ROCKVILLE, Md (April 8, 2020) – Institutional Shareholder Services Inc. (ISS), the leading provider of end-to-end corporate governance and responsible investment solutions to the global financial community, today issued guidance on its policy application in light of the global impacts of the Covid-19 pandemic. The guidance addresses how ISS plans to apply ISS’ benchmark proxy voting policies over the coming months as annual shareholder meeting season gets underway in many markets. The guidance is intended to be read in combination with the relevant market and region-specific ISS Benchmark and Specialty Voting Guidelines and related FAQs, which can be found on the ISS website here.
By way of background, at the macro level, the four pillars of ISS’ voting policies — the global principles of Accountability, Stewardship, Independence and Transparency — provide a strong foundation upon which investors can support and work with companies to help protect in the short-term and then restore in the longer-term the strength and vitality of public companies and global markets. Based on these four global principles, the various market-specific ISS policies already give our research teams the ability to exercise appropriate discretion and use case-by-case analysis in response to company-specific, sector-specific and market-specific facts and circumstances. Over the past three decades, ISS has regularly exercised such case-by-case discretion to deal with many company-specific situations, market disruptions, recessions, and natural disasters in a thoughtful and considerate way.
“We at ISS understand and recognize the many challenges and uncertainties being faced by investors and companies, and that the current global situation requires understanding and flexibility in many ways. So even with the discretion and broad flexibility built into our policies and the manner in which we apply them, we feel that it is appropriate in this time of uncertainty to provide stakeholders with some specific guidance on a number of voting policy issues that are likely to be directly affected over the coming months by the pandemic and the global response to it.” said Georgina Marshall, Global Head of Research and Chair of the ISS Global Policy Board.
The guidance note provides direction on a number of annual meeting issues including postponements and virtual-only meetings. It also covers ISS’ approach to defensive measures and board considerations, including the adoption of poison pills and director attendance, respectively, against the backdrop of the pandemic’s impact on capital markets. It further addresses compensation issues such as changes in metrics and shifts in goals or targets and option repricing. Finally, capital structure and payouts, dividends, share repurchases, and capital raisings are also covered in the guidance.
As additional issues and impacts are created by the pandemic and associated regulatory developments, ISS will update its guidance and provide new information as needed throughout the remainder of the 2020 main annual meeting seasons.
Looking forward beyond the current short-term crisis, in advance of the 2021 main proxy seasons and as part of our regular policy development process, ISS will reach out to investors and other constituencies via our annual surveys, roundtables and other engagements to address whether further near- or long-term adjustments to our policies will be appropriate for 2021.