On November 20, 2015, Institutional Shareholder Services (ISS) announced updates to its benchmark proxy voting policies for the Americas, Europe, Middle East, and Africa (EMEA), and Asia-Pacific regions. The benchmark policy changes in the US cover:

The policy updates are effective for analyses of all public companies with shareholder meetings on or after February 1, 2016.

ISS is establishing separate methodologies to evaluate adoptions of:

ISS believes the bifurcation reflects the differing expectations that investors may have for the governance structures of a newly-public company versus a company that has been public for some time.

ISS generally recommends voting "against" or "withhold" for individual directors, committee members or the entire board (with the potential exception of new nominees) if the board amends the company's by-laws or charter without shareholder approval in a manner that materially diminishes shareholders' rights or that could adversely impact shareholders. ISS provides a list of factors to consider that remain unchanged for post-IPO companies.

Also for post-IPO companies, unless the adverse amendment is reversed or submitted to a binding shareholder vote, in subsequent years ISS will recommend voting case-by-case for director nominees. ISS generally recommends voting "against" directors (with the potential exception of new nominees) if the directors:

For pre-IPO or newly public companies, ISS will generally recommend voting "against" or "withhold" for individual directors, committee members or the entire board (with the potential exception of new nominees) if, prior to or in connection with the company's IPO, the company or the board adopts by-laws or charter provisions adverse to shareholders' rights, considering the following factors:

Unless the adverse provision is reversed or submitted to a vote of public shareholders, ISS will recommend voting case-by-case for director nominees in subsequent years.

Currently, ISS has limits of six directorships for most board members and three total board memberships (service on the home company board and two outside directorships) for sitting CEOs. Citing significant increases in average time commitment for board service, in 2016 ISS will change the limit to five for 2017.

ISS will generally recommend voting "against" or "withhold" for individual directors who:

Although all of a CEO's subsidiary boards will be counted as separate boards, ISS will not recommend a "withhold" vote from the CEO of a parent company board or any of the controlled subsidiaries of that parent, but may do so at subsidiaries that are less than 50 percent controlled and boards outside the parent/subsidiary relationships.

ISS provides an analytical framework for evaluating candidates nominated pursuant to proxy access. While ISS states that it is unlikely that many (or perhaps any) proxy access nominees will materialize in 2016, it is prudent to update the framework for evaluating candidates nominated via proxy access right.

Currently, ISS recommends voting case-by-case for the election of directors in contested elections, considering several factors. The policy update adds that in the case of candidates nominated through proxy access, ISS will recommend voting case-by-case considering any of the same factors that are applicable or additional factors which may be relevant, including those that are specific to:

Currently, insufficient disclosure regarding compensation arrangements for executives at an externally-managed issuer (EMI) is not considered a problematic pay practice under ISS policies. Typically EMI executives are compensated by the external manager, which is reimbursed by the EMI through a management fee.

According to ISS, many EMIs do not provide basic disclosure regarding executive compensation arrangements and payments between the external manager and the EMI's executives. When executive compensation information is disclosed, it is usually limited to the aggregate management fee paid by the EMI to its manager. ISS will add "Insufficient Executive Compensation Disclosure by Externally Managed Issuers (EMIs)" to the list of practices that may result in an adverse voting recommendation on executive compensation.

ISS will generally recommend voting "against" the say-on-pay proposal for EMIs, when insufficient compensation disclosure precludes a reasonable assessment of pay programs and practices applicable to the EMI's executives.

ISS currently recommends voting case-by case for shareholder proposals asking companies to adopt policies requiring senior executive officers to hold equity past retirement or for a significant period of time, taking several factors into account. There is also a separate policy covering proposals tied to a specific retention ratio.

The policy update clarifies the factors considered in the case-by-case analysis. It also broadens the policy to encompass equity retention proposals more generally, eliminating the need for a separate policy for specified retention ratios.

ISS will generally recommend voting case-by-case on shareholder proposals asking companies to adopt policies requiring senior executive officers to retain a portion of net shares acquired through compensation plans, taking the following factors into account:

ISS generally recommends voting "for" proposals seeking a report on a company's animal welfare standards with certain exceptions. The policy update broadens the language to include shareholder proposals requesting reports on the risks associated with the use of certain methods of animal housing and other animal welfare practices deemed inhumane in a company's supply chain.

This update adds factors to be considered when evaluating proposals requesting that a company report on its product pricing or access to medicine policies. The update reflects ISS' current practice by adding consideration of the potential for regulatory risks and the company's exposure to controversies, litigation, or fines.

This update clarifies the types of risks related to climate change that can impact a company's operations and investments. It also clarifies that capital expenditure strategy and stranded carbon asset resolutions are evaluated under the policy.