The updated ISS guidelines are effective for meetings on or after February 1, 2018.

On November 16, 2017, Institutional Shareholder Services (ISS) published its 2018 Americas Proxy Voting Guidelines Updates. The following is a high-level summary of the updates relating to US public companies.

Disclosure of Shareholder Engagement. In considering whether to recommend against compensation committee members of companies whose say-on-pay proposals received less than 70% of votes cast, ISS will consider several factors regarding shareholder engagement efforts, including the timing and frequency of engagements with shareholders, whether independent directors participated, and the company’s proxy disclosure of specific concerns voiced by dissenting shareholders that led to the say-on-pay opposition.

Board Diversity. In terms of considering board composition under its “Fundamental Principles,” ISS’s policies now provide that boards should be sufficiently diverse to ensure consideration of a wide range of perspectives. ISS will highlight boards with no gender diversity; however, no adverse vote recommendation will be made solely due to a lack of gender diversity.

Shareholder Rights Plans. Short-term rights plans (one year or less) will continue to be assessed on a case-by-case basis, but ISS’s analysis will focus primarily on the company’s rationale for the unilateral adoption of such plans and other factors, including whether there is a commitment to put any renewal to a shareholder vote. ISS will now also recommend voting against all directors of companies with “long-term” (greater than one year) unilaterally adopted shareholder rights plans at every annual meeting, regardless of whether the board is annually elected.

Climate Change Shareholder Proposals. ISS has further revised its voting recommendations on climate change shareholder proposals. ISS will generally vote for proposals calling for company disclosure of information on the financial, physical, or regulatory risks it faces related to climate change, or on how the company identifies, measures, and manages such risks.