ISS and Glass Lewis Publish 2026 Benchmark Proxy Voting Policies

Executive Summary

Institutional Shareholder Services Inc. (ISS) and Glass Lewis have released their 2026 Benchmark Proxy Voting Policy updates, introducing changes that will impact governance, compensation and shareholder-proposal evaluations as we head into the 2026 proxy season. ISS’s revisions focus on:

• Potentially “Problematic” Capital Structures: ISS will generally recommend voting against directors at companies with multi-class capital structures featuring unequal voting rights, with exceptions for convertible preferred shares and limited-duration enhanced voting rights. Proposals to create new classes of common or preferred stock with superior voting rights will also face opposition unless specific conditions are met.  This aligns treatment of unequal voting rights across share types.
• Enhanced Pay-for-Performance Analysis: ISS extends its pay-for-performance evaluation period from three to five years and will assess CEO pay relative to peers over one- and three-year periods, improving alignment with long-term investor perspectives.
• Flexible Time-Based Equity Award Evaluation: ISS now emphasizes longer-term horizons for time-based equity awards, adopting a more flexible, qualitative review that considers realized pay outcomes alongside granted and realizable pay.
• Updated Responsiveness Criteria for Say-on-Pay: ISS clarifies factors for assessing company responsiveness to low say-on-pay votes, including meaningful investor engagement disclosures and recent corporate activities, influencing voting recommendations for compensation committee members.
• Expanded Authority on Director Pay: ISS gains broader authority to recommend against problematic non-employee director compensation, particularly if unreasonable awards occur repeatedly without justification.
• Equity Plan Scorecard Enhancements: ISS adds a new scored factor for disclosure of cash-denominated award limits for non-employee directors and introduces a negative overriding factor to recommend against equity plans lacking sufficient positive features under certain models.
• Case-by-Case Approach to Environmental and Social Proposals: ISS will evaluate key environmental and social shareholder proposals (including climate change, diversity, human rights and political contributions) on a case-by-case basis, rather than generally supporting them, reflecting investor feedback and improved corporate disclosures.

ISS’s policy updates, which may be found here, will be effective for shareholder meetings held on or after February 1, 2026.

For its part, Glass Lewis’s updates include:

• Formalizing Its Mandatory Arbitration Clause Policy: Glass Lewis now explicitly addresses mandatory arbitration provisions, recommending voting against governance committee chairs or full governance committees when mandatory arbitration provisions are adopted post-initial public offering (IPO), spin-off or direct listing unless a compelling rationale and relevant disclosures are provided.
• Revisions to Pay-for-Performance Model and Governance Clarifications: Glass Lewis updates its pay-for-performance model, shifting to a weighted scorecard system and clarifies policies on shareholder rights, majority voting, governance document amendments and supermajority voting, with an emphasis on protecting minority shareholders and enabling nuanced, client-customized voting recommendations.

Glass Lewis’s updates, which may be found here, will apply to meetings held after January 1, 2026.

Taken together, the updates offered by both firms signal a broader shift toward more nuanced, investor-aligned analysis and engagement, foreshadowing continued evolution in voting recommendations, including customized voting models and increasing shareholder choice.

ISS – Summary of 2026 Proxy Voting Guideline Updates

Consistent with prior updates, ISS updates its voting policies annually and “incorporates an assessment of emerging issues, relevant regulatory changes, and notable trends seen across global, regional, and individual markets, plus relevant academic research, and empirical studies.” In addition, the updated guidance reflects feedback from an array of stakeholders, including institutional investors, companies and other market participants.  For companies based in the U.S., ISS’s updated guidance covers the following eight topics:

Board of Directors – Problematic Capital Structures

Unequal Voting Rights: ISS will generally recommend voting withhold or against directors individually, committee members or the entire board (other than new nominees who will be considered on a case-by-case basis) if the company employs a multi-class capital structure with unequal voting rights.  The guidance previously applied to companies with a common stock structure with unequal voting rights.  In addition, for 2026, ISS has added two additional exceptions to this policy: (a) convertible preferred shares that vote on an “as-converted basis” and (b) situations where the enhanced voting rights are limited in duration and applicability, such as where they are intended to overcome low voting turnout and ensure approval of a specific, non-controversial agenda item and “mirrored voting” applies.  Examples of unequal voting rights include common or preferred stock that enjoy more votes per share than other shares; classes of shares that are not entitled to vote on all the same ballot items or nominees; and stock with time-phased voting rights (i.e., "loyalty shares").  ISS notes that preferred stock that includes voting rights, only with respect to items that affect the rights of its holders as a class, are not generally considered problematic for these purposes.

Dual Class Structure: ISS will continue to generally recommend voting against proposals to create a new class of common stock, subject to certain exceptions (e.g., the new class of shares will be transitory or is intended to facilitate a corporate financing transaction with minimal or no dilutive impact).  For 2026, ISS also will recommend voting against proposals to create a new class of preferred stock with voting rights superior to common stock, unless (a) the preferred shares are convertible into common shares and vote on an “as converted” basis prior to conversion, or (b) the enhanced voting rights of the preferred shares have limited duration and applicability and the shares are voted in a way that mirrors the votes of the common shares (i.e., where such shares are intended to overcome low voting turnout and ensure approval of a specific, non-controversial agenda item such as a reverse stock split needed to avoid a delisting).

ISS explains that the policy changes are intended to eliminate a discrepancy in the treatment of capital structures with unequal voting rights, irrespective of whether shares are classified as “common” or “preferred”.

Compensation – Executive Pay Evaluation – Pay for Performance Evaluation: ISS conducts an annual pay-for-performance analysis to determine whether there is strong or satisfactory alignment between executive pay and performance over a sustained period.  For companies in the S&P 1500, Russell 3000 or Russell 3000E, the analysis considers Peer Group Alignment and Absolute Alignment.  For 2026, ISS is extending the Peer Group Alignment measurement period from three years to five years.  In addition, ISS will now assess the multiple of a chief executive officer’s (CEO) total pay relative to the peer group median over both one- and three-year periods, compared to just the most recent fiscal year under the prior policy.  Russell 3000E companies are not subject to the Absolute Alignment analysis.  For more information regarding the composition of ISS peer groups, ISS directs readers to its peer selection methodology set forth in its U.S. Peer Group FAQ.

ISS characterizes the updated policy as reflecting a better alignment with how investors evaluate a company’s long-term performance when assessing compensation programs relative to peer groups within a sector.

Compensation – Time-Based Equity Awards with Long-Term Horizon: For 2026, this ISS policy update is elevating the importance of a longer-term time horizon for time-based equity awards and represents a more flexible approach to how ISS will evaluate equity awards in its pay-for-performance qualitative review.  In explaining the updated guidance, ISS notes that investors share an “evolving” view on the appropriate mix of performance- and time-based equity awards, with many investors seeking a more flexible, qualitative approach to how equity awards are structured.  For instance, certain investors have indicated that time-based awards can comprise a majority (or even all) of an equity award package so long as it is adequately long-term in nature through relevant vesting and/or retention requirements.  ISS underscores that equity awards will continue to be evaluated on a case-by-case basis and within the context of a particular company’s facts and circumstances.  Finally, ISS explains that the policy update is also meant to clarify that realized pay outcomes may be considered in addition to realizable and granted pay.

Compensation – Compensation Committee Communications and Responsiveness: ISS identifies the factors it will use on a case-by-case basis to evaluate certain ballot items related to executive pay on a board’s responsiveness to investor input and engagement.  For 2026, ISS has updated its guidance by eliminating duplicative factors in the compensation policy section, directing readers to the substantially identical factors set forth in the Board of Directors policy section covering say-on-pay.

Compensation – Board of Directors – Responsiveness: In light of updated guidance by the U.S. Securities and Exchange Commission (SEC) regarding 13G versus 13D filing status, ISS has clarified how companies can demonstrate responsiveness to low (i.e., less than 70% of votes cast) say-on-pay votes.  Specifically, if a company discloses “meaningful” investor engagement efforts, and in addition states that it was unable to obtain specific feedback (e.g., due in part to such SEC guidance), then ISS will evaluate the company’s actions and how they were intended to benefit shareholders.  ISS also has added additional factors it will consider when assessing responsiveness, including whether a company has recently engaged in significant corporate activity (e.g., a recent merger or proxy contest) and any other compensation action or factor deemed relevant to ISS’s analysis.  ISS notes that say-on-pay support levels of 50% or less merit the highest levels of responsiveness.  Finally, ISS has clarified that its voting recommendations on this matter will be made on a case-by-case basis for compensation committee members (or the full board in exceptional circumstances) if advisory votes on executive compensation are implemented on a less frequent basis than the frequency that received the plurality of votes cast.

Compensation – Problematic Compensation Practices – High Non-Employee Director Pay: This update provides ISS with expanded authority to issue adverse voting recommendations for problematic or unreasonable non-employee director (NED) compensation awards in the first year of occurrence or where ISS observes a pattern with respect to such awards.  For these purposes, a pattern exists when there are two or more consecutive or non-consecutive years of problematic or unreasonable compensation awards without disclosing a compelling reason for the problematic and unreasonable compensation or other mitigating factors.  ISS’s rationale for this update sets forth a non-exhaustive list of potentially problematic or concerning compensation practices, including (a) particularly large NED pay magnitude compared with industry peer medians or pay that exceeds that of a company’s executive officers; (b) performance awards, retirement benefits and excessive perquisites; and (c) inadequate disclosures or an insufficient rationale justifying unusual NED payments.

Compensation – Equity-Based and Other Incentive Plans: ISS will recommend votes on a case-by-case basis on equity plan proposals that are subject to its Equity Plan Scorecard (EPSC) framework.  That framework includes three pillars: Plan Cost, Plan Features and Grant Practices.  For 2026, ISS added an additional factor it will now consider under Plan Features.  Specifically, under its new guidance, ISS is implementing a new scored factor that will now consider the disclosure of cash-denominated award limits for non-employee directors, which ISS views as a “best practice”.  ISS notes that this new scored factor only applies to S&P 500 and Russell 3000 EPSC models.

ISS is also introducing a new “negative overriding factor” pursuant to which ISS will recommend voting against an equity plan proposal where such proposal is determined to lack sufficient positive features under the Plan Features pillar, notwithstanding achieving an overall passing score.  This new overriding factor applies only to S&P 500, Russell 3000 and non-Russell 3000 EPSC models.

ISS notes that its U.S. Equity Compensation Plans FAQ for 2026 is expected to be published in mid-December.

Social and Environmental Shareholder Proposals: For 2026, ISS is updating its policies on certain environmental- and social-related (E&S) shareholder proposals.  Specifically, proposals involving (a) Climate Change / Greenhouse Gas (GHG) Emissions, (b) Diversity (Equality of Opportunity), (c) Human Rights and (d) Political Contributions, will now be considered on a case-by-case, rather than “generally vote for” basis.  ISS indicates that these policy shifts are intended to “better reflect” investor sentiment it received during its interactions with clients.  ISS also believes that the updated approach is consistent with declining support for E&S proposals more broadly, an evolving regulatory environment in the U.S. and improved disclosures by companies on these topics.

Glass Lewis – Summary of 2026 Proxy Voting Guideline Updates (United States)

In announcing its 2026 updates, Glass Lewis underscores that the “Benchmark Policy reflects broad investor opinion and widely accepted governance principles and is intended to provide clients with nuanced analysis informed by market best practice, regulation, and prevailing investor sentiment.” Glass Lewis notes that the Benchmark Policy represents just one of its policy offerings.  The firm’s remarks are consistent with its evolving approach to client engagement.  Specifically, in October, Glass Lewis announced that beginning with the 2027 proxy season, the firm will cease issuing proxy voting recommendations based on a single, benchmark approach and shift instead toward client-customized voting recommendations.

For 2026, Glass Lewis has issued two “noteworthy revisions” and a series of clarifying amendments.

Benchmark Policy Revisions

Mandatory Arbitration Provisions: The Benchmark Policy now expressly outlines its approach to mandatory arbitration clauses in corporate governing documents.  In reviewing companies’ post-IPO, spin-off or direct listing governing documents, the policy will consider whether the company has adopted a mandatory arbitration provision or other governance terms viewed as adverse to shareholder interests.  Where such provisions are present, the policy may recommend voting against the chair of the governance committee or, in some instances, the full committee.  The policy will also generally recommend voting against any charter or bylaw amendment introducing a mandatory arbitration clause, unless the company provides a compelling rationale and meaningful disclosure.

Pay-for-Performance Methodology Enhancements: Glass Lewis has updated its proprietary pay-for-performance model.  Instead of a single letter grade, the model will now employ a scorecard incorporating up to six tests, each receiving an individual rating that is aggregated, using weighted scoring, to produce an overall score from 0 to 100. Glass Lewis directs readers to its Pay-for-Performance Methodology Overview for additional detail.

Clarifying Amendments

Shareholder Rights: The policy clarifies circumstances in which amendments to governing documents that diminish shareholder rights may trigger against voting recommendations for the chair of the governance committee or all committee members.  Examples include amendments that:

• Restrict shareholders’ ability to submit proposals.
•   Limit shareholders’ ability to bring derivative claims.
• Replace majority voting standards with plurality voting.

Majority Voting for Director Elections: The discussion of director-election voting standards has been updated for clarity and to remove outdated references; however, the underlying policy approach remains unchanged.

Amendments to Certificates of Incorporation and Bylaws: Glass Lewis has clarified its guidance on amendments to governing documents, noting that it will continue to evaluate such amendments on a case-by-case basis and remains opposed to bundling multiple amendments into a single proposal, as this limits shareholders’ ability to evaluate each change on the merits.  Generally, the policy supports amendments that do not materially disadvantage the interests of shareholders.

Supermajority Voting Requirements: Clarifications confirm that proposals to eliminate supermajority standards will be assessed on a case-by-case basis.  Importantly, where a company has a controlling or dominant shareholder, Glass Lewis may view supermajority voting as a tool to protect minority shareholders and may oppose proposals to remove these protections.

General Approach to Shareholder Proposals: Reflecting the rapidly evolving U.S. shareholder-proposal landscape, the Benchmark Policy has refined its language regarding how it evaluates these matters, including the treatment of issues previously addressed through the SEC’s no-action process.  While some legacy guidance has been removed, the policy continues to rely on the core principle that shareholders should have the opportunity to vote on matters of material significance.  Glass Lewis notes that further updates may be issued prior to or during the 2026 proxy season in response to regulatory or market developments.

We note that many of the larger asset managers and institutional investors have introduced (and are expected to expand) bespoke “voting choice” or “pass-through” voting arrangements that enable shareholders to select different voting policies that may not necessarily align with the Benchmark Policy approach historically used in relation to shareholder voting recommendations.  We will continue to monitor developments in this evolving space.