Center to ISS: Flexibility is Paramount

In commenting on ISS’s 2026 policy survey, our message was clear: the first priority is to bring back much-needed flexibility for the Compensation Committee.

What happened: ISS issued its annual policy survey last month, asking pointed questions about the future of performance shares, shareholder engagement, DEI metrics and director pay, among others.

Center’s response: Based on member feedback, the Center highlighted the Committee’s need for flexibility to tailor incentives and performance metrics to support the business strategy. Specifically, we advocated for the following:

• Performance Pay. ISS is debating whether to drop the requirement that half of LTI be “performance-based” – and we unequivocally believe they should. As our comments state, “companies should not be penalized for using time-based awards rather than performance awards if the Compensation Committee believes that is the best form of incentive for the company.”
• Shareholder Engagement. SEC changes are making it harder for some investors to fully engage – but this is not companies’ fault. “The absence of disclosed shareholder feedback should not be viewed negatively in the context of Say-on-Pay responsiveness if a company discloses that it has a robust investor outreach program.”
• DEI Metrics. It won’t be a common occurrence, but we made it clear to ISS that we don’t believe companies should be penalized for even in-flight changes to DEI metrics given the current challenging environment.

Next step: ISS will publish the results of the survey, then follow up with any changes to their policy for 2026. Meanwhile, despite their major win in the DC Circuit on whether the SEC should be able to regulate them further, ISS isn’t out of the woods – bipartisan legislation to oversee proxy advisors is underway.