Glass Lewis (GL) announced yesterday that its 2021 Proxy Voting Policy Guidelines for the United States are now available. In addition, the proxy advisor announced the release of its 2021 “Environmental, Social and Governance (‘ESG’) Initiatives,” which includes the firm’s approach to shareholder proposals.

We are preparing a more fulsome Briefing: Governance blogpost summary.  In the meantime, the following are a few key changes:

  • BOARD GENDER DIVERSITY.   Beginning in 2021, GL will note as a concern boards consisting of fewer than 2 female directors. Beginning with shareholder meetings held after January 1, 2022, GL will generally recommend voting against the nominating committee chair of a board with 6 or more directors, but with fewer than 2 female directors.
  • DISCLOSURE OF DIRECTOR DIVERSITY AND SKILLS.  GL will begin tracking the quality of such disclosure in proxy statements. Beginning with the 2021 proxy season, GL’s report for each S&P 500 company will include GL’s assessment of the proxy statement disclosure regarding matters such as board diversity, board skills and the director nomination process. While GL does not plan on making voting recommendations in 2021 solely on this ground, the proxy advisor notes that insufficient disclosure on director diversity and skills may be considered when evaluating other board-related matters where GL has identified a concern.
  • BOARD REFRESHMENT.   Beginning in 2021, GL 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 5 years. While GL does not intend to make recommendations in 2021 solely on this basis, the firm may factor that there is insufficient board refreshment at the company when determining its recommendation on other board-related matters where GL also has a concern.
  • ENVIRONMENTAL AND SOCIAL RISK OVERSIGHT.  GL has updated its policy on board oversight of environmental (E) and social (S) issues. Beginning in 2021, GL will note as a concern when S&P 500 company boards fail to provide clear disclosure regarding board-level oversight on E&S issues. Beginning with shareholder meetings held after January 1, 2022, GL will generally recommend voting against the board governance committee chairs of S&P 500 companies for inadequate disclosure regarding board oversight of E&S issues.
  • SPACs–New.  GL has added a new section detailing its approach to common special purpose acquisition companies (SPACs) issues. These include GL’s generally favorable view of proposals seeking to extend business combination deadlines, as well as GL’s 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, GL will generally consider these directors independent.

The updates also include GL’s codifying the additional factors the firm considers when assessing short-term and long-term incentive plans. In addition, the proxy advisor elaborates on when explanations are expected in connection with long-term incentive plan disclosures. Lastly, GL has added some clarifying changes, including that the firm is reverting back to its standard policy on virtual-only shareholder meetings. Earlier in the year, GL made a temporary exception for this meeting format in response to the extenuating circumstances caused by the COVID-19 pandemic.