In November 2025, ISS Governance (“ISS”) announced its global Benchmark Proxy Voting Guidelines for shareholder meetings with dates on or after February 1, 2026. Consistent with prior years, the 2026 updates were derived from extensive outreach to institutional investors, companies and other affiliated organizations. According to ISS, its proxy voting guidelines “are guided by the four tenets of ISS’ Global Voting Principles on accountability, stewardship, independence and transparency” and consider input from stakeholders on topics such as “corporate governance standards and practices, shareholder rights, board elections, executive compensation, shareholder proposals, board governance and risk management.” Significant changes to U.S. policy recommendations in 2026 include the following:
| Policy Area | Policy Change/Update |
| Problematic Capital Structures – Unequal Voting Rights | Generally vote withhold or against directors individually, committee members, or the entire board for companies with multi-class capital structure with unequal voting rights; i.e., unequal voting rights are problematic regardless of whether superior voting shares are classified as “common” or “preferred.” Exceptions are expanded to include: – Convertible preferred shares that vote on an “as-converted” basis – Situations where enhanced voting rights are limited in duration and applicability, such as to overcome low voting turnout and ensure approval of a specific non-controversial agenda item and “mirrored voting” applies Vote against proposals to create a new class of preferred stock with voting rights superior to the common stock, subject to certain exceptions. |
| Long-Term Alignment in Pay-for-Performance Evaluation | ISS’s pay-for-performance analysis will assess pay for performance alignment over a longer-term time horizons, as follows: – The degree of alignment between a company’s annualized “total shareholder return” rank and the CEO’s annualized total pay rank within a peer group, and the rankings of CEO total pay and company financial performance within a peer group, will be measured over a five-year period; and – the multiple of the CEO’s total pay relative to peer group median will be measured over one- and three-year periods. By way of background, ISS peer groups are generally comprised of 14-24 companies that are selected using factors such as market cap, revenue, assets, Global Industry Classification Standard (“GISC”) industry group, and the company’s selected peers’ GICS industry group. |
| Time-Based Equity Awards with Long-Term Time Horizon | Update to reflect the importance of longer-term time horizons for time-based equity awards; provides a flexible approach in evaluating the equity pay mix in qualitative pay-for performance reviews. |
| Compensation Committee Responsiveness | Streamlines policy language by cross-references the factors listed under Company Responsiveness (below). |
| Company Responsiveness | These updated factors, now also referenced with regard to Compensation Committee responsiveness, create flexibility for companies to demonstrate responsiveness to low say-on-pay support, especially following February 2025 guidance from the U.S. Securities and Exchange Commission on Schedule 13G vs. 13D filing (read more here). When (i) a previous say-on-pay vote received less than 70% support and (ii) the company subsequently discloses meaningful engagement efforts but also states that it was unable to obtain specific feedback, ISS will assess the company’s actions as well as why the company says that such actions are beneficial for shareholders, including the following new factors: – Significant corporate activity, such as a recent merger or proxy contest; and – Any other compensation action or factor considered relevant to assessing responsiveness. Less than 50% support for a say-on-pay vote warrants the highest degree of responsiveness under the factors noted above. Vote case-by-case on Compensation Committee members (or, in exceptional cases, the full board) if an advisory vote on executive compensation is implemented on a less frequent basis than the frequency that received the plurality of votes. |
| High Non-Employee Director Pay | Updates previous policy regarding high non-employee director pay practices by allowing for adverse recommendations (i) when a pattern emerges across two or more consecutive or non-consecutive years and (ii) in the first year if pay issues are egregiously problematic, without disclosure of any “compelling rationale or other mitigating factors.” Compensation is defined expansively to include performance awards, retirement benefits and perquisites. |
| Enhancements to Equity Plan Scorecard (“EPSC”) | By way of background, ISS’s EPSC evaluates equity incentive plan proposals using positive and negative factors. These factors are grouped under three “pillars”: Plan Cost, Plan Features, and Grant Practices, which are weighted and scored; generally, a total EPSC score determines whether ISS provides a “For” or “Against” recommendation. The EPSC will now assess whether plans that include nonemployee directors disclose cash-denominated award limits (this was previously informational only and not scored). In addition, there is a new negative overriding factor for plans that lack sufficient positive features under the “pillars” above, even though the plan overall receives a passing score. |
| Global Approach: E&S Shareholder Proposals | Globally, ISS evaluates social and environmental shareholder proposals addressing topics such as consumer and product safety, environment and energy, labor standards and human rights, workplace and board diversity, and political issues. Now, in addition to existing factors, ISS will consider if a proposal addresses substantive matters that may impact shareholder’ interests, including impacts on shareholders’ rights. |
| U.S. Only: E&S Shareholder Proposals | Based on the decline in shareholder support for the types of E&S shareholder proposals discussed below and on the increasing variation of regulations, as well as recent improvements in disclosure, recommendations are updated from a “vote for” to a “case-by-case” approach for proposals regarding: – Climate change/greenhouse gas emission; – Diversity/equality of opportunity; – Human rights; and – Political contributions (note that the decline in shareholder support for related proposals was not a factor with regard to these proposals). |
Read ISS’s Proxy Voting Guidelines Benchmark Policy Changes for 2026: U.S., Brazil Canada, and Americas Regional here.