Institutional Shareholder Services (ISS) has initiated its annual global policy survey, a crucial undertaking designed to gather input from stakeholders and inform potential adjustments to its influential voting guidelines ahead of the 2027 proxy season. The comprehensive survey, released on Tuesday, August 4, 2026, invites feedback on a wide array of corporate governance issues, including the contentious topics of semiannual reporting, corporate reincorporation, and the responsiveness of boards to shareholder votes on executive compensation. This proactive engagement underscores ISS’s commitment to aligning its policies with evolving market practices and investor expectations.
The survey, made available through a downloadable PDF and detailed on the ISS STOXK website, seeks to capture a diverse range of perspectives from companies, investors, and other interested parties. Responses are due by 5 p.m. Eastern Time on August 14, 2026, providing a focused window for input. The questions posed by ISS are designed to probe deeply into areas that significantly impact corporate oversight, shareholder rights, and executive remuneration, particularly for U.S. and Canadian companies.
Key Areas of Focus for the 2027 Proxy Season
The survey touches upon several critical governance domains, each with potentially far-reaching implications for publicly traded entities:
Board Matters: Re-evaluating Director Tenure and Independence
A significant point of inquiry for U.S. companies concerns the long-standing debate surrounding director tenure and its correlation with board independence. ISS is exploring whether extended service on a board should inherently be a factor in assessing a director’s independence. The survey presents specific timeframes – 10, 12, 15, or 20 years – after which independence might be subject to greater scrutiny. This suggests a potential shift in ISS’s stance, moving beyond its current QualityScore metric. Presently, the QualityScore flags directors with nine or more years of service as having "lengthy tenure," but this designation only impacts a company’s score if more than a third of the board comprises such directors. The survey’s exploration of this issue could lead to a more rigorous approach to director independence, potentially impacting board composition and director nomination processes. For instance, if ISS were to adopt a stricter view, companies might face increased pressure to refresh their boards more regularly, thereby introducing new perspectives and potentially enhancing oversight.
Shareholder Rights: Navigating Reporting, Reincorporation, and Governance Provisions
The survey also delves into significant shareholder rights issues, including the potential shift towards semiannual financial reporting for U.S. and Canadian companies. This question is particularly timely given recent regulatory proposals in both jurisdictions that would permit public companies to opt for semiannual reporting over the traditional quarterly cadence, while retaining the option for quarterly filings. ISS is seeking to understand the prevailing sentiment on this matter, gauging whether it is viewed as a positive step to combat "short-termism," a potential driver of increased market volatility, or a disadvantage for public investors. The outcome of this feedback could influence how companies communicate their financial performance and how investors analyze that performance.
Furthermore, ISS is soliciting opinions on how to evaluate the trade-offs involved when companies change their jurisdiction of incorporation or amend their governing documents in response to shifts in corporate law. The focus here is on balancing potential business advantages against any potential erosion of shareholder rights. This is a critical consideration for companies operating in dynamic legal environments.
The survey also addresses "problematic" governance provisions, a category that currently triggers perpetual negative vote recommendations from ISS on director elections. These provisions include multi-class share structures with unequal voting rights, supermajority voting requirements for charter or bylaw amendments, and restrictions on shareholder proposals or derivative suits. ISS is asking whether this perpetual recommendation policy should be maintained or if it should be limited to the initial year of adoption, with the possibility of targeting only committee chairs. This inquiry could signal a move towards a more nuanced approach to addressing governance concerns, potentially allowing companies more flexibility in addressing specific provisions over time.
Executive Compensation: Say-on-Pay, Long-Term Incentives, and Discretionary Bonuses
In the realm of executive compensation, ISS is seeking input on how to address concerns when a "say-on-pay" vote is not on the ballot, particularly in light of anticipated SEC proposals that could exempt a significant number of U.S. public companies from these voting requirements. The survey explores various approaches, including applying adverse recommendations to the entire compensation committee, targeting only the compensation committee chair in the first instance of concern, or refraining from adverse recommendations unless a say-on-pay vote is mandated.
The survey also probes the appropriate threshold for evaluating board responsiveness to shareholder concerns regarding executive compensation when a say-on-pay vote is absent. ISS is soliciting opinions on whether to maintain the existing 50% threshold used in director elections, the 70% threshold applied to say-on-pay votes, or to consider alternative thresholds. This is a complex issue, as it directly impacts how shareholder sentiment on compensation is translated into board accountability.
Additionally, ISS is questioning the rationale behind companies withholding disclosure of forward-looking long-term incentive performance targets, citing competitive harm as a potential justification. The survey asks whether this rationale is sufficiently compelling in certain circumstances. This question is pertinent to transparency in executive pay structures and the ability of shareholders to assess the alignment of executive incentives with long-term company performance.
For financial services companies, ISS is revisiting its current policy which generally flags discretionary bonus programs as a concern. The survey acknowledges the arguments from these companies that formulaic bonus structures may be incompatible with their business models and that shareholders are often supportive of existing bonus arrangements due to the sector’s unique characteristics. ISS is seeking views on whether this sector-specific context warrants a different approach to evaluating discretionary bonus programs in qualitative pay-for-performance assessments.
Environmental and Social Topics: Climate and Nature-Related Disclosures
On the environmental and social front, ISS is addressing the growing recognition of climate-related risks and the potential for companies to reduce or suspend their disclosures in response to evolving regulatory landscapes globally. The survey asks how shareholders should appropriately react to such reduced disclosures, indicating a concern about maintaining transparency in environmental reporting.
Furthermore, ISS is inquiring about the appropriateness of expecting companies with significant exposure to nature-related risks to disclose information according to recognized frameworks. This highlights a growing focus on biodiversity and natural capital within the broader ESG (Environmental, Social, and Governance) agenda. The inclusion of this topic signifies a move towards a more holistic view of corporate sustainability.
Background and Implications
Institutional Shareholder Services (ISS) is a leading global provider of governance and responsible investment solutions. It provides research and recommendations to institutional investors on how to vote their shares at company meetings. Its policies significantly influence corporate governance practices worldwide. The annual policy survey is a cornerstone of ISS’s policy development process, aiming to ensure its recommendations remain relevant and reflective of evolving best practices and market demands.
The 2027 proxy season will be shaped by the feedback gathered through this survey. Potential changes could lead to more rigorous director independence standards, shifts in financial reporting practices, adjustments to how problematic governance provisions are addressed, and evolving approaches to executive compensation oversight. For U.S. and Canadian companies, understanding these potential changes and participating in the survey is crucial for effective governance planning and for ensuring alignment with investor expectations. The outcome of this survey will provide valuable insights into the future direction of corporate governance and the increasing emphasis on transparency, accountability, and sustainable business practices. The deadline for responses is rapidly approaching, making this a critical period for engagement from all stakeholders.
