Where Investors, Corporates Split on ISS Policy Issues — And Where They Agreed

ISS will use the survey to develop policy updates

Respondents to ISS’s annual policy survey — from both the investor and corporate camps — were largely on the same page about what human capital management metrics are most helpful in terms of considering shareholder proposal relevancy and support.

…Roughly half (51%) of investors believe it is unacceptable for a board to adopt a short-term poison pill to defend against an activist campaign, compared to 65% of non-investors, according to the survey results. A poison pill, or shareholder rights plan, is when companies offer discounted shares to existing investors to dilute the stock’s value when outsiders hit a certain threshold of stock ownership.

A majority of investors (59%) believe that poison pills should always have a clause to prevent them from being used as an entrenchment mechanism, while 52% of non-investors said such a clause should depend on the trigger threshold and other terms of the pill. Investors and non-investors also diverged on trigger thresholds.

Generally, more companies have adopted poison pills in recent years after the advent of the SEC’s universal proxy rule and stock price declines. However, just 2% of S&P 500 companies have poison pills in place, according to public company intelligence provider MyLogIQ.

For example, just this week the Container Store adopted a limited duration plan “in response to the rapid and significant accumulation of the Company’s common stock by a single stockholder and to protect value for all of the Company’s stockholders,” according to a press release.