Key Changes to Proxy Advisor Policies for 2013

I was going to write-up a short guide to recently announced changes by Institutional Shareholder Services and Glass Lewis but after reading a recent Alert from Weil I’ve decided to save time by simply touching on a few of the main points and recommending readers go directly to the Alert. Why reinvent the Weil? (Sorry, I couldn’t help myself.) I’ve also included a link to it in the Shareowner’s Action Handbook for future reference.

Main points: Both proxy advisors are getting tougher on board that aren’t responsive to the vote of shareowners. Directors who ignore shareowners may find themselves voted out of office. Self-selected peers and realizable pay take on increasing importance, as do existing change-in-control severance agreements.

ISS will no longer grandfather in golden parachute severance packages. Hedging or pledging of significant stock will yield a negative vote for directors and officers by ISS. ISS will consider subsidaries as separate from parent boards for purposes of over boarding.  ISS adopted policy changes related to board attendance, social and environmental proposals, sustainability metrics for compensation and lobbying disclosure, as well as 40 circumstances for a negative vote in uncontested director elections.

Glass Lewis adopted policy changes related to equity compensation proposals and exclusive forum provisions.

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