In a world where the only constant is change, it could have been surprising to see that Glass Lewis made no changes to its global voting policies for next year – except that Glass Lewis had announced last month – when it opened comment on the four perspectives that will underpin its research beginning next year – that there would be minimal changes to its 2027 benchmark policies. And “minimal” it is – none.
Note that a few weeks ago, I blogged about a dozen things we learned from ISS’ survey results – which revealed a number of key differences between investor and corporate/non-investor respondents on a number of issues, including on director tenure, semiannual reporting, discretionary bonuses and climate disclosure.
Now, ISS has proposed changes to its benchmark voting policies – and the proposed changes are modest. Comments are due by November 4th. Here’s a summary of the proposed changes that apply in the US:
- Bylaw Amendments – Management Proposals to Ratify Existing Charter or Bylaw Provisions: Clarifies the policy for situations where a management proposal seeking ratification of an existing governance practice or provision addresses the same topic as a shareholder proposal and is used to exclude a shareholder proposal from the meeting ballot.
- Executive Compensation – Option Valuation Model: Removes references to ISS’ binomial option pricing model, replacing it with Black-Scholes as the methodology to be used for valuations of options to calculate Shareholder Value Transfer (SVT) from 2027.
- Climate Board Accountability: A global update to the Climate Board Accountability policy for ISS benchmark policies worldwide, codifying a fully case-by-case approach for all markets.
- Risk Oversight – Cybersecurity and AI: All ISS benchmark policies on director elections globally contain a provision where – under extraordinary circumstances – material failures of risk oversight may be addressed as governance failures or egregious actions through recommendations on director elections. This global change adds cybersecurity and artificial intelligence-related risks to the named examples of possible factors in assessing material failures of risk oversight.
Authored by
Broc Romanek