Glass Lewis 2019 voting guidelines for the United Kingdom
On 16th November 2018, Glass Lewis published updated guidelines on their approach to proxy advice. They say the UK policy guidelines incorporate not only the recommendations of the UK Code and the requirements of the Act and the UK Listing Authority, but also corporate governance best practices.
Summary of changes for the 2019 United Kingdom Policy Guidelines:
Board Skills and Diversity
There is an expectation that FTSE 100 companies provide particularly meaningful disclosure in line with developing best practice standards.
They will take into account disclosed gender pay gap data and executive pipeline composition when assessing diversity concerns at the board level of larger companies.
Pay Ratios
They have updated their guidelines to reflect their position on the disclosure of CEO pay ratios in order to clarify that they will not, in and of themselves, have a material impact on their voting recommendations at this time.
Board and Committee Responsiveness
They have clarified their policy regarding board and committee responsiveness to shareholder dissent. Specifically, they have outlined that they may, in certain circumstances, hold committee chairs and members accountable for a failure to adequately address shareholder dissent.
Environmental and Social Risk Oversight
They have codified their approach to reviewing how boards are overseeing environmental and social issues. For companies listed in a blue-chip index and in instances where they identify material oversight issues, Glass Lewis will review a company’s overall governance practices to identify which directors or board-level committees have been charged with oversight of environmental and/or social issues.
Glass Lewis will also note instances when such oversight has not been clearly defined by companies in their governance documents. Further, they have clarified that, 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, Glass Lewis may consider recommending that shareholders vote against members of the board who are responsible for oversight of environmental and social risks. In the absence of explicit board oversight of environmental and social issues, Glass Lewis may recommend that shareholders vote against members of the audit committee. In making these determinations, Glass Lewis will carefully review the situation at hand, its effect on shareholder value, as well as any response made by the company in order to take corrective action.
Executive Remuneration: Realised Pay
They have clarified that they 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.
