July 5, 2022

Volume XII, Number 186

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Appearances Matter According To ISS' Proxy Voting Guidelines

Last month, Institutional Shareholder Services published its Americas 2022 Proxy Voting Guidelines.  As part of its updated guidelines, ISS has removed the "grace" period for board diversity so that its policy now reads as follows:

Racial and/or Ethnic Diversity: For companies in the Russell 3000 or S&P 1500 indices, generally vote against or withhold from the chair of the nominating committee (or other directors on a case-by-case basis) where the board has no apparent racially or ethnically diverse members.  An exception will be made if there was racial and/or ethnic diversity on the board at the preceding annual meeting and the board makes a firm commitment to appoint at least one racial and/or ethnic diverse member within a year.

(emphasis added, footnote omitted).  Apparently, appearances matter to ISS.  In contrast, California's discriminatory board diversity quota law, Cal. Corp. Code §§ 301.4 & 2115.6, relies upon self-identification.  Thus, what may appear to ISS could conflict with how directors from time to time identify themselves.

There is an unhappy irony in the fact that this post is being composed on a day honoring Martin Luther King who had an entirely different dream for America: 

I have a dream that my four little children will one day live in a nation where they will not be judged by the color of their skin but by the content of their character.

ISS' policy See also ISS' Odious Failure To Recognize Israel.

© 2010-2022 Allen Matkins Leck Gamble Mallory & Natsis LLP National Law Review, Volume XII, Number 18
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About this Author

Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm
Partner

Keith Bishop works with privately held and publicly traded companies on federal and state corporate and securities transactions, compliance, and governance matters. He is highly-regarded for his in-depth knowledge of the distinctive corporate and regulatory requirements faced by corporations in the state of California.

While many law firms have a great deal of expertise in federal or Delaware corporate law, Keith’s specific focus on California corporate and securities law is uncommon. A former California state regulator of securities and financial institutions, Keith has decades of...

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