On November 18, Glass Lewis released its 2017 U.S. Proxy Season Guidelines. The guidelines are a detailed overview of the key policies Glass Lewis applies when analyzing individual companies and are formally updated on an annual basis.
One of the more significant changes to the Glass Lewis Guidelines is the director overboarding policy. Under this policy, Glass Lewis will generally recommend voting against a director who serves as an executive officer of any public company while serving on a total of more than two public company boards, and against any other director who serves on a total of more than five public company boards. Glass Lewis may consider factors such as the size and location of the other companies where the director serves on the board, the director’s board roles at the companies in question, whether or not the director serves on the board of any large privately held companies, the director’s tenure on the boards in question, and the director’s attendance record at all companies. Glass Lewis may refrain from recommending against certain directors if the company provides sufficient rationale for their continued board service.
Further, Glass Lewis clarified how it approaches corporate governance at newly public entities. Although Glass Lewis believes that such companies should be given adequate time to comply with exchange listing requirements and to comply with basic governance standards, it will review the terms of the company’s governing documents in order to determine whether shareholder rights are being severely restricted from the outset. If Glass Lewis concludes shareholder rights are significantly restricted from the outset, it will consider recommending that shareholders vote against members of the governance committee or the directors serving at the time of the governance documents adoption. The specific areas of governance that will be reviewed by Glass Lewis include anti-takeover mechanisms, supermajority vote requirements and general shareholder rights, such as the ability of shareholders to remove directors and call special meetings.
Additionally, Glass Lewis has clarified its approach to board evaluation, succession planning and refreshment. Glass Lewis believes a robust board evaluation process focused on the assessment and alignment of director skills is more effective than solely relying on age or tenure limits.
The full text of the Glass Lewis 2017 Proxy Season Guidelines is available here.