Glass Lewis’ Policy Guidelines provide an overview of our approach to governance and proxy research. Updated guidelines are now available for the United States, Canada, Israel, and Shareholder Initiatives, and updates to other markets will be released soon.
In developing our policies, we consider a diverse range of perspectives and inputs, with ongoing analysis of regulatory developments, academic research and evolving market practices as a starting point. We incorporate insights gained from discussions with institutional investors, trade groups and other market participants, as well as meetings of the Glass Lewis Research Advisory Council. Further, our engagement meetings with over 1,000 public companies each year help shape our guidelines by adding essential market- and industry-specific context.
Glass Lewis evaluates these guidelines on an ongoing basis and formally updates them on an annual basis. For 2019, our guidelines are focused on several key areas, including board diversity, environmental and social risk oversight, auditor independence, executive compensation and shareholder rights. For a complete detail of the 2019 updates, please review the Summary of Changes within the relevant policy document.
Among other updates, the 2019 Guidelines address the following topics:
- Board Gender Diversity: Our policy regarding board gender diversity, announced in November 2017, takes effect for meetings held on or after January 1, 2019. Under this updated policy, we will generally recommend voting against the nominating committee chair of a board that has no female members. When making this recommendation, we will closely examine the company’s disclosure of its board diversity considerations and other relevant contextual factors.
- Conflicting and Excluded Proposals: During 2018, we observed several different approaches taken by companies in response shareholder resolutions on the topic of special meeting rights. Our updated guidelines codify how we will generally recommend voting in these different scenarios.
- Diversity Reporting: We will now generally recommend in favor of shareholder proposals requesting additional disclosure on employee diversity and those requesting additional disclosure on the steps that companies are taking to promote diversity within their workforces.
- Environmental and Social Risk Oversight: We have codified our approach to reviewing how boards are overseeing environmental and social issues.
- Executive and Director Compensation: We have expanded our discussion of several executive compensation topics and how these factor into our say-on-pay voting recommendations. Areas where we have expanded or enhanced our policies include excise tax gross-ups, severance and sign-on arrangements, grants of front-loaded awards, clawback provisions, and CD&A disclosure for smaller reporting companies. We have also added clarifying language regarding our approach to peer groups, pay-for-performance, the use of discretion, director compensation and bonus plans.
- Ratification of Auditor: Additional Considerations: We have codified additional factors we will consider when reviewing auditor ratification proposals and extended our discussion of auditor ratification to reflect updated disclosure standards.
- Virtual Shareholder Meetings: Our policy regarding virtual-only shareholder meetings, announced in November 2017, takes effect for meetings held on or after January 1, 2019. For companies opting to hold their annual meeting by virtual means, and without the option of attending in person, we will examine the company’s disclosure of its virtual meeting procedures and may recommend voting against the members of the governance committee if the disclosure does not ensure that shareholders will be afforded the same rights and opportunities to participate as they would at an in-person meeting.
- Written Consent Shareholder Proposals: We have adjusted our approach to written consent shareholder proposals. In instances where companies have adopted proxy access and a special meeting right of 15% or lower, we will generally recommend against shareholder proposals requesting that companies adopt a shareholder right to action by written consent.
- Other updates: In addition to the above, we have clarified our existing approach to a number of topics, such as director and officer indemnification, quorum requirements, director recommendations on the basis of company performance, and OTC-listed companies.
We believe in transparent, aligned and well-governed markets in service of our purpose to empower clients seeking to maximize long-term shareholder value. As such, investor clients and non-clients, issuers and other stakeholders are invited to comment on these updates, as well as any aspect of the Policy Guidelines, at any time throughout the year. Your feedback will be taken into consideration as we continue to evaluate our guidelines on an ongoing basis and formally update them annually.