Davis Polk New ISS Policy Update: Tougher Standards for 2011

On Friday, November 19, ISS Corporate Governance Services released its U.S. Corporate Governance Policy Updates on voting recommendations for meetings occurring on or after February 1, 2011. The updates reflect a number of new or changed policies, most of which slant in the same direction: tighter shareholder-level oversight of executive compensation, and a willingness, perhaps even an eagerness, to use the say-on-pay tools mandated by the Dodd-Frank Act as a lever to effect change. Significant updates include:

 Recommending that companies seek say-on-pay annually, rather than every two or three years;
 No longer allowing companies to make future commitments to modify certain pay practices in order to reverse unfavorable recommendations;
 Revising the list of “egregious” pay practices that, by themselves, are sufficiently problematic to warrant negative compensation-related recommendations, including negative say-on-pay or compensation committee recommendations;
 Amending the calculation of allowable increases on common and preferred stock authorizations; and
 Limiting net operating loss protective amendments and pills to three-year terms.

Davis Polk Memo with more details: http://bit.ly/tLaCnn

The Board Director Training Institute (BDTI) is a "public interest" nonprofit in Japan dedicated to training about directorship, corporate governance, and related management techniques. It is certified by the Japanese government to conduct these activities as a regulated nonprofit. Read a summary about BDTI here, and see a menu of its services for both corporations and investors here.

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