Photo of Joe BrennanBy Joe BrennanJanuary 27 2017
Business Law

ISS and Glass Lewis - Policy Updates for 2017 Proxy Season

As Canadian public companies prepare for the 2017 proxy season, directors and management should be aware of the following recent policy updates issued by ISS and Glass Lewis for the 2017 proxy season.

Overboarded Directors


ISS will recommend a negative vote for an individual director if: (i) he or she sits on more than four public company boards  in total; AND (ii) has attended less than 75 percent of his/her respective board and committee meetings held within the past year without a valid reason for these absences.

If the individual director is also the CEO of a public company, ISS will recommend voting against that director if: (i) he or she sits on more than one outside public company board in addition to the company of which he/she is CEO; AND (ii) has attended less than 75 percent of his/her respective board and committee meetings held within the past year without a valid reason for these absences. However, a negative vote will only be recommended in the election of directors for outside boards the CEO sits on.

Glass Lewis 

Glass Lewis will provide a negative vote recommendation for any director that serves on more than five public company boards. For CEOs, they will provide a negative vote recommendation if the CEO serves on more than two public company boards. Note that Glass Lewis bases its recommendation solely on the number of Boards and does not include an attendance trigger like ISS.

Director compensation

On a case-by-case basis, ISS will generally provide a negative voting recommendation for members of the committee responsible for director compensation (or, where no such committee has been identified, the board chair or full board) where there are director compensation practices which pose a risk of compromising a non-employee director's independence including:

  • Excessive inducement grants issued upon the appointment or election of a new director to the board (consideration will be given to the form in which the compensation has been issued and the board's rationale for the inducement grant); and
  • Performance-based equity grants to non-employee directors which could pose a risk of aligning directors' interests away from those of shareholders and toward those of management.

Excessive Non-Audit Fees

ISS will provide a negative voting recommendation on the re-appointment of auditors if: 

Non-audit (“other”) fees < audit fees + audit-related fees + tax compliance/preparation fees.

In this circumstance, ISS will also provide a negative voting recommendation for individual directors who are members of the audit committee as constituted in the most recently completed fiscal year.

In doing its analysis, ISS will allocate tax fees not directly related to tax compliance services to "other" fees. In the absence of sufficient breakdown by the issuer in its public disclosure documents of amounts involved for various tax related services, all tax fees paid to the external audit firm will be deemed as including tax advice and consulting services including where boiler plate language indicates that "tax fees were paid for tax compliance, tax advice and tax planning services", resulting in some or all of the fees being reallocated to "other" fees.

Invitation for Discussion:

If you would like to discuss this blog in greater detail, or any other business law matter, please do not hesitate to contact one of the lawyers in the Business Law group at Nerland Lindsey LLP.


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.

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