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Institutional Shareholder Services (ISS) published its annual benchmark policy survey on July 24, slightly earlier than in recent years. The purpose of the survey is to gather feedback ISS will use to inform its benchmark voting policy for the coming year from a broad spectrum of stakeholders including institutional investors, public company executives, corporate directors and other interested market constituents.
A summary of the key survey questions is provided below. We encourage you to reach out to your normal Compensia contacts if you would like support in responding to the survey.
The ISS survey will close on Friday, August 22 at 5:00 PM ET.
Excessive non-executive director pay
ISS is considering changes to its policy on excessive non-executive director compensation. Currently, outliers are identified only after two consecutive years in the top 2% of pay relative to peers within the same index and 4-digit GICS industry group. ISS is seeking feedback on practices that may warrant more immediate investor concern, such as poor disclosure, excessive perks, or pay levels exceeding that of executive officers.
Board and workforce diversity
In February 2025, ISS suspended the application of its U.S. board diversity-based voting guidelines and no longer considers board gender or racial composition statistics in U.S. director vote recommendations.
However, through this survey, ISS is seeking to understand if companies and investors are still considering board and workforce diversity in their decision-making, what disclosures they find most useful, and which aspects of diversity—such as gender, race/ethnicity, skills and experience, tenure, or other factors—they prioritize when evaluating board composition.
Performance-based equity vs. time-based equity
While historically both prominent proxy advisors (i.e. ISS and Glass Lewis) have strongly favored the use of performance-based equity in long-term incentive programs, there has been growing criticism from investors and companies regarding performance-based equity programs, citing concerns that they can be overly complex, costly, and sometimes non-rigorous, with the ultimate effect of not having a strong correlation with sustained performance. At ISS roundtable discussions held last year, investors expressed “nearly unanimous support” for a future policy change that no longer views a predominance of time-vesting equity awards (i.e. an award mix where performance-based equity represents less than 50% of the total target long-term incentive award value) as a significant concern. Feedback from last year’s ISS annual survey found that a minority of investor respondents (43%) favored maintaining ISS’s current approach, while 31% supported a change to categorically view extended vesting time-based awards positively (i.e. comparable to performance-based awards).
Accordingly, the survey seeks further input on whether and/or in what circumstances extended vesting time-based awards are viewed as an appropriate substitute for performance-based awards, whether a mix of award types is categorically preferred, and whether other factors or safeguards are more relevant than the type or ratio of equity granted.
Additional topics covered
- ISS seeks feedback on its dual or multi-class capital structure policy and if investors consider “non-common” shares with more than one vote per share should generally be considered the same way as common shares
- ISS seeks feedback on its director overboarding policy with enumerated options for a maximum of board seats held from three to six, no limit, or “it depends.” The last time feedback on overboarding was elicited through the policy survey was 2019.
- ISS seeks opinions on whether boards of companies making significant use of Artificial Intelligence (AI) should use a global framework (e.g., OECD AI Principles, NIST AI RMF, etc.) for assessing AI-related risks
You can access ISS’ Annual Benchmark Policy Survey here.
Need Assistance?
Compensia has extensive experience in helping companies establish executive compensation programs and practices, and developing disclosure of such practices in their proxy materials, taking into consideration SEC disclosure requirements, proxy advisor policies, and investor expectations. If you would like assistance with, or if you have any questions on, the subjects addressed in this Thoughtful Disclosure Alert, please contact your regular Compensia team members or the authors of this Alert:
