Proxy Adviser's Gender and Shareholder Meetings Guidelines

Each year, Glass Lewis reviews internal corporate governance guidelines annually. The firm announced that it is making noteworthy revisions to its policies for 2018.

Each year, Glass Lewis reviews internal corporate governance guidelines. It is one of the two most prominent firms of its type and advises more than 1,200 institutional investors. Glass Lewis guidelines determine whether or not the firm recommends that its clients vote in favor of or against corporate board members and proxy proposals.

Glass Lewis is making noteworthy revisions to their policies for 2018. Among the policy guideline changes are:

Greater Clarity of Board Gender Diversity: The firm will consider the gender makeup of companies’ board of directors when evaluating their oversight structure. In 2019, Glass Lewis will “generally recommend voting against the nominating committee chair of a board that has no female members.”

Dual-Class Share Structures: Glass Lewis “believes dual-class voting structures are typically not in the best interests of common shareholders.” As such, it is now considering the presence of such structures when evaluating corporate governance following an initial public offering (IPO) or corporate spin-off.

Board Responsiveness: The firm says that corporate boards have an “imperative to respond” to shareholder dissents representing more than 20% of votes cast to a proposal at an annual meeting. Furthermore, Glass Lewis says companies with dual-class share structures should be responsive when a majority of unaffiliated shareholders support a shareholder proposal or oppose a management proposal.

Virtual Shareholder Meetings: Glass Lewis holds a nuanced view of meetings held over the internet instead of in person. The firm thinks virtual meetings can “complement” traditional, in-person shareholder meetings but also “have the potential to curb” meaningful communication between shareholders and a company’s management. Starting in 2019, the firm will “generally recommend voting against” governance committee board members of companies not providing disclosure about holding virtual-only shareholder meetings.

Director Commitments: Glass Lewis will evaluate the specific duties and responsibilities of directors who serve in executive roles other than CEO (such as an executive chair) as part of its decision about whether to apply a limit of two total board memberships for public executives.

CEO Pay: The firm will begin displaying the ratio of CEO pay to the median compensation of their company’s employees in its proxy reports, but says the ratio will not be “a determinative factor in our voting recommendations.”

Source: “2018 Proxy Paper Guidelines,” Glass Lewis, December 2017.