Today ISS launched a brief comment period (through November 11) on proposed changes to its benchmark policy for the 2026 proxy season. The proposed substantive changes impacting the US encompass the following:
United States
· Capital structures – unequal voting rights — Capital structures with unequal voting rights to be considered problematic regardless of whether shares with superior voting rights are classified as “common” or “preferred.”
· Non-employee director (NED) compensation practices – problematic high NED pay — Expands existing policy addressing problematic high NED pay practices, allowing for adverse vote recommendations in the first year of occurrence or when a pattern emerges across non-consecutive years.
· Executive compensation – company responsiveness — In light of recent SEC guidance on Schedule 13G (passive) versus Schedule 13D (active) filing status for institutional investors, which may create legal uncertainties when companies seek to obtain feedback from shareholders, this proposed policy change allows more flexibility for companies to demonstrate responsiveness to low say-on-pay support.
· Executive compensation – 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, compared to the current three years, while maintaining an assessment of pay quantum over the short term.
· Executive compensation – time-based equity awards with long-term time horizon — Proposed policy update reflects the importance of a longer-term time horizon for time-based equity awards and represents a more flexible approach in evaluating equity pay mix in the pay-for-performance qualitative review.
· Executive compensation – enhancements to equity plan scorecard — Adds a new scored 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.
· US Environmental and Social-related (E&S) shareholder proposals — Updates US policy on four E&S-related shareholder proposal topics to reflect fully case-by-case assessments of each situation.
· Global – shareholder proposals — Updates to all market and regional policies globally to reinforce a consistent case-by-case approach, and to provide a baseline for shareholder proposal topics not explicitly covered in some market and regional policies.
As previously reported, the Society submitted a comment letter on the potential policy changes but did not complete the online survey due largely to the limitations imposed by, and concerns about, the prepopulated, multiple choice answer selections.