Issue link: https://digital.shearman.com/i/1019978
Shearman & Sterling LLP 54 | IPO Corporate Governance 1 The data in this section was sourced from Voting Analytics. of the 2016 cohort had at least one independent director receive a withhold or against recommendation from ISS based on the rationale in the ISS policy at their first annual meeting after going public 70% ISS VOTING RECOMMENDATIONS 1 We analyzed ISS voting recommendations for director nominees at annual meetings for the 2015 and 2016 IPO companies. Consistent with last year's survey, ISS continued to follow its voting policy for newly public companies by making withhold or against recommendations against director nominees for the 2016 IPO companies. Although there was an impact on the voting percentages for the director nominees, we are not aware of any director that failed to be elected due to negative recommendations. Consistent with the results for the 2015 cohort, the governance factors most commonly cited by ISS as a basis for a withhold or against recommendation against director nominees was the failure to remove, or subject to a sunset provision, a classified board and supermajority voting requirements to amend certain charter or by-law provisions. The existence of a problematic capital structure in which different classes have unequal voting rights was also cited in the recommendations for companies in the 2016 cohort with multi-class equity structures and differing voting rights. Problematic capital structure was not included as a factor in the recommendations for the 2015 cohort as it was included in the ISS policy after the first annual meeting for these companies. As noted above, for subsequent annual meetings, ISS recommends that votes for directors should be on a case-by-case basis unless the adverse provision and/or problematic capital structure has been removed. Based on our review of the data, ISS recommended withhold or against votes across the board at the second and third annual meetings for companies in the 2015 cohort and the 2016 cohort that had not removed such governance practices or made them subject to a sunset provision.