Proxy Advisor Voting Policy Update for 2019

Glass Lewis has updated and announced the changes to their 2019 voting policies. Glass Lewis’s voting policy provide the basis for their approach to proxy advise to their Institutional client base. While Institutional clients are increasingly designing their own customized policy, proxy advisor policies are still influential in the voting outcome and reflect current governance concerns.

The key changes to Glass Lewis’s policy:

  • Gender diversity – as advised last year, Glass Lewis will start withholding on the nominating chair when no women are present on the board.  Glass Lewis will take into consideration the company’s disclosure of its board diversity considerations and other relevant contextual factor.
  • Director Board Skills: The policy will include an analysis at S&P/TSX 60 index companies of board skills matrices to assist in assessing a board’s competencies and identifying any potential skills gaps.
  • Environment and Social Risk oversight: Glass Lewis may consider recommending that shareholders vote against members of the board who are responsible for oversight of environmental and social risks.
  • Auditors – additional factors Glass Lewis will consider include the auditor’s tenure, a pattern of inaccurate audits, and any ongoing litigation or significant controversies that call into question an auditor’s effectiveness. In limited cases, these factors may contribute to a recommendation against auditor ratification
  • Virtual Shareholder Meetings: For companies that choose to have virtual only shareholder meetings, Glass Lewis will examine the company’s disclosure of its virtual meeting procedures and may recommend voting against mem­bers of the governance committee if the company does not provide disclosure assuring that shareholders will be afforded the same rights and opportunities to participate as they would at an in-person meeting.
  • Executive and Director Compensation: Glass Lewis has expanded their discussion of several executive compensation topics and how these factor into their say-on-pay voting recommendations. Areas expanded, or enhanced 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. Glass Lewis has also added clarifying language regarding their approach to peer groups, pay-for-performance, the use of discretion, director compensation and bonus plans.
  • Executive Compensation Plans -Contractual payments and arrangements have extended policy regarding contractual payments and arrangements as part of their analysis of executive compensation and clarified terms that help drive a negative recommendation.

ISS will be determined after the close on November 1st., of their proposed benchmark voting policy comment period.  ISS comment period is to allow them to solicit the views of governance stakeholders on certain proposed policy changes.  The proposed policy changes that have been sent for comment that will affect Canadian issuers, are concerned with expanding the list of Canadian company’s subject to negative director recommendations if there are no women on the board. 

Please contact Penny Rice at Shorecrest Group if you have any questions about these amendments or other governance questions.