ISS Releases Proposed Updates to Proxy Voting Guidelines for Comment

The ISS recently released its 2013 proposed updates to their proxy voting guidelines. Five proposals would affect US based companies, of which one was directed at shareholder proposals and four focused on executive compensation, as follows:
• ISS would recommend a vote AGAINST or WITHHOLD from the entire board if the board failed to act on a shareholder proposal that received the support of a majority of shares cast in the previous year. Currently, ISS would make such a recommendation only if the proposal received the support of either (i) a majority of the outstanding shares or (ii) a majority of the votes cast in the last year and one of the two previous years.
• A revision in the methodology for selecting peer groups for executive compensation comparisons in say-on-pay proposals.
• The use of a comparison of realizable pay to grant date pay as part of the evaluation of pay-for-performance alignment.
• Adding the pledging of company shares by directors and officers as a factor that may lead to negative recommendations under the existing problematic pay practices evaluation.
• A change on say-on-golden parachute proposals to (i) include existing change-in-control arrangements maintained with named executive officers rather than focusing only on new or extended arrangements and (ii) to place further scrutiny on multiple legacy problematic features (e.g. single trigger equity, tax gross –ups, etc.) in change in control agreements.
The full proposals are available at The comment period expires on October 31, 2012.

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