Newsflash: ISS 2021 Proxy Voting Guidelines for UK and Ireland

Institutional Shareholder Services (ISS) has published its updated proxy voting guidelines for the UK and Ireland (as part of its guidance for Europe, Middle East and Africa), effective for meetings on or after 1 February 2021.

Changes made in respect to remuneration relate to ISS’ position on pensions and post-employment shareholding guidelines. The updated guidelines also include amended provisions on gender diversity, overboarding and risk oversight of board directors.


The updated Guidelines do not include specific guidance in respect of COVID-19. However, ISS has stated that following COVID guidance issued in April 2020, it ‘intends to carry this or similar policy guidance into 2021 and update going forward as needed’.


Recommendations on voting in respect of the remuneration policy include particular focus on a number of areas, which have been expanded to include:

  • The extent to which pension contributions are aligned with those available to the wider workforce, as recommended by the UK Code
  • Whether an appropriate post-employment shareholding requirement is in place.

‘These amendments reflect ISS' position on pension contributions and post-cessation shareholding requirements as potential drivers of the voting recommendation where the remuneration policy is submitted for shareholder approval. This update recognises pensions and post-cessation shareholding requirements as potential vote drivers, as these issues have come into prominence since the 2018 UK Corporate Governance Code came into force. There is no intent to significantly alter ISS' existing approach in terms of the application of the policy.’

Gender diversity on boards

ISS has clarified that it will generally recommend against the chair of the nomination committee (or other directors on a case-by-case basis) in the following cases:

  • The company is a constituent of the FTSE 350 (excluding investment trusts) and the board does not comprise at least 33 percent representation of women, in line with the recommendation of the Hampton-Alexander Review.
  • The company (excluding investment trusts) is a constituent of any of the following, and there is not at least one woman on the board:
    • FTSE SmallCap;
    • ISEQ 20;
    • Listed on the AIM with a market capitalisation of over GBP 500 million.
  • Mitigating factors will include compliance with the relevant board diversity standard at the preceding AGM and a firm commitment, publicly available, to comply with the relevant standard within a year. In 2021 only, for FTSE 350 constituents, a public commitment to bring the composition of the board in line with the recommendations of the Hampton-Alexander Review by the following AGM will not result in a negative recommendation, regardless of the previous composition of the board.

Guidance on overboarding has been clarified to state that in considering the nature and scope of the various appointments and the companies concerned, that while a stricter view may apply for directors who serve on the boards of complex companies, those in highly regulated sectors, or directors who chair a number of key committees, ‘likewise, a more lenient view may apply for directors who serve on the boards of less complex companies (for example, externally managed investment companies)’.

Other changes (all markets)

ISS has expanded the ‘extraordinary circumstances’ in which it will consider recommending a vote against individual directors, to include ‘demonstrably poor risk oversight of environmental and social issues, including climate change’.

The updated guidelines can be read here.

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