State Street added a true “vote with the board” policy to its proxy voting choice program policy options available through ISS. The new ISS custom “Vote with Company Board Recommendation Policy” provides for voting in accordance with the board’s recommendations on all items in the proxy statement where a recommendation is provided and an “abstain” action in the absence of any board recommendation.
According to Reuters, State Street’s global chief investment officer acknowledged that ISS’s so-called Global Board Aligned Policy introduced earlier this year, which is among State Street’s voting policy options, “could be misunderstood given its name.”
As previously reported, the Global Board Aligned Policy is in fact not board-aligned. Although the policy is more deferential to management and the board on environmental and social topics (subject to ISS’s discretion about the adequacy of the company’s disclosure), it is identical in content to ISS’s Benchmark Policy on all corporate governance, capital/restructuring, and compensation issues, with the exception of board climate accountability. As such, the Society has previously raised concerns to ISS, certain institutional investors, and others, that investors may select the policy under the mistaken belief that their votes will be cast in accordance with the board’s recommendations, and had thus urged ISS to change the policy name to more accurately reflect its contents.
This post first appeared in the weekly Society Alert!