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