Glass Lewis has posted its 2020 Voting Guidelines. A summary of the changes appears on page 1 of the guidelines & on Glass Lewis’s blog, and we’ll be posting memos in our “Proxy Advisors” Practice Area. Here are some of the highlights:
– Excluded Shareholder Proposals. Some of the most notable policy changes respond to the SEC’s recent guidance on the shareholder proposal no-action process. Glass Lewis now says that if the SEC declines to state a view on whether a shareholder proposal should be excluded, then it will likely recommend that shareholders vote against the members of the governance committee unless that proposal appears in the proxy statement.
If the SEC verbally permits a company to exclude a proposal and doesn’t provide a written record, Glass Lewis says that the company will have to provide some disclosure about the no-action position. Companies that don’t provide this disclosure will also face a negative recommendation on the members of their governance committee.
– Committee Performance & Disclosure. Several revisions relate to the codification of circumstances under which Glass Lewis will recommend against chairs of the audit, governance, and comp committees. Audit committee chairs will earn a thumbs down if fees paid to the company’s external auditor aren’t disclosed.
Governance committee chairs will get dinged when either director attendance information isn’t disclosed or when a director attended less than 75% of board and committee meetings and the proxy doesn’t provide enough details as to why. Comp committee chairs will earn Glass Lewis’s wrath if they adopt a time period for holding a “say-on-pay” vote that differs from the one approved by shareholders.
– Exclusive Forum Bylaws & Supermajority Provisions. Glass Lewis has tweaked its guidelines to clarify that it may not recommend against the governance committee chair in situations where it determines that an exclusive forum bylaw has been “narrowly crafted to suit the unique circumstances facing the company.” Glass Lewis has also codified its position that it will recommend voting against proposals to eliminate supermajority provisions at controlled companies, because these protect minority shareholders.
– Gender Pay Equity. Glass Lewis clarified that it will review on a case-by-case basis proposals that request that companies disclose their median gender pay ratios. It will generally vote against those proposals if the company has provided sufficient information concerning its diversity initiatives & concerning how it is ensuring that women and men are paid equally for equal work.
Other changes include defining situations where Glass Lewis reports on post-fiscal year end compensation decisions & setting expectations for disclosure of mid-year adjustments to short-term incentive plans. Glass Lewis also says that it has “enhanced” its discussion of excessively broad “change in control” provisions in employment agreements.
-John Jenkins, TheCorporateCounsel.net November 5, 2019
