Earlier this month ISS updated its 2011 corporate governance policies, which apply to shareholder meetings held in February or later. Key updates include:

  • Say on Pay Votes. ISS will recommend annual say on pay votes, but it is unclear what action ISS will take if shareholders approve biennial or triennial votes. Companies that support triennial votes often argue that approval every three years comports with a long-term approach to compensation.
  • Equity Burn Rate. The cap designed to limit the dilutive effect of compensating employees with equity cannot change more than 2% from the prior year’s cap.
  • Problem Pay. ISS could recommend against directors for pay practices that include repricing underwater stock options without shareholder approval, "excessive" (not defined) perks or gross-ups, and change-in-control payments that exceed three times base salary and average/target/most recent bonus or are paid without involuntary job loss.
  • Absent Directors. ISS will recommend against director nominees who attend less than 75% of board and committee meetings without an acceptable reason (medical issues, family emergencies).