Glass Lewis, ISS update proxy guidelines for 2015 season

7 novembre 2014

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On November 5, Glass Lewis released updates to its Canadian voting guidelines for the upcoming 2015 proxy season.

Notable updates to the guidelines include those in respect of shareholder rights and defences, including (i) recommending that shareholders withhold votes from all members of an uncontrolled TSX-listed company’s governance committee where such company has not adopted a majority voting policy, in light of changes to TSX rules; (ii) amending the circumstances in which Glass Lewis will consider support for shareholder rights plans to require that the plan not allow the board the discretion to amend the material provisions without shareholder approval in addition to Glass Lewis’ previously considered attributes; and (iii) amending its position with regard to advance notice policies such that Glass Lewis may now consider recommending a vote against a policy that does not allow for the commencement of a new time period where an annual meeting is adjourned or postponed (an issue we discussed in our recent post).

Additional updates include the increase in guidance with regard to directors who have served on boards or as executives of companies with poor performance records, the additional recommendation that routine director evaluation be performed by an independent external firm and new guidance about “one-off awards” with Glass Lewis stating the companies should redesign their compensation programs where such programs fail to provide adequate incentives to executives, rather than make additional grants.

ISS also released updates to its proxy voting guidelines yesterday. The updates to the guidelines include (i) amending the definition of independence to allow former CEOs, on a case-by-case basis, to be considered independent after a five-year cooling off period following retirement from such position; (ii) recommending withholding votes from individual directors, committee members or the entire board where an advance notice policy has been unilaterally adopted by the board without shareholder approval; and (iii) an update to ISS' current policy on advance notice bylaws to review, on a case-by-case basis, proposals to adopt or amend advance notice policies by considering a number of features that may be considered problematic, including:

  • subject to certain specified circumstances, the company's deadline for notice of shareholders' director nominations being fewer than 30 days prior to the meeting date;
  • the board's inability to waive, in its sole discretion, all sections of the advance notice provision;  
  • a requirement that any proposed nominee agree in advance to comply with all policies and guidelines of the company that apply  to directors;  
  • any provision that restricts the notification period to that established for the originally scheduled meeting in the event that the meeting has been adjourned or postponed;  
  • any additional disclosure requests within the advance notice requirement or the company's ability to require additional disclosure that exceeds certain requirements; 
  • stipulations within the provision that the corporation will not be obligated to include any information provided by dissident director nominees or nominating shareholders in any shareholder communications; and
  • any other feature or provision determined to have a negative impact on shareholders' interests and deemed outside the purview of the stated purpose of the advance notice requirement.

As we discussed last month ISS released a draft version of the updates earlier this fall.

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