Donald Kalfen
Institutional Shareholder Services recently issued its 2026 Policy Survey Questionnaire, which generally previews potential changes in ISS’s proxy voting policies.
Through its annual policy survey, ISS seeks feedback from institutional investors, public companies, corporate directors and the consulting and legal communities on emerging trends in corporate governance, executive compensation and other matters as part of its policy formulation process. The policy survey often provides an early read on ISS’s emerging views on particular issues.
The results of the Policy Survey are expected to be published in late September.
Summary of ISS Policy Survey
The Survey asks respondents to answer questions related to the following executive compensation, governance and shareholder proposal matters¹:
Executive Compensation Matters
• Proportion of Time-Based and Performance-Based Equity Awards: Are time-based equity awards acceptable as the predominant or sole component of long-term incentive awards to executive officers and under what circumstances?
• Board Responsiveness to Prior Say on Pay Vote: How should ISS assess board responsiveness to a prior Say on Pay vote if a company discloses that it did not receive any shareholder feedback upon engaging with investors?
• Modification of In-Flight Awards to Eliminate ESG/DEI Metrics: How should ISS assess the modification of in-flight incentive awards to eliminate Environmental and Social (“E&S”) or Diversity, Equity and Inclusion-related (“DEI”) metrics?
Governance Matters
• Non-Executive Director (NED) Pay: Are there specific problematic practices in NED pay that typically warrant immediate concerns for investors and potentially adverse ISS vote recommendations in the first year of the practice?
• Director Overboarding: What are the appropriate directorship limits for CEOs, executive directors and non-executive directors?
• Board Diversity and DEI: Does your organization still view board diversity, including diversity targets, to be an important priority?
Shareholder Proposals
• Burden of Proof: Under what circumstances does your organization believe that proponents should make detailed company-specific cases in support of a shareholder proposal?
• Shareholder Proposals Seeking to Separate the Board Chair and CEO Roles: What is your organization’s view of shareholder proposals seeking to separate the Board Chair and CEO roles?
A detailed description of each of the ISS policy survey questions related to executive compensation and governance matters is provided in the Appendix which can be downloaded as a PDF.
Meridian comments. For the second consecutive year, ISS asks questions related to its current policy to prefer at least 50% of all equity awards granted to executive officers to be in the form of performance-based equity awards. The survey questions suggest that ISS may be amenable to predominately or solely time-based equity awards, provided that the award design includes lengthy vesting periods or other features.
In February 2025, the SEC staff issued guidance on when certain shareholder engagement activities could trigger additional SEC reporting obligations by an institutional investor. In response to the SEC guidance, many investors held passive listening-only meetings with issuers during the 2025 proxy season. In this context, ISS asks how it should assess board responsiveness to a prior Say on Pay vote given many 2025 engagement meetings offered little to no insight into investor concerns underlying their vote decisions. We expect that ISS’s analysis in 2026 will focus on whether a company made positive executive pay program changes, rather than whether the company specifically addressed investor concerns raised during engagement meetings.
Similarly, considering the evolving landscape around E&S and DEI-related metrics and targets, ISS asked for input on whether ISS should leniently assess the removal of such metrics from in-flight awards.
¹The Survey also includes questions on (i) multi-class vote structures, (ii) AI governance and risk management and (iii) shareholder proposals seeking the right to act by written consent.
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The Client Update is prepared by Meridian Compensation Partners’ Governance and Regulatory Team led by Donald Kalfen. Questions regarding this Client Update or executive compensation technical issues may be directed to Donald Kalfen at 847-235-3605 or dkalfen@meridiancp.com.
This report is a publication of Meridian Compensation Partners, LLC, provides general information for reference purposes only, and should not be construed as legal or accounting advice or a legal or accounting opinion on any specific fact or circumstances. The information provided herein should be reviewed with appropriate advisors concerning your own situation and issues.