, investors and regulatory bodies have started to focus on additional indicators of audit quality and auditor independence. Auditor ratification, appointment, disclosure and rotation requirements differ widely by market, but nonetheless ISS would like to assess investor and other market participants’ views in this area. The survey solicits views on what other audit-related factors could be considered in evaluation of the independence and performance of the external auditor.

Director Accountability and Track Records.  The survey notes some institutional investors are interested in tracking individual directors who have been involved in controversies with respect to one or more of their past or present directorships, particularly where concerns have been raised about shortfalls in oversight. Where identified, such concerns about oversight shortfalls may trigger negative recommendations under current ISS policy for directors who held boardroom leadership roles or served on committees with direct responsibility for overseeing the activities that triggered the controversy.  The survey solicits views regarding whether a negative ISS vote recommendation regarding a director oversight failure resulting in a negative vote recommendation should be noted in the proxy research of other companies where that director serves on the board.

Gender Diversity on Boards.  The survey notes that last year ISS asked respondents if they considered it problematic if there are zero female directors on a public company board.  ISS is revisiting the same questions that were asked in last year’s policy survey with respect to gender diversity on boards to identify changes, if any, in investor and non-investor views on this topic.

One-Share, One-Vote Principle.  Some companies have accessed public capital markets with significant differential voting rights. ISS is considering whether to provide in the future an adjusted analysis of shareholder vote results to show what the results would have been if all votes had been counted under the one-share, one-vote principle.