Glass Lewis recently announced the publication of its 2021 Voting Guidelines. The biggest changes are that Glass Lewis is expanding its board gender diversity policy to vote against nominating chairs if there are fewer than two female directors, beginning in 2022 (they already recommend against the nominating chairs of all-male boards) — and they’re phasing in additional scrutiny of the descriptions of board-level E&S oversight.
As always, the first few pages of the Guidelines summarize the policy changes. Here’s a few highlights:
– Board Gender Diversity: Beginning in 2021, we will note as a concern boards consisting of fewer than two female directors. Our voting recommendations in 2021 will be based on our current requirement of at least one female board member; but, beginning with shareholder meetings held after January 1, 2022, we will generally recommend voting against the nominating committee chair of a board with fewer than two female directors. For boards with six or fewer total members, our existing voting policy requiring a minimum of one female director will remain in place.
– Disclosure of Director Diversity & Skills: Beginning with the 2021 proxy season, our reports for companies in the S&P 500 index will include an assessment of company disclosure in the proxy statement relating to board diversity, skills and the director nomination process.
– Board Refreshment: Beginning in 2021, we will note as a potential concern instances where the average tenure of non-executive directors is 10 years or more and no new independent directors have joined the board in the past five years. We will not be making voting recommendations solely on this basis in 2021; however, insufficient board refreshment may be a contributing factor in our recommendations when additional board-related concerns have been identified.
– E&S Oversight: Beginning in 2021, Glass Lewis will note as a concern when boards of companies in the S&P 500 index do not provide clear disclosure concerning the board-level oversight afforded to environmental and/or social issues. Beginning with shareholder meetings held after January 1, 2022, we will generally recommend voting against the governance chair of a company in the aforementioned index who fails to provide explicit disclosure concerning the board’s role in overseeing these issues. While we believe that it is important that these issues are overseen at the board level and that shareholders are afforded meaningful disclosure of these oversight responsibilities, we believe that companies should determine the best structure for this oversight for themselves.
– SPACs: We have added a new section detailing our approach to common issues associated with special purpose acquisition companies (“SPACs”), including our generally favorable view of proposals seeking to extend business combination deadlines, as well as our approach to determining the independence of board members at a post-combination entity who previously served as executives of the SPAC. Absent any evidence of an employment relationship or continuing material financial interest in the combined entity, we will generally consider such directors to be independent.
Glass Lewis also made several clarifying amendments — including that their standard policy on virtual shareholder meetings is now in effect, and they expect robust disclosure about the ability of shareholders to participate in the meeting.
We’ll be posting memos in our “Proxy Advisors” Practice Area — and you should also mark your calendar for our January 14th webcast, which is a dialogue with Courteney Keatinge, Senior Director of ESG Research at Glass Lewis. Members of TheCorporateCounsel.net can access that webcast for free — if you’re not a member, you can try a no-risk trial.
-Liz Dunshee, TheCorporateCounsel.net November 25, 2020
