ISS Issues FAQs on Director Qualification Bylaws
On January 13, 2014, Institutional Shareholder Services (“ISS”) issued
FAQs detailing its position on adopted or proposed bylaws that disqualify any director nominee who receives third-party compensation (“director qualification bylaws”). This guidance implicitly recognizes and addresses a trend among certain activist institutional investors to offer a special compensation arrangement to their slate of director nominees and comes on the heels of last year’s bitter proxy fight between Hess Corp. and its institutional investor, Elliott Management Corp., in which Elliott offered a bonus scheme to its director nominees, tied to Hess’s short-term performance.