Most institutional investors want Institutional Shareholder Services to adopt a stricter proxy-voting policy on the maximum number of boards considered appropriate for CEOs and other corporate directors to serve, while corporate respondents favor a policy of more latitude, said a report released Monday containing results of an ISS global survey it uses to consider revisions to its policies.
Some 48% of institutional investor respondents favor limiting the maximum number of boards on which a CEO could serve to two companies, including his or her own company, before being considered “overboarded,” or serving on too many boards to commit appropriate attention to them. Some 32% favor limiting the CEO to three boards, while 12% favor no limits and 8%, other.
Of corporate and other non-investor respondents, 37% favor a three-seat limit, while 20% favor a two-seat limit, 35% favor no limit and 8%, other.
The ISS’ current policy considers CEOs overboarded if they serve on more than three boards, including their own company.
Regarding non-executive directors, 34% of institutional investor respondents favor a limit of four boards, 18% to five, 20% to six, 12% no limits and 16% other.
Of corporate and other non-investor respondents, 41% favor no limit for non-executive directors; 25%, a six-board limit; 7%, a five-board limit; 19%, a four-board limit; and 8% other.
The current ISS policy considers non-executive directors overboarded if they serve on more than six boards.
As part of its global outreach, the ISS released the survey in August seeking feedback from investors, corporations, academics and others on possible changes to its worldwide proxy-voting policies for 2016. The policies serve as the basis for the ISS’ general recommendations on how clients should vote their proxies.
The ISS received 421 responses from 415 organizations worldwide. They included 114 institutional investors, representing 109 organizations, including 65 investment management firms, 17 public pension funds, seven union pension funds, and six foundations and endowments. The ISS also received responses from 257 companies.
Aside from overboarding, the survey sought feedback on a wide range of proxy-voting policies, including proxy-access thresholds, executive incentive compensation, and corporate capital allocation and share buybacks.
The ISS plans to use the results of the survey to contribute to its drafting of its proposed proxy-voting policies for 2016. The ISS plans to post its proposed policies in October on its website for public comments. The final 2016 policies are expected to be issued in November, according to an ISS statement.
