Editorial Team For any publicly traded company, proxy season brings the same tension year after year. The board and your management team are trying to sell a vision, while institutional investors, led by proxy advisory firms like Institutional Shareholder Services (ISS), are picking apart every single word. The real challenge is making sure your corporate message actually aligns with what these advisors care about. If you ignore the hints in the latest ISS policy survey, you’re asking for a wave of dissent votes that can stop strategic plans cold and shake shareholder confidence. So how do you actually shape your shareholder communication to get these gatekeepers on your side?
Key Takeaways
- You have to get ahead of ISS policy updates, especially the annual survey, to see what governance standards they’ll be using for the next proxy season.
- Dig into the ISS voting recommendations from past years, both for your company and your peers, to find specific, actionable patterns on things like executive pay or board diversity that you can apply now.
- Good shareholder communication isn’t just one document. It’s a full-court press using proxy statements, investor decks, and direct meetings to handle ISS policy issues before the recommendations even come out.
- If your governance practices don’t fit ISS’s cookie-cutter model, you must explain exactly why, using strong data and business context to head off a negative vote recommendation.
- After proxy season ends, do a full debrief on the voting results and ISS reports to figure out what worked, what didn’t, and how you’ll tighten up your governance and communication for next time.
The Disconnect: When Corporate Narratives Clash with Proxy Advisor Directives
I’ve seen so many well-run companies stumble during proxy season, not because they were performing badly, but because their communication was completely tone-deaf to the proxy advisory firms. The problem is almost always a disconnect: management thinks the proxy statement lays out a clear case, but ISS (and a lot of institutional investors who follow them) runs that same information through a rigid filter of policy guidelines and quantitative tests. This isn’t just a difference of opinion. It’s a structural gap in how your story is being heard versus how it’s being graded.
Take the classic example of executive compensation. A compensation committee will spend months putting together a plan they believe genuinely incentivizes long-term growth by tying pay to a set of complex operational goals. The board is convinced this is great for shareholders. But if the plan’s design, the performance metrics, or the severance terms stray too far from ISS’s published benchmarks, or if the disclosure is just too confusing, it becomes an immediate red flag. I’ve watched companies with stellar financial performance get hit with an “Against” recommendation on their Say-on-Pay vote just because their summary compensation table was a mess or they did a poor job explaining their peer group selection. The intent was good, but they failed to translate it into the language of governance policy.
Another place I see this happen all the time is with environmental, social, and governance (ESG) disclosures. Companies get that ESG is important, so they’ll invest in sustainability projects and publish glossy reports. But if the proxy statement doesn’t draw a straight line from those efforts to shareholder value, or if it ignores specific ESG risks that ISS flagged in its latest policy updates (like board oversight of climate risk), all that work gets you zero credit. The 2025 ISS policy updates, for example, put a much bigger spotlight on board accountability for climate transition plans and specific disclosures about human rights in the supply chain. Companies that still treated ESG like a marketing project instead of a core governance issue found themselves scrambling to explain why they were behind.
What Went Wrong First: The Reactive Approach to Corporate Campaigns
For a long time, the standard corporate playbook for proxy season was reactive. You’d file the proxy, cross your fingers, and wait for the ISS report. Only when a negative recommendation came out would the company scramble to start making calls. This “firefighting” is a terrible strategy because it’s almost always too late. By the time ISS publishes its recommendations, a huge chunk of institutional investors have already made up their minds. Trying to change their vote at the last minute takes a massive effort and often just makes you look desperate.
One of the most common failed tactics was just repeating what was already in the proxy. When facing an ISS “Against” recommendation on a director, for instance, a company would just point back to the director’s impressive biography, completely ignoring the specific reason ISS gave for the thumbs-down (like being on too many other boards, not being independent, or having poor meeting attendance). This shows you don’t even understand the complaint. I remember a case in 2024 where a company got hammered on its board chair because of a lack of independence. ISS had flagged several interlocking directorships. The company’s response was a press release talking about the chair’s industry experience, totally missing the point and cementing the opposition.
Another big mistake was simply not keeping up with what investors care about now. Governance isn’t a fixed target. What was fine five years ago can be a major red flag today. Companies that weren’t tracking the annual ISS policy survey and the updates that followed were just flying blind. For example, the intense focus on board diversity expanding beyond just gender to include ethnic and racial diversity caught a lot of boards flat-footed in the early 2020s. Companies that had met a basic gender quota but provided no other demographic data suddenly faced negative recommendations, even if their boards were otherwise solid. Their shareholder communication hadn’t evolved with investor expectations, and they paid for it.
The Solution: Proactive Engagement and Strategic Communication Aligned with ISS Policies
The only way to have a smooth proxy season in 2026 and beyond is to get proactive with your shareholder communication by building a strategy that anticipates what ISS is going to say. This doesn’t mean you have to blindly follow every single ISS guideline. It means you have to understand the logic behind their policies and frame your company’s choices in that context. My approach breaks this down into three phases: anticipatory analysis, strategic disclosure, and targeted engagement.
Phase 1: Anticipatory Analysis of the ISS Policy Survey and Trends
First, you have to dissect the annual ISS policy survey and the final policy updates. These documents aren’t just reading material. They are the literal rubric ISS will use to grade your proxy. And you can’t just skim them. For example, when ISS starts making noise about director tenure and board refreshment, you need to look at your own board’s average tenure, identify any long-serving directors, and get a story ready about your board refreshment process. You do this even if you aren’t making any changes, because it shows you’re paying attention and have a plan.
You also need to look beyond just ISS. Read the reports from groups like the Council of Institutional Investors (CII) and see what big asset managers like BlackRock, Vanguard, and State Street are saying, because their views often predict or shape where ISS is headed. A 2025 report from State Street Global Advisors, for instance, talked about the need for hard numbers on human capital management and stronger board oversight of cybersecurity. Knowing about these currents helps you see where ISS might go next. I also advise reviewing ISS’s voting guidelines for your specific market or industry, since the nuances that can trip you up are often hidden there.
A huge part of this phase is doing a detailed post-mortem on your last proxy season and your peers’. Go through every “Against” recommendation you got and figure out exactly what ISS said. Did they complain about your pay-for-performance alignment? Board independence? The logic behind an M&A deal? That data gives you a clear roadmap for what to fix. If ISS dinged your stock option granting practices in 2025, for example, you know that your 2026 proxy needs to tackle that head-on, either by showing what you changed or by building a much stronger defense of your approach.
Phase 2: Strategic Disclosure and Proxy Statement Crafting
Once you know what ISS is looking for, you can write a proxy statement that answers their questions before they’re even asked. This means you have to get rid of the boilerplate language. If ISS is focused on board diversity beyond gender, your proxy needs a board diversity matrix with a clear breakdown of racial, ethnic, and other demographics, plus a story about why you’re committed to that broader view. Don’t just list a director’s resume. Explain how each person’s specific skills help the board with oversight of critical areas like cybersecurity, AI governance, or climate risk.
For executive compensation, you absolutely cannot hide the ball. You must show the link between pay and performance with simple charts and graphs that anyone can understand. If your pay structure is different from what ISS prefers, you need a powerful reason why. This means explaining your choice of metrics, how the targets were set, and why your peer group makes sense. I strongly recommend adding a “Compensation Discussion and Analysis” (CD&A) summary that acts like an executive summary, making it easy for an ISS analyst to get the main points without slogging through 50 pages of text. Sometimes a simple table showing year-over-year comp changes and the logic behind them can prevent a major headache.
And the proxy statement isn’t your only tool. Investor presentations, dedicated governance pages on your IR website, and even press releases can all push your message out. For example, if you just hit a major sustainability milestone that aligns with ISS’s ESG priorities, put out a press release about it and explain how it fits into your company’s strategy. Hitting them from multiple channels ensures that your narrative gets to proxy advisors and other stakeholders long before they sit down to make a voting decision. A company I advised recently built a “Governance at a Glance” mini-site on their IR portal with short videos of their lead independent director explaining the board’s work on key topics. It was incredibly effective.
Phase 3: Targeted Engagement and Pre-Proxy Outreach
You can’t just file your proxy and wait for the report. Proactive engagement with ISS and your key investors is non-negotiable, and it needs to start months before you file. Get on the phone with the ISS policy team to walk them through your governance framework and explain any tricky areas where you think they might have questions. The point isn’t to lobby them for a good recommendation (that won’t work). It’s to give them context and clarity so there are no surprises. Be ready to talk about board composition, your exec comp philosophy, and any big governance changes you’ve made. That dialogue can clear up a lot of misunderstandings before they become negative recommendations.
At the same time, you need to be talking directly to your largest institutional shareholders. You have to understand their voting policies, because many large asset managers have their own governance teams and standards that can be different from ISS. Tailor your conversations to their hot-button issues. If a big fund is obsessed with board independence, for example, you better be ready to walk them through how your board structure meets their definition of it, with specific examples. That direct dialogue builds a relationship that can sometimes even secure their vote in your favor if ISS happens to go the other way. I’ve personally seen a strong, multi-year relationship with a major investor completely override a negative ISS recommendation.
Finally, be prepared for a fight. If you think a contentious shareholder proposal is coming or an activist is sniffing around, you need to have a communication plan for those corporate campaigns ready to go. This means having your rebuttals written, your investor decks prepared, and your management and board members prepped to talk directly to shareholders. Your goal is to own the narrative from day one.
Measurable Results: Enhanced Shareholder Support and Reduced Governance Risk
When you put a proactive, ISS-aware shareholder communication strategy in place, the results are obvious. The most immediate impact is a sharp drop in “Against” votes on your key proposals, especially Say-on-Pay, director elections, and equity plans. Companies that get out in front of ISS policy concerns and engage directly almost always see shareholder support jump, often clearing 90% approval on management’s proposals. That kind of strong support gives the board the freedom to focus on long-term strategy without being bogged down in governance fights.
Beyond just the vote counts, a smart strategy improves your company’s reputation for good corporate governance. That can actually lower your cost of capital, since more and more investors are using ESG and governance ratings in their decisions. A 2024 study from MSCI showed that companies with high governance scores consistently did better than their peers with weaker governance over a five-year period, with less volatility and better returns. By getting ahead of governance issues, you send a signal that you’re focused on long-term value, which attracts better, more stable investors.
Plus, this proactive approach just lowers your overall risk. By seeing potential problems and dealing with them before they blow up, you can avoid expensive and draining proxy fights or activist campaigns. It lets your management team focus on running the business instead of constantly playing defense. I worked with a mid-cap tech company that had been getting hammered by shareholders on executive pay for three years straight. We put together a full strategy: we analyzed the ISS policies, completely rewrote their CD&A for clarity, and started talking to their biggest investors early. Their Say-on-Pay support shot up from 72% to 94% in one year. That wasn’t just a number on a page. It freed up countless hours of management time that had been wasted on damage control.
In the end, aligning your shareholder communication with what you learn from the ISS policy survey turns proxy season from a defensive chore into an opportunity to strengthen investor confidence and prove your leadership. You move from just following the rules to actually writing your own governance story and building a stronger relationship with the capital markets.
Getting a handle on the complex world of ISS policies and turning them into a clear shareholder communication strategy isn’t just a nice-to-have anymore. It’s a basic requirement for good corporate governance. Companies that use the insights from the ISS policy survey to drive their communication won’t just get better voting results. They’ll build a foundation of trust that creates real, long-term value.
What is the ISS Policy Survey and why is it important for shareholder communication?
The ISS Policy Survey is the annual process where ISS asks institutional investors, companies, and others for their opinions on potential changes to its voting policies. It’s your crystal ball for the next proxy season. The survey results are used to create the specific rules ISS will use to judge your company, so understanding them lets you adjust your shareholder communication to address their likely concerns before they become problems.
How often does ISS update its policies, and when should companies pay attention?
ISS usually sends out its policy survey in the summer or fall, and then publishes the final policy updates around November or December. Those updates apply to the very next proxy season. You need to pay attention the moment the survey comes out, and then you have to tear apart the final updates as soon as they’re released. This gives you just enough time to fix your proxy disclosures and engagement plan before proxy season really kicks off.
What are common areas where ISS policies often lead to “Against” recommendations?
The usual suspects for “Against” votes are executive pay plans that don’t seem connected to performance, a board that isn’t independent enough (too many insiders or directors who have been there forever), a lack of board diversity (gender, racial, and ethnic), and weak oversight of big ESG risks like climate change or human capital management. Just being unclear or not transparent about any of these issues is also a great way to get a negative recommendation, even if your actual practices are fine.
Should companies simply conform to every ISS policy guideline?
No, not at all. The goal isn’t blind obedience to ISS. It’s doing what’s right for your business and its shareholders. If one of your governance practices doesn’t fit the ISS model, the key is to explain exactly why you’re doing it differently. A clear, data-driven argument that shows how your unique approach actually benefits shareholders can often prevent a negative recommendation, especially if you’ve been talking with them proactively.
What role do proxy advisors like ISS play in corporate campaigns?
In a proxy fight, like an activist campaign, ISS is the 800-pound gorilla. Its recommendation can easily swing enough institutional votes to decide the outcome. Because of that, both the company and the activist have to frame their arguments in a way that aligns with the ISS policy framework. If you’re defending against a campaign, you have to prove that your strategy and governance are solid and create long-term value, often by directly refuting points using ISS’s own logic.
