Last week, ISS released its updated proxy voting guidelines for 2026. Here’s a 19-page summary – and a 35-page summary of the changes for the Americas. There is a total of 10 changes applicable in the US, eight of which are US-specific and two of which are global. There are two separate E&S shareholder proposal policy changes – one for the US and one that applies globally – that substantially overlap, so the recap below combines those two into one section:
- Problematic capital structure involving unequal voting rights: Eliminates inconsistencies in the treatment of capital structures with unequal voting rights by considering them problematic regardless of whether superior voting shares are classified as “common” or “preferred.”
- Long-term alignment in pay-for-performance evaluation: Updates pay-for-performance quantitative screens to assess pay-for-performance alignment over a longer-term time horizon, considering a five-year period, above the current three years, while also maintaining an assessment of pay quantum over the short term.
- Time-based equity awards with long-term time horizon: Updated policy reflects the importance of longer-term time horizons for time-based equity awards and provides for a more flexible approach in evaluating the equity pay mix in pay-for-performance qualitative reviews.
- Compensation committee responsiveness: Streamlines policy language by removing duplicated factors for evaluating responsiveness to shareholder input on executive pay – and the section now cross-references the factors listed under the “Board of Directors” policy.
- Company responsiveness to low say-on-pay support: Expands flexibility for companies to demonstrate responsiveness to low say-on-pay support, in light of recent SEC guidance on 13G vs. 13D filing status that may limit shareholder engagement.
- High non-employee director pay: Expands existing policy that addresses high non-employee director pay practices, allowing for adverse recommendations in the first year of occurrence if considered highly problematic or when a pattern emerges across non-consecutive years.
- Enhancements to Equity Plan Scorecard: Adds a new scoring factor under the Plan Features pillar to assess whether plans that include non-employee directors disclose cash-denominated award limits – and introduces a new negative overriding factor for equity plans found to be lacking sufficient positive features under the Plan Features pillar despite an overall passing score.
- E&S-related shareholder proposals: Adopts a fully case-by-case approach for shareholder proposals on diversity, political contributions, human rights, and climate change. Globally, it clarifies the use of a consistent case-by-case framework and reinforces the use of a common set of evaluation factors and specifically notes consideration of whether a proposal may substantively affect shareholder rights or interests
- Highly paid non-employee directors: Refines classification of directors receiving compensation comparable to top executives. Such individuals will now be classified as non-independent non-executive directors unless there is clear evidence of managerial authority.
Authored by
Broc Romanek