At the end of October we reported on the Institutional Shareholder Services’ (“ISS”) consultation on hybrid and virtual-only shareholders’ meetings. The ISS has now published its updated 2018 Proxy Voting Guidelines, effective for meetings on or after 1 February 2018.
As expected, the guidelines support hybrid shareholder meetings and reject vitual-only meetings. By way of a reminder, hybrid meetings refer to in-person, physical meetings in which shareholders are permitted to participate online. Virtual-only meetings refer to meetings where there is no physical meeting and participation is exclusively through online technology.
Other updates include the following:
Overboarding: For chairmen, a negative recommendation would first be applied towards non-executive positions held but the chair position would be targeted where the chairman is being elected as chairman for the first time or holds three or more chair positions or where the chairman holds an outside executive position.
Audit and Remuneration Committee Composition: The guidelines reiterate the UK Corporate Governance Code which requires that the audit and remuneration committees should comprise only independent directors.
Threshold Vesting Levels for Long-Term Incentive Plans: The guidance states that threshold vesting should generally be no higher than 25 percent. However, as much as 25 percent may be considered inappropriate if LTIP grants represent large multiples of salary. When analysing LTIP award vesting levels, other issues will be taken into account, such as how challenging the threshold targets are, the positioning of salaries and remuneration levels in general.
Share Issuances without Pre-emption Rights: The guidelines have been amended to specifically refer to a cash-box structure as being an abuse of the authority to disapply pre-emption rights approved at the previous AGM.