Several Changes for 2022 U.S. Glass Lewis Voting Guidelines

Proxy advisory firm Glass Lewis recently released its voting guidelines for public company boards for the year 2022. The guidelines target several areas that are also of  interest to mutual fund boards. Some of the changes for 2022 include:

Waiver of Age and Tenure Policies: Beginning in 2022, in cases where the board has waived its term/age limits for two or more consecutive years, Glass Lewis will generally recommend shareholders vote against the nominating and or governance committee chair, unless a compelling rationale is provided for why the board is proposing to waive this rule, such as consummation of a corporate transaction.

Board Gender Diversity: Beginning in 2022, Glass Lewis will generally recommend voting against the chair of the nominating committee of a board with fewer than two gender diverse directors, or the entire nominating committee of a board with no gender diverse directors, at companies within the Russell 3000 index. For companies outside of the Russell 3000 index, and all boards with six or fewer total directors, Glass Lewis’s existing policy requiring a minimum of one gender diverse director will remain in place. Beginning with shareholder meetings held after January 1, 2023, Glass Lewis will transition from a fixed numerical approach to a percentage-based approach and will generally recommend voting against the nominating committee chair of a board that is not at least 30 percent gender diverse at companies within the Russell 3000 index. Additionally, when making these voting recommendations, Glass Lewis will carefully review a company’s disclosure of its diversity considerations and may refrain from recommending that shareholders vote against directors of companies when boards have provided a sufficient rationale or plan to address the lack of diversity on the board.

State Laws on Gender Diversity: Glass Lewis will include two sections regarding state laws on gender diversity and state laws on underrepresented community diversity and will recommend in accordance with mandated board composition requirements set forth in applicable state laws when they come into effect. Glass Lewis said it will generally refrain from recommending against directors when applicable state laws do not mandate board composition requirements, are non-binding, or solely impose disclosure or reporting requirements in filings made with each respective state annually.

Stock Exchange Diversity Disclosure Requirements: The guidelines include a new section regarding the diversity disclosure rule adopted by the Nasdaq stock exchange. For annual meetings held after August 8, 2022, of applicable Nasdaq-listed companies, Glass Lewis said it will recommend voting against the chair of the governance committee when the required disclosure has not been provided.