Ellason lens on… ISS 2025 Guidelines
Fri 17, January
ISS has issued its UK & Ireland Proxy Voting Guidelines for 2025 (link) which apply to meetings held on or after 1 February. The publication of these updated Guidelines follows the consultation undertaken by ISS on its 2025 Global Benchmarking Voting Policies, which closed on 2 December 2024.
The revisions are unchanged from those summarised in our November 2024 Lens (link) and have been adopted to:
- Reinforce the principle that long-term incentives should be appropriate for a company’s individual circumstances.
- Reflect the updated IA Principles published in October 2024, in respect of malus and clawback as well as providing guidance on explaining pay decisions (including the use of benchmark data to do so). While the ISS Guidelines have not been updated to reflect the removal from the Investment Association (IA) Principles of the ‘5% in 10 years’ dilution limit for discretionary plans, ISS has confirmed that this will not be a factor it considers when evaluating new or amended LTIPs to inform its voting recommendations.
- Clarify how remuneration at smaller companies (and those traded on AIM) will be assessed following the QCA Code recommendation to put remuneration reports and policies to advisory shareholder votes. Given the increased external focus on executive pay at such companies, the list of voting considerations has been updated to reflect recommended market standards such as the requirement for three-year performance periods for share-based incentives.
Ellason commentary: The 2025 ISS Guidelines reflect the changes on which it consulted in November 2024 to align broadly with the latest IA Principles of Remuneration and reflect market sentiment on the need to be flexible around remuneration structures to help ensure the competitiveness of UK companies.