On October 7, ISS STOXX Governance (ISS) announced the results of its annual global benchmark policy survey. This survey is conducted as part of the annual policy development process that ISS undertakes to determine whether it should make changes to its benchmark voting polices for the 2027 proxy season.
ISS notes that it received a total of 253 responses, of which 141 were from institutional investors and investor-affiliated organizations, and 112 from companies, corporate-affiliated organizations, and other non-investor respondents. The survey covered a wide range of governance-related topics, including director independence, executive compensation, periodic reporting, shareholder rights and management of nature-related risks. Key findings of the survey include:
- On the topic of director independence in the U.S., 64 percent of investor respondents indicated that a long director tenure should be considered as a factor in assessing a director’s independence, while 74 percent of non-investor respondents said tenure, regardless of length, should not be a factor to consider and that a board’s determination of independence is sufficient.
- On proposals to permit semiannual reporting in U.S. and Canada, approximately half of the investor respondents indicated that a move to semiannual financial reporting would be a negative change, and that less frequent reporting could heighten volatility and “tilt the playing field away from public investors and toward, for example, those with access to non-public information or sophisticated data analysis capabilities.” In addition, 13 percent of investor respondents indicated that semiannual reporting makes sense for smaller, pre-revenue or start-up companies, but not for larger, more mature companies. The results indicated that 54 percent of non-investor respondents specified that semiannual reporting would not be a concern and that boards should be trusted to balance the relevant considerations and make the right decision for the company, with a further 19 percent indicating that it would be a positive change.
- In response to the SEC’s filer status proposal that would, among other changes, significantly expand the number of U.S. companies exempt from say-on-pay voting requirements, fifty percent of investor respondents indicate that, where pay concerns and a say-on-pay vote is not on the ballot, they would support in the first year opposing the election of the chair of the compensation committee, and a further 41 percent of investor respondents supported opposing all incumbent compensation committee members. By contrast, 54 percent of non-investor respondents said opposition of compensation committee members would not be appropriate under such circumstances.
- In response to whether companies with significant exposure to nature-related risks should disclose information using a recognized framework, 68 percent of investor respondents said yes, while half of non-investor respondents indicated that such disclosure should be left to the discretion of individual companies.
ISS will next release key draft benchmark policy updates for 2027 and open a public comment period. Final benchmark policy updates are expected to be announced in late November or early December and take effect for shareholder meetings occurring on or after February 1, 2027.