2019 Proxy Season Review Part 2—ISS Negative Recommendations Against DirectorsSullivan & Cromwell LLP - July 25, 2019
ISS recommendations continue to correlate with lower director support levels:
- Directors average 97% shareholder support with ISS in favor and 79% if not (level with 2018), although almost all directors win over 50% shareholder support
- S&P 500 directors identified for excessive non-audit fees or poor attendance receive the lowest average shareholder support (55% and 63%, respectively)
- Outside of the S&P 500, Russell 3000 directors receive the lowest average shareholder support for non-responsiveness to shareholder concerns or excessive non-audit fees (58% and 60%, respectively)
- No S&P 500 directors identified for non-responsiveness (either to low say-on-pay vote or other shareholder concerns), poison pill or unilateral action, although a meaningful number of Russell 3000 directors was cited for each, as broader Russell 3000 falls behind in adopting some corporate standards
- Most common negative recommendation among Russell 3000 relates to adverse governance provisions at newly public companies (369 outside S&P 500, compared to three within)
Our annual proxy season review memo summarizes significant developments relating to the 2019 U.S. annual meeting proxy season. This year our review comprises three parts: Rule 14a-8 shareholder proposals submitted and voted, ISS negative recommendations and compensation-related matters. This is Part 2. Part 1, which focuses on Rule 14a-8 shareholder proposals, was published on July 12, 2019, and is available here. Part 3 can be accessed here. Details regarding our annual webinar to discuss 2019 proxy season developments can be found here.