Current Posts

November 24, 2015 | Ning Chiu

Beginning today, ISS is accepting updates to companies’ self-selected compensation benchmarking peers, if those companies have annual meetings scheduled between February 1, 2016 and September 15, 2016. Submissions are due by 8:00 p.m. EST on Friday, December 11, 2015.

Companies that have made changes to their peer group since the 2015 proxy statement should be aware that ISS uses the disclosed peers as an input into its own peer group selection process. No submissions are needed if there were not any changes to the information in the 2015 proxy statement.

The process requires filling out an online form, as explained here, but also confirming the submission by sending ISS an electronic copy on company letterhead along with your name, email address and company name, to ISS provides ... Read More

November 23, 2015 | Ning Chiu

Please see our client alert on the proxy advisory firms’ policy updates.

November 20, 2015 | Ning Chiu

ISS has issued its updates to its proxy voting guidelines effective for meetings on or after February 1, 2016. 

The policy update is quite brief and does not address many of the questions asked in the survey period during the ISS consultation period.  Proxy access is only discussed in this update in the context of an actual contested election, while the survey questions had targeted specific bylaw terms.

For its overboarding policy, in 2016, ISS will note in its reports if a director is serving on more than five (5) public company boards.  Starting in February of 2017, ISS will recommend against directors who sit on more than five (5) public company boards.  ISS did not change its policy for CEOs of public companies who sit on other boards.  The policy remains that CEOs are not considered overboarded by serving on the boards of more than two public... Read More

November 19, 2015 | Ning Chiu

In a speech focused on executive compensation disclosure, Keith Higgins raised a number of possible rule changes that he believes could make executive compensation more useful to investors.  In light of the fact that the Commission recently issued a concept release about the audit committee report, and the audit committee report is the model for the compensation committee report, he questioned whether the compensation committee report should be revised to require more insight into the information the committee used and the factors it considered in evaluating executive compensation. 

Some might be inclined to point out that information about the thinking behind the decisions made by compensation committees is already available in CD&As, another area he covers in his speech.  Item 402 contains a list of 22 items to be discussed, 15 of which were... Read More

November 17, 2015 | Ning Chiu

CalPERS is considering changing its proxy voting policies to account for issues of director tenure.  New language in its governance principles could state that director independence may be “compromised” at 10 years of service.  If implicated, companies are expected to “carry out rigorous evaluations to either classify the director as non-independent or provide detailed annual explanation why the director can continue to be classified as independent.”  In addition, boards should fully evaluate their succession planning process surrounding director refreshment to maintain the necessary mix of skills, diversity and experience.   

CalPERS’ presentation has several interesting data points around the topic of tenure.  Over the last 10 years, the percentage of boards in the S&P 500 with a mandatory retirement age of 70 has decreased from 51% to 11%, while... Read More

November 16, 2015 | Ning Chiu

Glass Lewis updated its voting guidelines that apply to the 2016 proxy season. There are limited revisions from the prior policies, which include: 

Overboarding.  Beginning in 2017, Glass Lewis will recommend voting against a director (a) who is the executive officer of a public company and sits on more than two public company boards or (b) who serves on more than five public company boards. In 2016, Glass Lewis will note a concern for these directors, thus providing a transition period before putting the full policy into effect. 

Exclusive forum provisions (for IPO companies only).  Instead of recommending against the chairman of the nominating and governance committee, for IPO companies that have adopted exclusive forum Glass Lewis will evaluate the provision alongside other bylaw terms, such as supermajority vote... Read More

November 12, 2015 | Ning Chiu

In preparing for the upcoming proxy season, it is helpful to examine the information that investors provide about their most recent voting and engagement efforts.  We start with Vanguard.  

In the 12 months ended June 30 of this year, Vanguard funds voted at more than 13,000 meetings covering 120,000 items.  The funds supported 93% of director nominees, voting against candidates for reasons related to attendance, independence or committee actions.  Similarly, Vanguard supported 95% of say-on-pay proposals and 88% of equity compensation plans, but did vote against nearly 350 compensation committee members. 

On shareholder proposals, Vanguard tended to vote in favor of certain types of governance proposals, such as declassifying boards, while generally abstaining on environmental or social matters.  Many believe that Vanguard always prefer proxy... Read More

November 9, 2015 | Ning Chiu

A global trade association of 64 stock exchanges, the World Federation of Exchanges (WFG), has recommended that its member exchanges voluntarily incorporate a set of 34 ESG factors into listed company disclosure standards.

The WFG, which includes the NYSE and NASDAQ, highlights 34 key performance indicators that the group believes demonstrate the best sustainability practices, such as energy consumption, water management, CEO pay ratio, gender diversity, human rights, child and forced labor, temporary worker rate, corruption and anti-bribery, tax transparency, supplier code of conduct and codes of ethics. The purpose and methodology is explained here and the full list of indicators is ... Read More

November 3, 2015 | Ning Chiu

Both Nasdaq and the NYSE issued recent reminders to companies about key announcements that may constitute material news.

Changes to dates.  Changes to a company’s earnings release, dividend record and dividend payment dates may be material information that should be promptly disclosed publicly, Nasdaq noted recently in an issuer alert.  This includes any changes to these dates, such as when earnings are announced.  Companies must pre-notify Nasdaq MarketWatch about material information if the public release is made between 7am to 8pm ET.

The NYSE also sent guidance about the importance of making a prior public announcement of the scheduling of a company’s earnings release or any change in that schedule... Read More

November 2, 2015 | Ning Chiu

ISS has launched its annual data verification period starting today, November 2nd.  From now until 8pm EST on November 13, companies can review and confirm the data used by ISS for QuickScore and in formulating its research reports that investors obtain to make voting decisions.  

QuickScore covers US companies in the S&P 500 and Russell 3000.  Companies that do not have a login already can request one at the email address listed here.

For screening purposes, and not for scoring, QuickScore will now track whether companies permit proxy access, including the following requirements:  (a) the percentage of share holding; (b) the number of years of continuous ownership; (c) the number of shareholders allowed to form a group; and (d) the number or percentage of board seats for proxy access nominations. 

Companies should take the... Read More