New ISS Position on Third Party Compensation Director Disqualification Bylaws in the US

November 21, 2013

In connection with the upcoming annual meeting of Provident Financial Holdings, Inc., the Proxy Advisory Services arm of Institutional Shareholder Services has recommended that Provident Financial’s stockholders withhold their votes for the director candidates of the company who are members of its nominating and governance committee, citing a “material governance failure” arising from the board’s recent adoption of a bylaw disqualifying as a nominee for election to the board anyone who receives compensation for that candidacy from a third party. Companies which have, or are considering the adoption of, a bylaw governing this area should carefully consider its scope to avoid triggering undesired consequences.

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