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ISS is proposing changes to its U.S. policies on problematic governance structures, independent board chair proposals and share buybacks. Here’s a summary of potential implications.
ISS has released proposed voting policy changes for the 2020 proxy season. In contrast to previous years, the draft policy updates applicable to U.S. companies do not address compensation-related policies nor certain topics included in the 2019 ISS policy survey circulated in July — specifically director overboarding, gender diversity and climate risks. There was also no mention of the potential use of Economic Value Added (EVA) metrics as the pay for performance secondary quantitative filter for companies with elevated scoring or borderline “cautionary low” or “medium” scoring to replace Generally Accepted Accounting Principles (GAAP) financial metrics. However, these topics may be included when the final policy update is released in the first half of November. The final policy updates will also include previously announced changes regarding board gender diversity and excessive non-employee director compensation.
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