In the wake of the SEC rescinding major aspects of its existing rules regulating proxy advisory firms (see above), Glass Lewis has
released its
2022 Policy Guidelines. The new guidelines include changes on the following topics:
- Board Gender Diversity. Beginning in 2022, Glass Lewis will recommend against the Chair of the Nominating Committee of boards with fewer than two gender diverse directors, or the entire Committee of boards with no gender diverse directors. Beginning in 2023, the requirement will be at least 30% gender diversity on any Russell 3000 board.
- Supporting Other Diversity Requirements. Glass Lewis will show its support for various state or stock exchange diversity requirements by recommending in line with those requirements for gender or ethnic diversity on the board (e.g., CA and IL state law or Nasdaq listing standards).
- Board Diversity Disclosures. Also beginning in 2022, Glass Lewis may recommend against the Chair of the Nominating and/or Governance Committee for S&P 500 companies with “poor disclosure” of board diversity, and in 2023, individual or aggregate racial/ethnic demographics will be required.
- ESG Oversight. Beginning in 2022, Glass Lewis will recommend against the Governance Committee Chair of any S&P 500 company that fails to provide explicit disclosure of board-level oversight of ESG issues.
- Board Age/Tenure. Beginning in 2022, Glass Lewis will recommend against the Nominating or Governance Committee Chair of any company that has waived director term/age limits for two or more consecutive years unless compelling rationale is provided.
- Linking ESG to Pay. Glass Lewis notes it will highlight the use of ESG metrics tied to pay in its reports but does not take a position on whether this is an appropriate practice (robust disclosure will be expected, especially where ESG metrics are qualitative).
Meanwhile, ISS’s
draft 2022 policies were almost entirely focused on its global markets, although it was noted that 2022 marks the deadline for Russell 3000 and S&P 1500 companies to have at least one racially/ethnically diverse director.
