EQ Proxy: ISS And Glass Lewis Policy Updates For 2026

Background On Proxy Advisory Firms

Each year ISS and Glass Lewis publish their respective proxy voting guidelines and policies, describing the factors that will be taken into consideration in making voting recommendations. While these policies remain largely consistent year over year, the annual updates often address new and emerging issues, or revise and clarify existing stances on evolving matters of corporate governance, such as corporate governance standards and practices, shareholder rights and proposals, board elections, executive compensation, ESG-related issues, board governance and risk management. These changes can be based on a number of factors, such as changing shareholder attitudes, new legislation or exchange rules, or general industry trends.

This year ISS clarified 19 policies – including larger changes regarding executive compensation, shareholder proposals and board governance. The other policy updates are less significant in nature, typically being minor updates for regulatory changes, or clarifications or codifications of existing policy applications, plus the South African policy updates, which are already in effect. Some highlights of the new GL updates include the general approach to committee size recommendations, vesting and holding periods for long-term incentives and provisions for the analysis of executive remuneration practices.

These proxy voting guidelines can be used by institutional investors as either determinative or informative of their voting decisions, and the recommendations by ISS and Glass Lewis can significantly sway the outcome of shareholder voting proposals.

Changes to ISS’s benchmark voting policies will apply for shareholder meetings to be held on or after February 1, 2026, and updates to Glass Lewis’s proxy voting guidance will apply for shareholder meetings to be held on or after January 1, 2026.

Key ISS Guideline Changes

ISS has summarised in Appendix A, the final policy updates for 2026, consisting of the updates on the 19 policy topics considered significant and presented as proposed changes in the comment period document (identified in the table with an asterisk *), and the remaining less significant updates which were not included in the comment period document, being relatively minor in nature, including clarifications or codifications of existing policy applications or simple updates of a regulatory nature. The full text of and rationales for all updates are provided in the relevant regional update documents, which were released at the same time as the publication of the Executive Summary.

The appendix concludes with a section on director overboarding policies, which remain under review globally, although no changes are being introduced for 2026.

Irish CG code update

ISS has updated its policy to reflect the Irish Corporate Governance Code (2024) update. ISS explained that this update is intended to replicate the threshold for significant shareholder dissent set at 25% (versus 20% under the U.K. Code). ISS noted that Companies that are dual-listed in Ireland and the UK may choose to comply with either the Irish Corporate Governance Code or the UK Corporate Governance Code, depending on which is more appropriate for their circumstances. Under the update ISS may recommend a vote against resolutions at future general meetings, if the company has not taken sufficient action to address the dissent.

Definition of In-Person Shareholder Meetings

ISS establishes a clear definition of in-person meetings to address recent practices by some companies that seek to introduce more restrictive in-person shareholder meetings, with the potential to diminish shareholder participation or restrict opportunities for engagement with the board. ISS will now recommend support for proposals allowing for the convening of hybrid shareholder meetings if it is clear that it is not the intention to hold virtual-only shareholder meetings. ISS noted that the update reflects a recent development, whereby a limited number of companies have sought to introduce more restrictive in-person shareholder meetings, where for example, participating shareholders are provided with a physical meeting venue but no directors are present. While some flexibility in meeting formats is not inherently problematic, proposals that restrict in-person interaction with directors could raise concerns, particularly where such changes might diminish shareholder participation or restrict opportunities f

Relationship Agreements

ISS updated its policy language regarding relationship agreements to reflect 2024 changes to U.K. Listing Rules, removing the requirement for companies to maintain written and legally binding relationship agreements with controlling shareholders. The lack of a written and legally binding relationship agreement between companies and any controlling shareholder(s) will now no longer be one of the specific factors, under which ISS may recommend against the election or re-election of directors. However, under the update companies are still expected to disclose how they ensure management independence.

Change of Control Provision

ISS updated its policy language to reflect the removal of change of control guidance from the U.K. Investment Association’s Principles of Remuneration. As a result, the wording is changed to reflect this development, which ISS notes has no effective impact on its policy guidelines.

Good Leaver Disclosure

ISS have added an explicit expectation for companies to provide a rationale and justification for the treatment of departing directors classified as “good leavers.” UK best practice calls for clear disclosures regarding executive director leaving arrangements. As noted in the Investment Association's Principles of Remuneration. With this addition, ISS adds an explicit expectation for companies to provide transparent explanations for leaver treatment, ensuring alignment with market best practices and investor expectations.

Related-Party Transactions

ISS updated its policy to reflect 2024 changes to U.K. Listing Rules that removed the requirement for shareholder approval of most related-party transactions. ISS has updated its Policy language to acknowledge this change, while retaining case-by-case evaluation criteria for any transactions that remain subject to shareholder vote. Furthermore, ISS adds that in circumstances where a related-party transaction remains subject to shareholder approval, the company must ensure that the related party does not vote on the relevant resolution and should take all reasonable steps to ensure that the related party's associates do not vote on the relevant resolution.

Minor Updates and Typographical Corrections

ISS explained that it has also undertaken other policy updates, less significant in nature, typically being minor updates for regulatory changes to reflect the latest U.K. Corporate Governance Code (January 2024, effective January 2025) and QCA Code (2023),and made corrections to minor typographical errors within the Policy, which are already in effect.

Approach to Committee Size Recommendations

Glass Lewis have updated their policy to reflect that it will typically recommend shareholders vote against, rather than abstain from voting on, the re-election of the audit and/or remuneration committee chair where the committee is of an insufficient size. Glass Lewis is here reiterating both the expectation of the UK Code, and the market in that the workload of these committees cannot be satisfactorily performed by fewer than three members — two for smaller companies.

Gender Diversity

Given that the timeline for achieving the FTSE Women Leaders Review targets, which pre-dates these Listing Rules targets for FTSE 350 companies, has now passed. Glass Lewis has updated its policy on proposals relating to the re-election of the Nomination Committee Chair, to reflect that it will typically recommend against their re-election where the board does not comprise at least 40% gender diverse directors, absent any mitigating circumstances. In these circumstances, Glass Lewis will consider the board's disclosure on diversity and/or mitigating circumstances, including: (1) Where a board consists of four or fewer directors; (2) where a company discloses a credible plan to address the gender imbalance on the board within a near-term and defined timeframe (e.g., by the time of the next annual meeting or scheduled board election); (3) Where a company otherwise demonstrates its commitment to diversity through an exceptionally diverse board or through the composition of, or disclosed succession plans for, its executive committee; and/or (4) in other exceptional and company-specific cases (e.g., recent uplisting, unexpected director resignation etc.).

AIM Companies’ Board Independence

The updated policy explains that, in line with the 2023 QCA Corporate Governance Code, the ‘AIM-Quoted Companies’ section of the Benchmark Policy guidelines has been updated to clarify that AIM companies' boards should be at least half independent and include a minimum of two independent non-executive directors. Accordingly, Glass Lewis has outlined that in the event that more than half of the members are affiliated or inside directors, it will typically recommend a vote against one or more of the non-independent directors in order to satisfy this threshold.

Pay for Performance

Glass Lewis revised and updated its policy to add a description of its new proprietary pay-for-performance model, including score ranges, the individual tests comprised in the balanced scorecard, and information on the selection of peers. Further, Glass Lewis also clarified that, while the outcome of this model may impact the analysis of a company’s executive remuneration practices, Benchmark Policy recommendations on the remuneration report and policy proposals will continue to result from a holistic assessment of the company’s remuneration structure, disclosure and practices as a whole, as well as other relevant external factors.

Key Committees

Glass Lewis’s policy guidelines for the purposes of director attendance, have been updated to clarify that Glass Lewis generally considers key committees to be the audit, remuneration and nomination committees. It is attendance at these committees that are the focus in the recommendations by Glass Lewis that shareholders vote against directors who fail to attend either: at least 75% of the board meetings; or 75% of the aggregate of board and key committee meetings.

Remuneration Committee Independence

The Benchmark policy’s discussion on remuneration committee independence has been updated. Going forward, Glass Lewis will consider the Chair of the Board’s membership of the remuneration committee in light of its clarification to confirm they are only serving on the remuneration committee if they were classed as independent on appointment and continue to satisfy standard independence tests outside of their chair role.

Vesting/Holding Periods

Under the existing policy, Glass Lewis considers within the extant “Incentive Plans” section of the guidelines the required vesting and holding periods for long-term incentives and the minimum recommended vesting/performance periods. The updated policy explains that for clarification the “Vote on Remuneration Policy” section of the guidelines has been updated to reflect that market practice, as outlined in the UK Code and by the Investment Association, typically calls for combined vesting and holding periods of at least five years for long-term incentives. Further, Glass Lewis has aligned within the extant “Incentive Plans” section of the guidelines, the minimum three-year vesting/performance period expected for long-term incentives.

Key Takeaways

The 2026 polices of ISS and Glass Lewis, along with summaries of their updates, are available on their respective websites. These policy updates will play a critical role as public companies prepare their 2026 proxy statements and annual shareholders’ meetings. To position themselves for favourable voting recommendations from ISS and Glass Lewis, companies should carefully review these voting guidelines and consider making proactive disclosures aligned with proxy advisor expectations. Additionally, companies may wish to evaluate potential adjustments to governance and executive remuneration practices to mitigate the risk of an adverse voting recommendation from the proxy advisor. However, any such change should be thoughtfully balanced against the company’s broader governance strategy and long-term objectives.

In addition to ISS, Glass Lewis and other third-party proxy advisory firms, companies should also assess the voting policies of major institutional investors with significant holdings. These institutional investors often have and maintain their own evolving voting policies, which can influence voting outcome just as meaningfully.