Last week, ISS launched its latest annual ‘Global Benchmark Policy Survey’ – responses are due by August 22nd. Here are the primary questions (I didn’t include the multiple-choice answers):
- Multi-Class Capital Structures
The current ISS policy on multi-class capital structures generally looks at whether a company has two or more classes of common (or ordinary) shares with disparate voting rights or different voting entitlements (e.g. the right to vote on different sets of directors).
Shares other than common shares do not generally fall under the policy. However, some such non-common shares may have voting rights that are superior to those of common shares, and such shares can be used to confer control or other extraordinary rights on a founder or strategic investor that is disproportionate to the level of their capital commitment.
For purposes of ISS benchmark policy on multi-class capital structures, does your organization consider that such “non-common” shares with more than one vote per share (other than in cases where these shares vote on an “as-converted” basis) should generally be considered the same way as common shares that have more than one vote per share? - Burden of Proof
The vast majority of shareholder proposals at US companies are precatory (non-binding), so that even if a proposal receives majority support, it remains up to the board to determine exactly how (or even whether) to implement that proposal. Shareholder proponents – but not companies responding to a shareholder proposal – are also subject to a strict 500-word limit in the proxy statement, which can in some cases make it difficult for proponents to present detailed arguments in support of their shareholder proposals; and proposals must usually be submitted to the company months in advance, making it difficult for statements to reflect recent developments.
For these reasons, in the past many investors have not necessarily expected all shareholder proponents to make a detailed, company-specific case for their proposal, especially when based on widely understood principles or familiar topics.
Under what circumstances does your organization believe that proponents should make detailed and company-specific cases for a shareholder proposal?
3. Independent Board Chair
Advisory shareholder proposals seeking an independent board chair structure are among the most common shareholder proposals on governance topics at US companies. However, in the absence of company-specific factors suggesting that the board is not exercising sufficient oversight over the management team, these proposals seldom receive majority support.
Which of the following best describes your organization’s view of such independent board chair proposals?
4. Written Consent
The right to act by written consent can allow shareholders to take action on time-sensitive matters in between annual meetings, usually without the restrictions on timing and subject matter that tend to apply to special meetings called by shareholders. Yet in practice, institutional investors rarely if ever seek to initiate action by written consent, and the powers are primarily used by controlling shareholders at controlled companies, where bypassing a shareholder meeting and vote denies minority shareholders the opportunity to question or provide input about the subject of the written consent, or to cast a protest vote against it, if they wish to.
Which of the following options best expresses your organization’s view of the right to take action by written consent at companies that are NOT controlled?
5. Director Overboarding
There have been increasing regulatory requirements and other responsibilities on directors, and increasing needs to keep up to date with multiple sources of risks, all of which have contributed to greater expectations of directors with respect to time commitments and board refreshment. ISS last elicited views on director overboarding in its 2019 policy survey. Since that time, some institutional investors have further tightened their own policies on the maximum number of public board mandates they consider acceptable for directors before considering them overboarded.
Market standards vary between different countries globally regarding the maximum number of non-executive positions, or the maximum number of additional public company roles that should be held to avoid risks of overboarding. In the context of evolving expectations and standards, ISS is re-visiting the topic of overboarding this year to elicit further views.
Where local market best practice codes and/or regulations provide upper limits for board mandates, ISS policies globally generally already reflect these limits.
With respect to non-executive directors, where no relevant local market limits exist, which of the following best represents your organization’s view of appropriate limits for a non-executive director to avoid risks of overboarding?
6. Non-Executive Director Pay
Since 2018, ISS US research has identified and disclosed companies with outlier Non-Executive (NED) director pay, as compared to similar US index and industry peers. To identify NED pay outliers, ISS reviews NED pay levels relative to other US companies within the same index and 4-digit GICS industry group (typically excluding new directors or directors who received recent, well-explained special grants or payments). If an outlier is identified, ISS also reviews the structure of the NED compensation to identify any problematic NED pay practices (e.g., performance equity awards, excessive perquisites, or retirement programs).?
Currently, under ISS US Benchmark voting policy, ISS provides cautionary language in proxy analyses and reports if high (outlier) NED pay levels and/or other problematic NED pay practices are identified at a company and will generally make adverse vote recommendations on members of the committee that approves NED pay after two consecutive years if a reasonable rationale is not disclosed.
There is a concern, however, that waiting for two consecutive years of problematic pay practices to issue adverse ISS vote recommendations could result in investors missing any cases of single or non-consecutive years of problematic NED pay practices at a company. ISS is considering updating its policy in this regard and seeks current views on outlier or problematic non-executive director pay.
Are there specific problematic practices in NED pay that you consider would usually warrant immediate concerns for investors and potentially adverse ISS vote recommendations, even if only in one year?
7. Equity time-based vs. performance-based long-term executive incentives
Some investors, companies and other market participants have expressed concerns about the use of performance-based equity programs in executive pay, most notably in the US. Among the concerns are that such programs can be overly complex, costly, and sometimes non-rigorous.
Certain markets, for example in the UK and more recently in some markets in Continental Europe, have also started to see a trend towards more adoption by some companies of purely time-based equity incentives, either as a minority proportion in a mix with performance-based awards, or as the main or primary part of a company’s long-term incentive awards.
Some investors have advocated for reducing the emphasis on (or even replacing entirely) performance-based equity awards in favor of purely time-vesting equity awards, especially those that have an especially long horizon through extended vesting schedules and/or meaningful stock retention requirements. Other investors continue to believe that performance-based equity programs can provide meaningful insight into the board’s performance expectations and create a performance incentive for executives that can be better aligned with long-term shareholder interests, company value and strategy than purely time-based equity awards.
In this context, does your organization consider time-based equity structure acceptable for part or all of executive long-term incentive awards?
8. AI Governance and Risk Management
Artificial Intelligence (AI) is rapidly transforming the corporate landscape, presenting both significant opportunities and complex new risks. As this technology evolves, establishing robust governance and risk management practices is becoming increasingly crucial for many companies. In the 2025 proxy season, we observed increasing shareholder interest in how many companies are both addressing these challenges and seizing the potential of AI.
Given the rapidly evolving AI technological, regulatory, and best-practice landscape, do you think expecting a company significantly using AI to use a global framework (for example, OECD AI Principles, NIST AI RMF, etc.) for assessing AI related risks is appropriate at this time?
9. Board Diversity and DEI
How investors and companies approach diversity matters at U.S. companies has shifted recently, driven by factors including U.S. legal and regulatory developments and changing sentiments.
In February 2025, ISS halted the application of its U.S. board diversity-based voting guidelines for ISS’ proprietary U.S. Benchmark and Specialty policies. Specifically, for U.S. companies and shareholder meeting reports published on or after February 25, consideration of the gender, and racial and/or ethnic diversity of a company’s board when making vote recommendations under those policies on the election or re-election of directors at U.S. companies was suspended.
The relevant ISS research reports for U.S companies continued to include data on board diversity factors (where available) for investor subscribers interested in that data. We understand that many investors remain interested in assessing board diversity and potentially in corporate DEI program-related disclosures. Additionally, shareholder proposals related to DEI topics have evolved over recent years.
ISS would like to get further insights into how institutional investors, companies (particularly U.S. companies), and other stakeholders are approaching these topics for U.S. companies.
Authored by
Broc Romanek