ISS annual survey seeks views on how to adapt policies if fewer companies hold say-on-pay votes
28 July 2026
ISS annual survey seeks views on how to adapt policies if fewer companies hold say-on-pay votes
SOP and board responsiveness
Proposed amendments to the SEC’s public company reporting framework would exempt most public companies from the requirement to hold a SOP vote and significantly reduce their required executive pay disclosure. Only large accelerated filers (those with public float of $2 billion or more) would be required to comply with the current rules. All other companies (approximately 80% of current public companies) and, for at least a five-year period after going public, all newly public companies would be categorized as non-accelerated filers and eligible for scaled disclosure. See SEC amendments to company filer statuses would reduce executive pay disclosure for a detailed discussion of the proposal’s executive pay impact.
Current ISS guidelines. ISS’s current voting guidelines provide the following:
- If there’s no SOP vote on the ballot, ISS will redirect adverse vote recommendations that would typically apply to a SOP proposal to the election of incumbent compensation committee members on the ballot.
- If there’s a SOP vote on the ballot, in situations where shareholder support for a company’s pay program fell below 70% in the prior year (SOP Responsiveness Threshold), ISS will scrutinize the company’s disclosed response to its prior SOP vote result, giving consideration to the following: disclosure of shareholder engagement efforts regarding the issues that contributed to the low support, specific actions taken to address those issues, and additional rationale provided for the company’s pay practices.
- If one or more directors received less than 50% support (Director Election Threshold), whether or not it’s due to a compensation issue, ISS may recommend that shareholders vote against all incumbent board nominees if the company fails to take adequate action to respond to or remediate the issues that led to the low support level.
Summary of survey questions. ISS is seeking feedback on whether the guidelines should be adjusted given the proposed SEC rule changes.
- How should ISS signal significant executive pay concerns when no SOP vote is on the ballot? Besides “other” or “no opinion,” the choices are:
- Keep current approach
- Take a more targeted approach (i.e., in the first year of concern, any adverse vote recommendation should be applied only to the election of the compensation committee chair, potentially escalating to other committee members only if there are multiple years of concerns)
- No impact on election of compensation committee members
- Keep current approach
- Which board responsiveness threshold would be appropriate when evaluating the board’s response to any compensation committee members who received low shareholder support at the prior annual meeting?
- Director Election Threshold (<50%)
- SOP Responsiveness Threshold (<70%)
- Other
- None
- Director Election Threshold (<50%)
LTI performance goal disclosure
According to ISS, many companies don’t disclose forward-looking LTI performance targets on the assertion that such disclosure could cause competitive harm.
Current ISS guidelines. Non-disclosure is considered a negative factor in the pay-for-performance qualitative evaluation. In addition, the risk of competitive harm is generally considered to be a less compelling rationale for the non-disclosure of relative performance goals than for absolute goals.
Summary of survey questions. ISS is seeking feedback on whether, and under what conditions, the risk of competitive harm may be a compelling rationale for non-disclosure of forward-looking LTI performance targets.
- Can the risk of competitive harm be a compelling rationale for the non-disclosure of forward-looking LTI performance targets? Besides “other,” choices are:
- Yes
- Yes, provided the company commits to retrospective disclosure of the performance targets and results after the award cycle closes
- This could be a reasonable rationale but should be assessed case-by-case depending on the company’s explanation and circumstances
- Not a reasonable rationale in most or all cases
- Yes
- Is a distinction between relative and absolute performance goals appropriate? The choices are “yes” or “no.”
Bonus programs at financial services companies
According to ISS, large financial services companies typically determine annual bonuses using committee discretion, based on a broad assessment of performance factors, rather than through formulaic outcomes tied to quantified goals.
Current ISS guidelines. ISS identifies fully discretionary programs as a concern in their qualitative pay-for-performance evaluation, though mitigating weight may be given to disclosures that increase transparency around the use of discretion (e.g., pre-set pay opportunities, performance category or factor weightings, and detailed explanations about how performance factors influenced payout decisions). Several financial services companies have informed ISS that formulaic bonus structures are incompatible with the regulatory and risk management requirements applicable to the industry, and that their shareholders are supportive of their current bonus structure.
Summary of survey questions. ISS is seeking feedback on whether the sector-specific context may warrant a different treatment of discretionary bonus programs.
- Should a discretionary bonus program based on broad assessments of performance factors continue to be viewed as a structural concern in pay-for-performance qualitative evaluations for financial services companies? Besides “no opinion,” the choices are:
- Yes
- No — given prevailing practice and regulatory considerations within the industry, such a structure shouldn’t be viewed, in isolation, as a concern
- Yes
- Would your view change if companies provided disclosures to increase transparency around the use of discretion, such as pre-set pay opportunities, performance category or factor weightings, and detailed explanations around the impact on payout decisions? The choices are “yes” or “no.”
Other topics
Other questions covered in the survey include:
- Board elections: Should companies that elect directors as an entire slate — rather than allowing shareholders to vote on each director individually — face adverse voting recommendations?
- Director independence and tenure: Should long board tenure be a factor in determining director independence and what is considered long (e.g., 10, 12, 15 or 20 years or more)?
- Reincorporations and shareholder rights: How should ISS assess companies that change their location of incorporation or change their governing documents after changes in corporate law?
- “Problematic” governance provisions: How long should directors be subject to adverse vote recommendations when a company continues governance provisions that limit shareholder rights (e.g., multi-class share structures and supermajority voting requirements)?
- Semiannual vs. quarterly financial reporting: Whether semiannual (vs quarterly) reporting as recently proposed by the SEC would be a concern or a positive change benefiting companies?
Next steps
is a Partner and Senior Legal Consultant in Mercer's Law & Regulatory Group (L&R) based in New York. She specializes in technical legal and regulatory issues affecting executive compensation and corporate governance. She focuses on SEC disclosure, tax, employment and change in control agreements, equity programs, and employee benefit issues that arise in the context of corporate transactions and initial public offerings.
is a Senior Legal Consultant in Mercer's Law & Regulatory Group (L&R) based in Washington DC. She provides expert analyses on a variety of US and Canadian compliance and policy matters, and advises clients on securities and corporate governance issues affecting executive pay in North America.
is a Parter and the Head of Mercer’s US & Canada Executive Rewards Practice. He advises US and Canadian companies’ Compensation Committees and senior leadership teams on a wide variety of executive compensation topics and Board of Director pay issues. In addition, he leads the go-to-market strategies, as well as the development of intellectual capital and technical solutions, for Mercer’s Executive Rewards Practice in the US and Canada.