Glass Lewis Updates its Virtual Meeting Policy for the 2020 Proxy Season

April 6, 2020

Glass Lewis will generally refrain from recommending voting against governance committee members on the basis of an issuer holding a virtual shareholder meeting provided that the issuer discloses its rationale for holding a virtual shareholder meeting, including citing COVID-19.

In light of the COVID-19 pandemic, Glass Lewis has published an updated version of its 2020 Proxy Paper Guidelines for Canada to provide for exceptional treatment of virtual-only shareholder meetings. For the 2020 proxy season, Glass Lewis will generally refrain from a “vote against” recommendation for members of the governance committee on the basis that the issuer is holding a virtual-only shareholder meeting, provided that the issuer satisfies minimum disclosure expectations, including citing COVID-19 in its rationale for holding a virtual-only shareholder meeting. This updated policy will apply to virtual-only shareholder meetings between March 1, 2020 and June 30, 2020.

Glass Lewis has highlighted concerns that the virtual-only format may hinder the ability of shareholders to meaningfully participate and engage with management during the meeting. Accordingly, as discussed in our Proxy Season Preparedness post, Glass Lewis indicated as its standard policy position, to generally vote against governance committee members if a company opts to hold a virtual meeting without adequate disclosure to support the preservation of shareholders’ right to participate virtually.

When analyzing the governance profile of companies that choose to hold virtual-only meetings, Glass Lewis will look for robust disclosure in a company’s proxy statement which assures shareholders that they will be afforded the same rights and opportunities to participate as they would at an in-person meeting.  According to Glass Lewis, examples of effective disclosure include:

  • addressing the ability of shareholders to ask questions during the meeting, including time guidelines for shareholder questions, rules around what types of questions are allowed, and rules for how questions and comments will be recognized and disclosed to meeting participants;
  • procedures, if any, for posting appropriate questions received during the meeting and the company’s answers, on the investor page of their website as soon as is practical after the meeting;
  • addressing technical and logistical issues related to accessing the virtual meeting platform; and
  • procedures for accessing technical support to assist in the event of any difficulties accessing the virtual meeting.

Glass Lewis’ standard policy position will apply for all shareholder meetings occurring after June 30, 2020. Further, companies opting to continue to hold a virtual-only shareholder meeting in subsequent years will want to revisit their disclosure in this regard with a view to providing robust disclosure concerning adequate shareholder participation in order to avoid a negative recommendation.

For further information on virtual shareholder meetings please see our earlier posts: Industry Canada Provides Guidance on Virtual Meetings and AGM Delays under the CBCA, Social Distancing During Proxy Season: Update on Virtual Shareholder Meetings and Looking to Change Your Meeting Because of COVID-19? CSA Says Go For It!

DISCLAIMER: This publication is intended to convey general information about legal issues and developments as of the indicated date. It does not constitute legal advice and must not be treated or relied on as such. Please read our full disclaimer at www.stikeman.com/legal-notice.

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