Yesterday, ISS issued FAQs explaining its views on director
qualification/compensation bylaws. These types of bylaws
disqualify from serving as directors persons who receive
third-party compensation, typically from activist investors, for
their service as directors. Such bylaws have been adopted
since last spring by some companies to prevent arrangements similar
to those proposed by activist shareholders running minority slates
of directors for the boards of Hess Corp. and Agrium, Inc. in early
2013. See here.
In November 2013, ISS recommended that shareholders of Provident
Financial Holding withhold their votes from three director
candidates coming up for re-election who were serving on the
company's nominating and governance committee, because the
Provident board had adopted a director qualification/compensation
bylaw. See here. At the company's annual
meeting on November 26, 2013, the three candidates were re-elected
by low margins, receiving withhold votes
