- Continental Europe
- Shareholder Initiatives
- United Kingdom
- United States
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 1,500 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 2020, our guidelines are focused on several key areas, including companies’ exclusion of shareholder proposals and key board committee responsiveness and performance. For a complete detail of the 2020 updates, please review the Summary of Changes within the relevant policy document.
Among other updates, the 2020 guidelines for the U.S. and Shareholder Initiatives address the following topics:
Excluded Shareholder Proposals
In September 2019, the SEC announced guidance stating that in cases where a company seeks to exclude a shareholder proposal, the staff will inform the proponent and the company of its position, which may be that the staff concurs, disagrees or declines to state a view, with respect to the company’s asserted basis for exclusion. In instances where the SEC has declined to state a view on whether a shareholder resolution should be excluded, we believe that such proposal should be included in a company’s proxy filings. A failure to do so will likely lead Glass Lewis to recommend that shareholders vote against the members of the governance committee.
The SEC also stated that beginning with the 2019-2020 shareholder proposal season, the staff may respond orally, instead of in writing, to some no-action requests. In instances where the SEC has verbally permitted a company to exclude a shareholder proposal and there is no written record provided by the SEC about such determination, we expect the company to provide some disclosure concerning this no-action relief. In cases where a company has failed to include a proposal on its ballot without such disclosure, we will generally recommend shareholders vote against the members of the governance committee of the board.
Key Committee Performance and Disclosure
Glass Lewis has codified our guidelines to state that we will generally recommend voting against the audit committee chair when fees paid to the company’s external auditor are not disclosed.
We have also codified that we will generally recommend voting against the governance committee chair when: (i) directors’ records for board and committee meeting attendance are not disclosed; or (ii) when it is indicated that a director attended less than 75% of board and committee meetings but disclosure is sufficiently vague that it is not possible to determine which specific director’s attendance was lacking.
Finally, Glass Lewis has codified that we will generally recommend against all members of the compensation committee when the board adopts a frequency for its advisory vote on executive compensation other than the frequency approved by a plurality of shareholders.
Exclusive Forum Provisions
We have clarified our guidelines to state that When companies have adopted an exclusive forum provision, we may not recommend against the governance committee chair in instances where it can be reasonably determined that the provisions of a forum selection clause are narrowly crafted to suit the unique circumstances facing the company.
Supermajority Vote Provisions
We have codified our approach to shareholder proposals requesting that companies eliminate any supermajority vote standard. In instances where such proposals are submitted to controlled companies, we will generally recommend that shareholders vote against such resolutions, as the supermajority vote may serve to protect minority shareholders.
Gender Pay Equity
We have clarified our approach to shareholder proposals requesting that companies provide more disclosure on the steps they are taking to ensure equal pay for women and men. We will review on a case-by-case basis proposals that request that companies disclose their median gender pay ratios (as opposed to proposals asking that such information be adjusted based on factors such as job title, tenure, and geography). In instances where companies have provided sufficient information concerning their diversity initiatives as well as information concerning how they are ensuring that women and men are paid equally for equal work, we will generally recommend against these resolutions.
In addition to the above, we have clarified our approach to a number of topics, such as defining situations where we report on post-fiscal year end compensation decisions and setting expectations for disclosure of mid-year adjustments to STI plans. We have also enhanced our discussion of excessively broad definitions of “change in control” in employment agreements.
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.