By: John Ellerman
Proxy advisory firm Glass, Lewis & Co. LLC (“Glass Lewis”) has just published a new 45 page report which provides an overview to the Glass Lewis approach to advising its institutional investor clients regarding proxy matters. For the 2015 proxy season, Glass Lewis has noted six policy changes which are highlighted in the report. In order to keep our clients abreast of these changes in Glass Lewis policy, Pay Governance has summarized these policy changes in the following paragraphs.
- Nominating and Governance Committee Performance – Glass Lewis has adopted a policy against Boards which have amended —without obtaining shareholder approval — a company’s governing documents which result in a reduction or removal of important shareholder rights. Glass Lewis lists the following examples of such Board actions:
- • Elimination of the ability of shareholders to call a special meeting or act by written consent
- • An increase to the ownership threshold required for shareholders to call a special meeting
- • An increase to vote requirements for charter or bylaw amendments
- • The adoption of provisions that limit the ability of shareholders to pursue full legal recourse (e.g., bylaws that require arbitration of shareholder claims)
- • The adoption of a classified board structure
- • The elimination of the ability of shareholders to remove a director without cause in those circumstances where Glass Lewis finds any of the above to occur, Glass Lewis states that it will recommend shareholders to vote against the chairman of the nominating and governance committee or the entire committee.
- • Votes for a declassified board structure
- • A majority vote standard for director elections
- • A right to call a special meeting
Glass Lewis has provided some new clarification to its proxy advisory guidelines for 2015. Truthfully, these policy changes are very narrow in their application and should not be considered overly onerous to most corporations. Pay Governance will keep its clients informed of any new developments by either Glass Lewis or ISS regarding their proxy advisory services for the 2015 proxy season.
General questions about this Viewpoint can be directed to John Ellerman by email at email@example.com.