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Oct 29, 2015

ISS starts consultation on US overboarding and Japanese boards

ISS accepts comment until November 9 on 16 proposed voting policy changes

Proxy advisory firm ISS has launched its annual policy consultations, requesting feedback on 16 suggested proxy voting policy changes including new guidelines on director overboarding in North America and the UK, board composition in Japan and non-independent chairmen of key committees in Hong Kong.

ISS is accepting comment until November 9 on the proposed changes, which follow a month of public consultation that drew 421 responses – including from 114 institutional investors – on topics ranging from proxy access to multiple voting rights in Europe.

For the US, ISS is considering changes to voting guidelines on director overboarding to recommend votes against, or withheld, for directors who sit on more than four or five public company boards other than their own. The current guidelines recommend a vote against directors who sit on six public company boards other than their own.

Under the proposed changes, ISS would also recommend withheld votes in the cases of CEOs who sit on more than one public company board other than their own, down from the two boards considered acceptable under current voting guidelines.

According to proposed policy changes regarding overboarding in the UK, ISS would recommend against executive directors who hold more than two other non-executive directorships or a chairman who holds more than three other non-executive directorships.

Under proposed changed for Japan, ISS would recommend against top executives at companies where boards don’t include a minimum of two outside directors. Since 2003, ISS has recommended against top executives of boards without at least one outside director.

For Hong Kong, ISS has proposed a policy to vote against non-independent nominees to the head of audit, remuneration and nomination committees. In the case of boards that don’t have those committees, ISS would recommend votes against nominees who are non-independent chairman of the board or nominees who serve as an executive director on a board that is not majority independent.