(ISS) and Glass Lewis have issued their Canadian proxy voting guidelines for the upcoming proxy season.
The ISS Proxy Voting Guideline Updates are generally applicable to shareholder meetings of TSX and TSX-V issuers held on or after February 1, 2016.
ISS and Glass Lewis recommendations can have a substantial effect on the outcome of shareholder meetings, particularly for issuers with a significant institutional investor shareholder base.
Issuers are encouraged to review the ISS and Glass Lewis updates with their advisors and legal counsel to prevent any potential negative voting recommendations at their upcoming meetings.
ISS generally recommends withholding voting for a director of a TSX-listed company who is overboarded and whose attendance record at board and committee meetings is less than 75%.
ISS will provide cautionary language in its reports where directors are overboarded, regardless of attendance.
The new factors that will be considered in the scorecard, both positive and negative, fall under three categories: The scorecard model will use two index groups to determine the thresholds and factor weightings: S&P/TSX Composite Index and Non-Composite TSX-listed issuers.
ISS will recommend generally voting against a plan proposal if its overall score indicates that the plan is not in shareholders’ interests.
In addition to the scorecard approach, ISS will recommend voting against a plan if any of the following unacceptable factors have been identified.
The new definition of overboarded will take effect in February 2017. EMIs pay outside firms for management services and, in most cases, some or all of the executives are directly employed and compensated by the external management firm.
ISS is concerned about board accountability where there is limited or insufficient disclosure on the management services agreement and executive compensation.
ISS will look at EMIs on a case-by-case basis and make recommendations on say-on-pay resolutions and director nominations after considering the following factors: Equity Compensation Plans (TSX).
ISS will continue to make recommendations regarding equity compensation plans on a case-by-case basis, but is adopting an equity plan “scorecard” similar to the one introduced last year in the US.