ISS Confirms Updated Policy on Overboarded Directors
Institutional Shareholder Services Inc. (ISS) advises its institutional investor clients on how to vote at public company AGMs. ISS has confirmed that, for meetings on or after February 1, 2019, it will generally recommend to its clients that they vote withhold for individual director nominees of Toronto Stock Exchange (TSX) listed companies who:
- Are non-CEO directors and serve on more than five public company boards; or
- Are CEOs of public companies who serve on the board of more than two other public companies besides their own (withhold only at their outside boards).
Note that the number of boards allowed by ISS in each case has increased by one from the previous policy. Also note that ISS has removed the old double trigger regarding lack of attendance. Under the old policy, an otherwise overboarded director was not considered overboarded so long as he/she attended at least 75% of his/her respective board and committee meetings held within the past year or had a valid reason for absences. That exception is no longer available.
As a result of these two changes, the ISS policy now more closely mirrors that of its competitor in the institutional voting advisory business – Glass Lewis. However, Glass Lewis limits the number of boards that CEO may serve on to one other public company board.
ISS is providing a one-year transition period – until February 2019 – to allow TSX-listed companies to address any overboarding situations.
Invitation for Discussion:
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Note that the foregoing is for general discussion purposes only and should not be construed as legal advice to any one person or company. If the issues discussed herein affect you or your company, you are encouraged to seek proper legal advice.