ISS Governance Services[FOOTNOTE 1] (“ISS”) recently updated its United States, Canadian, United Kingdom and international proxy voting policies for the 2008 proxy season.[FOOTNOTE 2] These corporate governance policies indicate how ISS will recommend that its clients vote on various corporate governance matters in the upcoming proxy season.[FOOTNOTE 3] Given the number of institutional investors that strictly adhere to ISS’ voting recommendations, U.S. public companies have little choice but to take the recommendations seriously. The new proxy voting policies will be in effect for stockholder meetings held after Jan. 31, 2008; stockholder meetings held on or before such date will be subject to the 2007 proxy voting policies.[FOOTNOTE 4]
The 2008 policy updates continue ISS’ trend toward recommending policies that tend to shift control over U.S. corporations from boards of directors to stockholders, thus further empowering activists and special interest groups. ISS’ updated policies promote the narrowing of directors’ discretion in various areas traditionally within the clear authority of boards of directors under state law, including executive hiring and compensation, traditional corporate governance matters, and social policy.
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