ISS Voting Policy Guidelines 2025

Institutional Shareholder Services have updated their voting guidelines for 2025. These will apply for shareholder meetings from 1st February 2025. The main changes in executive pay and board diversity are:

 Companies should explain the rationale for their pay decisions “based on the talent markets they are recruiting from” rather than relying on market rates as the justification.

 There appears to be a more receptive stance to hybrid long-term incentives which include restricted shares. They are however less explicit than the Investment Association in their support for such arrangements.

The 5% dilution limit in any rolling ten-year period for new or amended discretionary share schemes has been removed.

Regarding board diversity, the main change is a requirement for companies to report against targets, rather than the extent to which they have been met.

More information can be found in their detailed guidance at https://www.issgovernance.com/file/policy/active/updates/EMEA-Policy-Updates.pdf