The ISS Policy Formulation Process
On an annual basis, ISS covers more than 39,000 meetings in 115 countries, providing corporate governance solutions to more than 1,600 institutional investors. Many institutions follow ISS vote recommendations on every single ballot while some others will apply their own voting guidelines on certain agenda items. Why do institutional investors trust their voting decisions on the ISS benchmark policy guidelines and its implementation?
The ISS policy is not a product of arbitrary design; instead, it is viewed as a consensus amongst shareholders. During ISS’ annual policy formulation process, policy experts with substantial industry expertise will propose certain policy updates in their own region, which incorporates not only regulatory updates and market trends, but also the input from investors’ voting activities. The proposed policy updates, once approved by the ISS policy committee, will be put into a policy survey to solicit opinions from institutional investors. In addition, ISS hosts policy roundtables and conferences calls participated by institutional investors and other industry players to examine local best practices and gather input that will factor into the development of its policy. Issuers’ perspectives, which will also be captured by the policy survey, provides insights as to how they view and approach governance matters.
ISS launched its 2017 policy survey on August 2, 2016 which closed on August 30, 2016. After analysis and consideration of the survey responses, ISS will open a comment period for all interested market participants on the final proposed changes to its policies for 2017. The open comment period is designed to elicit objective, specific feedback from investors, corporations and other industry constituents on the practical implementation of proposed policy updates as well as any new policies. Following this, the latest version of the policy guideline document will be finalized in late November 2016, and will be applicable to all meetings held in 2017.