On 14 November 2018, Glass Lewis published its 2019 proxy guidelines. Some of the key revisions to its 2018 guidelines are as follows:

  • Board skills and diversity — FTSE 100 companies should provide meaningful disclosure in line with developing best practice standards. For instance, in accordance with U.K. best practice, FTSE 350 companies should strive for 33% female board representation by 2020.
  • Board and committee responsiveness — where at least 20% of shareholders vote contrary to the board's recommendation, the board should demonstrate some level of responsiveness to address shareholder concerns. Glass Lewis notes that, while the 20% threshold alone will not automatically generate a negative recommendation on a future proposal (e.g. against a director nominee), in certain circumstances, committee chairs and members should be held accountable for a failure to adequately address shareholder dissent via a recommendation against their re-election where the response to shareholder concerns has fallen below a qualitative threshold.
  • Environmental and social risk oversight — in instances where it is clear a company has not properly managed or mitigated environmental or social risks to the detriment of shareholder value or when such mismanagement has threatened shareholder value, the guidelines recommend voting against the directors responsible for the oversight of environmental and social risks.
  • Executive remuneration: realised pay — Glass Lewis will specifically assess the realised pay received by a company's top executives over at least three years when evaluating the link between pay and company performance.

The guidelines also encourage companies to disclose pay ratios between the CEO and medial or average U.K. employees, accompanied by a description of the methodology of the calculation. Pay ratio reporting obligations came into effect on 1 January 2019, and eligible companies will have to start reporting pay ratios in 2020.

The proxy guidelines can be accessed here.

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