ISS updated its benchmark proxy voting policies on November 25, 2026. The updates applicable to U.S. companies are briefly summarized below.
ISS is now harmonizing its treatment of unequal voting rights across both common and preferred stock structures. ISS will generally recommend against directors at companies with multi-class structures (including classes of common or preferred stock) featuring unequal voting rights, with limited exceptions, including two new exceptions:
ISS also clarifies in a footnote that preferred shares that have voting rights only with respect to items that affect the rights of their holders as a class are not generally considered a problematic capital structure.
In addition to generally voting against proposals to create a new class of common stock (subject to limited exceptions), ISS will now generally vote against proposals to create a new class of preferred stock with voting rights superior to the common stock, unless they fit into one of those exceptions.
As part of its quantitative analysis of pay-for-performance, ISS will now assess alignment between CEO pay and both company financial performance and company total shareholder return (TSR) within a peer group over a five-year period (instead of a three-year period). The multiple of the CEO’s total pay relative to the peer group median will now be measured over one‑ and three‑year periods (previously based on the most recent fiscal year only). According to ISS, the update is intended to better align with how investors assess a company’s long-term performance when evaluating compensation relative to peers.
ISS will maintain its absolute alignment test, which measures the alignment between CEO pay and a company’s TSR over the prior five fiscal years. The footnotes now clarify that the absolute alignment test does not apply to Russell 3000E Index companies (but it does apply to S&P 1500 and Russell 3000 companies).
In evaluating the equity pay mix in pay-for-performance qualitative reviews, ISS will now more affirmatively recognize time-based equity, where vesting and/or retention requirements demonstrate a long-term focus.
ISS will also consider “realized” pay outcomes alongside “realizable” and granted pay in its qualitative reviews.
ISS is refining how it evaluates responsiveness where prior say-on-pay support falls below 70%.
If a company discloses meaningful engagement efforts, but reports it could not obtain specific investor feedback, ISS will evaluate actions taken in response to the low say-on-pay vote and the company’s explanation of why those actions benefit shareholders. ISS explains that this change responds to recent SEC guidance on Schedule 13G (passive) versus 13D (active) filing status that may make shareholder engagement more challenging.
ISS also clarified that unusual circumstances (e.g., mergers and proxy contests) may affect its analysis, and notes that support below 50% warrants the highest responsiveness.
ISS is expanding its policy on non-employee director (NED) pay to allow for vote recommendations against members of the board committee responsible for approving or setting NED pay in the event of excessive or otherwise problematic NED pay in the first year of occurrence or in the event of a pattern identified across non-consecutive years.
Problematic practices include outsized NED pay relative to peers or to the company’s executives, performance-based awards, retirement benefits, and excessive perquisites, particularly without compelling disclosure.
ISS explains that the identification of one of these practices does not guarantee an adverse recommendation and that NED pay identified as merely marginally exceeding the relevant threshold in the absence of other escalatory factors or a multi-year pattern will continue to receive warnings without an adverse vote recommendation.
ISS is introducing a new scored factor under the Plan Features pillar that assesses whether plans that include non-employee directors as eligible participants disclose cash-denominated award limits (which is considered best practice). ISS explains that individual award limits for non-employee directors have previously been noted in the Equity Plan Scorecard (EPSC) analysis, though as informational data and not a scored factor.
For 2026, the new non-employee director individual award limit factor will only apply to the S&P 500 and Russell 3000 EPSC models.
ISS is also adding a negative overriding factor. An equity plan proposal will now receive an “against” recommendation if it is found to lack sufficient positive features under the Plan Features pillar (as indicated by a threshold Plan Features pillar score), despite an overall passing score.
For 2026, the new negative overriding factor will only apply to S&P 500, Russell 3000, and non-Russell 3000 EPSC models.
ISS is adjusting its recommendations from generally “for” votes to “case-by-case” evaluation of several shareholder proposal topics. ISS cited a decrease in pro-environment and pro-social justice shareholder proposals, a changing regulatory landscape, and improved company disclosure practices as reasons for adjusting its policy.
The updated policies generally apply to shareholder meetings taking place on or after February 1, 2026. Companies should assess how the changes to ISS’s proxy voting policies may impact shareholder voting on any proposals to be included on their agenda or the election of directors for their 2026 annual meetings. Companies that identify issues that could result in a negative recommendation from ISS should consider engaging with key shareholders on these issues prior to the proxy season.