Responding to an ISS “No” Vote

Times may be hard ahead for proxy advisors, but for this year at least, companies are still forced to “play ball.” Despite promises from ISS that executive performance incentive plans would face sharper scrutiny in 2024, early Say on Pay results suggest shareholders are voting with a familiar rhythm. 

By the numbers: Semler Brossy’s first pulse check of the season shows that, so far, support levels are actually up compared to last year. The S&P 500 is clocking in at 90.5% average approval, a full point higher than in 2023. Companies with a “for” from ISS enjoy a healthy 91% average voting approval, while those with an “against” languish at just 72%. 

So, what’s a company to do when it lands in the dreaded ISS against column? 

Redemption Is Possible. According to a Pay Governance study, the answer is clear: respond—and respond thoroughly.  

How? The turnaround stories follow a familiar script. 

1. Talk (and Listen) to Your Shareholders. Every successful rebound started with outreach. 

2. Rethink the Plan and Practices. Common annual tweaks included revising metrics, removing discretionary levers, and recalibrating payout curves. 

3. Drop the Red Flags. Companies were pressured to eliminate one-time awards, use of positive discretion and above-market or single-trigger severance. 

Bottom Line: While proxy advisors are clearly under the microscope (see the above story), their influence remains undeniable – for now.