As previously reported, following the SEC’s shift in approach to Rule 14a-8 no-action determinations, ISS issued U.S. Procedures & Policies (Non-Compensation) FAQ 91, warning that companies that fail to provide a "clear and compelling" rationale for excluding proposals could face heightened scrutiny and, in some cases, adverse voting recommendations against individual directors, certain committee members, or the entire board.
While, as of May, ISS has made only one such recommendation this season—and, according to this Bloomberg Law article, la ter revised it to "cautionary support" after the company provided supplemental disclosure—investors are increasingly holding governance committee members accountable for proposal exclusions. According to a recent Responsible Investor report, investors including CalPERS, Schroders, and the New York City and New York State pension funds have opposed or considered opposing (predominantly) governance committee members at companies that exclude proposals without what they view as adequate justification.
This post first appeared in the weekly Society Alert!