On 18 November 2024, ISS launched a consultation on its 2025 voting policies which will apply from 1 February 2025.  In relation to the US, there will be policy updates relating to: 

• Poison Pills: To clarify the factors that will be considered in the case-by-case evaluation of whether a board’s actions in adopting a short-term poison pill were reasonable, or whether the adoption of the pill should be deemed a governance failure warranting a recommendation to vote against directors.
• SPACs: To set out ISS’ present approach to SPACs seeking an extension to their termination dates. ISS will recommend support for extension requests of up to one year from the original termination date.
• General Environmental Proposals: To replace the reference to “General Environmental Proposals” with “Natural Capital-Related Proposals” as biodiversity and related environmental topics are now typically grouped under the theme of “nature capital” which is a common topic for investors to consider. There have been no material changes to the existing policy application.
• Executive Compensation: ISS is not proposing a formal policy change but has set out a summary of ongoing considerations relating to the use of performance v’s time-based equity awards, including a planned change in policy application for 2025 under its current policy. ISS is also seeking feedback on potential future policy changes.

On 15 November 2024, Glass Lewis (GL) published its 2025 Benchmark Policy Guidelines for the US which apply from January 2025.  Notable amendments made to the US Guidelines this year include the following:

• AI: A new section on AI has been added and, similar to the UK Guidelines, GL expects companies that develop/use AI to provide clear disclosure on the role of the board in overseeing issues relating to AI. Where insufficient oversight and/or management of AI technologies has resulted in material harm to shareholders, GL may recommend a vote against the re-election of accountable directors where the board’s oversight/response/disclosure was insufficient.
• Change in Control Provisions: GL has set out its policy view that companies should provide a clear rationale for how unvested awards are treated in the event of a change in control where there is committee discretion on same.

GL also clarified its existing policies around:

• Board Responsiveness to Shareholder Proposals: When shareholder proposals receive significant shareholder support (generally more than 30% but less than the majority of votes cast), GL believes that boards should engage with shareholders on the issue and provide disclosure addressing shareholder concerns and outreach initiatives.
• Reincorporation: GL will review all proposals to reincorporate to a different state or country on a case-by-case basis and sets out the items it will consider as part of its review.
• Approach to Executive Pay Program: GL has clarified its approach to the section relating to the link between compensation and performance noting that it takes a holistic approach to analysing executive compensation programs and reviews them on a case-by-case basis.