Shareholders want CEO pay limits that are tied to company performance and are increasingly frustrated by how the unilateral adoption of bylaw amendments by boards may diminish their rights. Those were among the findings from proxy advisor Institutional Shareholder Services’ annual global voting policy survey.

The survey of both shareholders and issuers was structured around several high-level themes, including: pay for performance; board accountability; boardroom diversity; equity plan evaluation; risk oversight and audit; cross-market listings; and environmental and social performance goals. ISS received more than 370 total responses to this year’s survey, of which 105 were institutional investors, nearly one-third of whom manage assets in excess of $100 billion. Roughly 70 percent of these respondents were based in the U.S.


Sixty percent of investors agreed there is a threshold at which the magnitude of CEO pay warrants concern, even if the company’s performance is positive and outperforms its peer group. Suggested remedies included proportional limits based on the degree of outperformance achieved relative to the company's peer group. Nineteen percent said they favor absolute limits on CEO compensation regardless of performance and 14 percent advocated for compensation limits based on absolute company performance.

Less than one-third of issuers who responded supported CEO pay limits. Of those who did, 90 percent supported limits developed through a comparison to median CEO pay at peer companies.

Forty-three percent of investors, but only three percent of issuers, said that that if performance goals are significantly reduced from one performance period to the next target award levels should be modified to reflect those revised expectations. By contrast, two-thirds of issuers said the compensation committee should have broad discretion to set both goals and target awards at levels deemed to be appropriate under those circumstances. One-fourth of issuers (and 19 percent of investors) agreed that performance goals should be set independently of target awards, because they must be maintained at competitive levels to attract and retain top quality executives.

Bylaw Adoption

Investors indicated little tolerance for unilateral boardroom adoption of bylaw amendments that, in their view, diminish shareholder rights. More than 70 percent of investors said the board should never adopt bylaws and charter amendments that negatively affect investors’ rights without shareholder approval. Twenty percent selected “it depends” as a response, listing such factors as directors' track record, level of board independence, and other governance concerns. Nearly one-half of issuers said the board should be free to unilaterally adopt any bylaws and charter amendments.


A majority of all respondents (60 percent of investors, 75 percent of issuers) said they consider overall diversity, including gender, when evaluating boards. None of the investors and only 9 percent of issuers, however, said they would consider gender diversity in the context of evaluating new nominees.

Additional findings from the survey can be found here.