Insight
On November 12, 2020, Institutional Shareholder Services (ISS) released its 2021 proxy voting guidelines. The major changes are as follows:
- Gender Diversity: ISS will continue to recommend voting against or withholding votes from governance committee chairs at companies with no women directors; however, it is eliminating most of the mitigating factors that previously led to exceptions to this policy.
- Racial Diversity: In 2021, ISS will flag companies that have no “apparent” racially or ethnically diverse members. In 2022, however, it will recommend voting against or withholding votes from governance committee chairs at those companies.
- Board Refreshment: ISS will recommend votes against mandatory retirements based on age and will consider director term or tenure limitations on a case-by-case basis.
- Exclusive Forum Provisions: ISS will recommend for exclusive forum selection provisions for Delaware companies and will consider such provisions for companies incorporated in other states on a case-by-case basis.
- Virtual Shareholder Meetings: ISS will recommend in favor of management proposals allowing for hybrid shareholder meetings unless the company policy is to hold virtual-only meetings to the preclusion of in-person meetings. Decisions to hold virtual meetings due to health concerns will be acceptable.
Other policies affected for 2021 include those addressing whether former employees (other than officers) can be independent directors; fee-shifting by-laws; mandatory arbitration in employment-related claims; and reports on workplace sexual harassment.
Please direct any questions or observations to Gunster securities law and corporate governance practice leader Bob Lamm.
