Introduction

On 25 November, ISS announced updates to their guidelines for the 2026 AGM season, which apply to shareholder meetings taking place on or after 1 February 2026. ISS has published a high-level overview of all changes, as well as a comparison that covers the Benchmark Policy changes in 2026 compared to 2025.

This memo summarises the policy changes that will be applied to their UK & Ireland and Continental Europe guidelines. In addition, we have included the policy changes that are applicable across the UK, Ireland and Continental Europe.

Executive Summary

A negative recommendation from ISS often has an adverse impact on the vote outcome of a given resolution. These updates could lead ISS to make a negative voting recommendation on a resolution due to a factor that was not previously considered. We recommend evaluating how these changes could impact your upcoming AGM, and we are available to assist you with any questions that you may have. The below table provides a summary of all policy updates:

Changes that apply across UK, Ireland and Continental Europe
ISS defines in-person shareholder meetings and considers it necessary for both shareholders and board members to be physically present at a specified physical location.
E&S shareholder proposals will continue to be assessed on a case-by-case basis, with a new focus on how the proposal may impact shareholder rights.
Highly paid directors will now be considered a NED unless there is clear evidence of management duties in which case a classification of Executive Director may be considered.
UK & Ireland policy changes Continental Europe policy changes
The IA’s Principles of Remuneration has led to updates on director leaver remuneration and change of control policy. Expectations introduced for timely disclosure of meeting materials and equity-based compensation for all markets.
The updated UK Listing Rules has led to clarifications on the relationship with controlling shareholders and RPTs. Employee shareholder representatives are now included in the calculation of board gender diversity at French issuers.
The policy now reflects the Irish Corporate Governance Code and its requirements to respond to shareholder dissent. Clarification on criteria assessed under stock option plans and equity-based compensation guidelines in the Nordic regions.

Changes that apply across the UK, Ireland and Continental Europe

Amendments to articles to allow virtual meetings (Clarification)

The updated policy now includes a definition for what constitutes a “physical or in-person shareholder meeting”:

  • Physical or in-person shareholder meeting: a meeting in which participating shareholders and board members meet in a specified physical location together. At such meetings, both shareholders and board members are physically present, enabling direct, in-person interaction.

Definitions for both a “virtual-only shareholder meeting” and a “hybrid shareholder meeting” were already outlined in the 2025 voting policy:

  • Virtual-only shareholder meeting: a meeting of shareholders that is held exclusively through the use of online technology without a corresponding in-person meeting.
  • Hybrid shareholder meeting: an in-person, or physical, meeting in which shareholders are permitted to participate online.

This update reflects a recent development at a small number of UK companies whereby the meeting materials do not clearly explain how shareholders attending in-person are expected to participate. In certain circumstances, shareholders were able to convene at a physical venue whilst management and board members took part electronically. In the UK & Ireland, ISS will continue to generally recommend votes against proposals allowing for the convening of virtual-only meetings and in favour of proposals allowing the convening of hybrid shareholder meetings. In Continental Europe the guidelines on shareholder meeting formats also remain unchanged.

Environmental & Social (E&S) shareholder proposals (New)

ISS has introduced an additional factor that will be considered in its assessment of E&S shareholder proposals and reinforced that such proposals are analysed on a case-by-case basis. Specifically, it will now assess:

  • “Whether the proposal addresses substantive matters that may impact shareholders' interests, including how the proposal may impact shareholders' rights”.

Director classification of highly-paid NEDs (Continental Europe, EMEA Regional) (New)

Any director who receives remuneration comparable to the top executives of the company will now be considered a non-independent non-executive director (NED) unless there is clear evidence of management duties in which case a classification of Executive Director may be considered. Previously such directors were generally reclassified as Executive Directors.

Updates on the UK & Ireland guidelines

Relationship agreements with controlling shareholders (Clarification)

Changes now reflect the UK Listing Rules update which took effect on 29 July 2024 and removed the requirement for companies to have written and legally binding relationship agreements with their controlling shareholders in place. However, ISS do expect such companies to disclose how they ensure the independence of management.

Change of control policy (Clarification)

The updated policy on change of control provisions omits reference to the Investment Association as its Principles of Remuneration, published on 9 October 2024, no longer include a section on change-in-control provisions. As such, there is no effective impact on the 2026 ISS policy guidelines relative to 2025.

Director leaver remuneration arrangement disclosure (New)

The policy update reflects the changes to the Principles of Remuneration of The Investment Association, published on 9 October 2024. The principles state that “bonus and LTI awards should be paid to good leavers only” and that the remuneration committee “is encouraged to disclose the rationale and justification for the treatment of leavers and the number of awards vesting or forfeited”. Consequently, the ISS policy specifies that “companies should provide a rationale and justification for the treatment of leavers”.

Related-party transactions (Clarification)

According to the UK Listing Rules update, which took effect on 29 July 2024, listed companies are no longer required to have a shareholder vote on related-party transactions (RPTs). The updated policy recognises the 2024 update to the UK listing rules and has maintained the voting considerations that will apply should a company decide to put the resolution on ballet.

Voting disclosure and responsiveness to significant shareholder dissent (Ireland) (Clarification)

Changes now incorporate the new Irish Corporate Governance Code’s threshold for determining significant shareholder dissent which has been defined as resolutions where 25% or more of votes are cast against the board recommendation for a resolution. The Irish Code applies to Irish incorporated companies with an equity listing on Euronext Dublin to financial years commencing on or after 1 January 2025.

ISS have maintained the position that it may recommend a vote against a relevant resolution(s) at a future general meeting if the company has not taken sufficient action to address the dissent.

Updates on the Continental Europe guidelines

Timely disclosure of shareholder meeting materials (New)

According to this newly introduced guideline, ISS will generally vote against the re-election of the chair of the audit committee (or other relevant directors, on a case-by-case basis) if a company has failed to provide shareholders with comprehensive meeting materials for two or more consecutive years. To this end, negative voting recommendations based on this guideline will only be made starting in 2027, assuming non-timely disclosure over two or more consecutive years.

Specifically, ISS expects shareholder meeting materials to be published at least 30 days, and ultimately no later than 21 days, before the meeting date or earlier if required by more stringent market practice or deadline. Exceptions may apply in cases related to shareholder proposals, requirement of additional disclosures or exceptional market-specific circumstances.

Equity-based compensation guidelines (Clarification)

ISS has clarified its position that performance targets in equity-based incentive plans should be measured “over a continuous period of at least three years”. As such, this does not constitute a substantive amendment to the policy, but rather a clarification in wording to avoid potential misunderstandings.

Board gender diversity (France) (New)

As a result of the transposition of the “Gender Balance on Corporate Boards” directive, beginning in 2026, French law will include employee shareholder representatives in the calculation of board gender diversity thresholds on boards. Consequently, ISS now expects the underrepresented gender to account for at least 30% of all shareholder-elected directors (including employee shareholder representatives) in widely held companies in France. ISS will generally vote against the chair of the nomination committee (or other relevant directors, on a case-by-case basis) if board gender diversity is below this threshold.

Stock option plans – adjustment for dividend (Nordic region) (Clarification)

The ISS voting policy previously included a specific guideline for the approval of stock option plans in the Nordic Region (Denmark, Finland, Norway, and Sweden). This provision has been removed from the policy as its contents (e.g. strike price adjustments, adjustments to the plan terms, dilution) are already addressed under the general guidelines on equity-based compensation guidelines.

 

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