November 20, 2015

ISS Adopts Stricter Rules on Director Overboarding

The two biggest proxy advisory firms are cracking down on board members with too many seats.Institutional Shareholder Services on Friday said it will consider a non-CEO director on five public company boards to be “overboarded,’’ down from its earlier policy of six. The group, which makes recommendations to large institutional shareholders on corporate governance, said under the new policy, starting in 2017, it will issue a negative recommendation if a director serves on more than five corporate boards. The one year grace period is to give “directors and companies sufficient time to make any changes.”The adviser is maintaining its stricter policy for sitting chief executives, who it considers to be overboarded if they have more than two outside directorships.Glass Lewis, ISS’s closest rival, will cut the acceptable number of corporate board spots to two from three for executive officers of public companies and lower the maximum to five from six for all other directors.

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