ISS announced the results of its annual Governance Principles Survey (see our prior reports here and here), which reportedly garnered 669 responses (including 469 corporates and 107 institutional investors) from 638 organizations - an 11% increase from last year's survey. More than 400 of the respondent organizations were US-based.
Key takeaways include:
- Auditors. Investor respondents most often cited regulatory fines or other penalties imposed on the auditor for weaknesses or errors in audit practices as the audit-related factor (other than fees paid to the auditor for non-audit services) they consider in evaluating the external auditor's independence & performance. Non-investors most frequently cited consideration of the identity of the audit partner and any links to the company or its management.
- Audit Committees. Investor and non-investor respondents most commonly cited the skills & experience of audit committee members (including number of financial experts, if applicable) as the information that shareholders should consider in evaluating a company's audit committee. See the Society's comment letter on this survey topic here.
- Board Gender Diversity. More than 80% of investors (up from 69% last year) and more than 60% of non-investors (up from 54% last year) consider it to be problematic if there are no female directors on a public company board - with the most common "Yes" response expressing a belief that the absence of at least one female signifies problems in the board recruitment process (45% investors / 33% non-investors), followed by: "Yes, but concerns may be mitigated if there is a disclosed policy/approach that describes the considerations taken into account by the board or the nominating committee to increase gender diversity on the board" (37% investors / 30% non-investors).
The Annual Policy Survey is part of ISS's annual policy development process. Comments on the Americas Policy Application Survey (second part) are due Friday. The Society plans to comment. This post first appeared in this week's Society Alert!