Beginning in 2019, Glass Lewis will recommend voting against the nominating committee chair of a board that has no female directors, according to the recently released 2018 Glass Lewis proxy guidelines. The new recommendation may be mitigated by the presence of a sufficient rationale for not having any female directors or a plan to address the lack of diversity on the board. Other highlights of the 2018 Glass Lewis Proxy Paper Guidelines include:
- As previously noted, CEO pay ratios will be displayed as a data point in 2018 reports, but not factored into vote recommendations at this time.
- Glass Lewis will heighten its emphasis on board responsiveness, explicitly requiring that boards take action if shareholder support is less than 80% on any ballot item.
- Although it is not a change, we note with interest that Glass Lewis has articulated the meaning of a "C" grade on its pay for performance analysis. Specifically, it states: “Unlike a school letter system, however, the letter “C” in the Glass Lewis grade system does not indicate a significant lapse; rather, a “C” in the Glass Lewis grade system identifies companies where the pay and performance percentile rankings relative to peers are generally aligned. This suggests that the company neither overpays nor underpays its executives relative to its comparator group." It further explains that “receiving an “A” in our analysis shows that the company is paying significantly less than peers while outperforming the comparator group.” The pay for performance analysis “informs” Glass Lewis’s say on pay vote, but does not dictate it. (The full say on pay discussion begins on page 27 of the document.)