On 17 December 2024, Institutional Shareholder Services (“ISS”) announced the release of its Benchmark Policy Updates for 2025, with five key changes to the UK Policy (the “Policy”) (summarised below and in Appendix A of the Executive Summary).

These policies are effective for shareholder meetings from 1 February 2025.

1. Remuneration: in general the changes reflect the updates to the Investment Association’s Principles of Remuneration 2025 (the “Principles”) which were made on 8 October 2024. For example, the Policy now discourages remuneration committees from using benchmarking on its own to justify increases in remuneration, removing the ability to rely on it from time to time. There are also some changes to the malus and clawback provisions which reflect amendments made to the UK Corporate Governance Code earlier this year, such as the additional requirement to disclose details of directors’ malus and clawback provisions in the remuneration report.
2. Dilution limits: one of the changes to the Principles in the autumn was the removal of the restriction on issuing new shares or re-issuing treasury shares above five per cent of a company’s issued share capital in any rolling ten year period in the context of executive (discretionary) schemes. The Policy has been amended to reflect this change whilst acknowledging that the five per cent dilution limit remains good market practice and so if there are any schemes which can exceed this limit, companies should explain this.
3. Board diversity: updates have been made to reflect that companies must report against the board diversity targets, rather than actually meet them (noting that companies are expected make progress against those targets over time). The changes also reflect that FTSE 350 companies have been subject to diversity reviews for some time now and accordingly they will be treated differently by the market, which will expect higher standards.
4. Remuneration at financial institutions: this section has been removed because with effect from 31 October 2023 UK banks and investment firms are no longer subject to the variable-to-fixed remuneration cap under the Capital Requirements Directive.
5. Remuneration resolutions for smaller companies: amendments have been made to reflect the new version of the QCA Corporate Governance Code, which was published in November 2023, including the recommendation to put remuneration reports and remuneration policies to annual advisory shareholder votes .

The 2025 EMEA Policy Updates sets out the exact changes which have been made and provides further information about the reasons behind each amendment.

If you would like to look at these changes in further detail, please speak to your usual contact at Burges Salmon or contact Nick Graves, head of the firm's Corporate Department.