Audit Committee Leadership Network, March 2016
On January 14–15, 2016, members of the Audit Committee Leadership Network in North America (ACLN) met in New York for their 30th stand-alone meeting. In one session, they were joined by Gary Retelny, president and CEO of Institutional Shareholder Services (ISS), to discuss the proxy advisory industry.
This ViewPoints synthesizes the key points discussed in the meeting. It also includes background information and perspectives that members shared before the meeting.
ACLN members discussed the following topics with Mr. Retelny:
ISS and the proxy advisory industry
Investors and other stakeholders rely on ISS and other proxy advisory firms to help fulfill their corporate governance obligations. The core of ISS’s business is to advise institutional investors on proxy voting issues. ISS is transforming into a global governance company that provides a range of services to different constituents. Audit committee chairs and Mr. Retelny discussed these services, ISS’s plans for growth, and ways that management and boards can work with investors and proxy advisers to ensure that they are making decisions based on accurate information.
ISS’s process and analysis
In order to meet its institutional investor-clients’ demands, ISS undergoes a regular, detailed process to understand major governance issues and make voting recommendations. ISS also works directly with large investors to help them establish and implement custom voting policies. To ensure the quality of its analysis, ISS engages regularly with companies and other market participants. Mr. Retelny emphasized that ISS relies exclusively upon publicly disclosed information to make its ultimate voting recommendations.
Specific policies and voting recommendations
A number of key corporate governance issues have caught the attention of institutional investors and have therefore become a priority for ISS. In particular, Mr. Retelny emphasized that issues like proxy access, overboarding policies, board refreshment, and director independence are front of mind for investors today.