Updated institutional investor voting guidelines

Institutional Shareholder Services (ISS) has published its UK proxy voting guidelines updates for 2022 and Glass Lewis has updated its Approach to Executive Compensation in the Context of the Covid-19 Pandemic.

ISS Proxy Voting Guidelines

The key changes to the current ISS UK proxy voting guidelines are set out in an executive summary document and include:

• Board diversity – In addition to its expectations on gender diversity (see our blog post from last year here), ISS has created a new policy on ethnic diversity based on the recommendations of the Parker Review (see our blog post here). For FTSE 100 companies, ISS will generally recommend a vote against the (re-)election of the chair of the nomination committee if the company has not appointed at least one director from an ethnic minority background.
• Board accountability on climate-related issues – In 2022, for companies that are currently featured on the Climate Action 100+ Focus Group list, ISS will recommend a vote against the (re-)election of the chair of the board where a company does not have both detailed disclosure on climate-related issues, such as reporting in line with the Task Force on Climate-related Financial Disclosures, and quantitative greenhouse gas emission reduction targets covering at least a significant portion of the company’s direct emissions.
• Non-financial ESG performance conditions in executive remuneration packages – ISS has confirmed that environmental, social and governance (ESG) metrics can be included as performance measures for executive remuneration, provided that the metrics are clearly linked to the company’s long-term strategy, material to the business and quantifiable.

The 2022 proxy voting guidelines apply to shareholder meetings taking place on or after 1 February 2022, save where otherwise noted.

Glass Lewis approach to executive compensation

Glass Lewis’s Approach to Executive Compensation document is designed to provide guidance on the application of its policy on executive remuneration in the context of the ongoing Covid-19 pandemic. Glass Lewis has updated the document to remove references to specific fiscal years, noting that the guidance will continue to apply throughout the course of the pandemic.