Andrea K. Wahlquist and Sabastian V. Niles are partners, and Justin C. Nowell is an associate at Wachtell Lipton Rosen & Katz. This post is based on their Wachtell memorandum.
Glass Lewis recently released its 2021 U.S. Voting Policies, which heighten focus on board diversity and related disclosures, board tenure and refreshment, and environmental and social risk oversight. The new policies also address incentive compensation plans and shareholder proposals. The new policies generally become effective for shareholder meetings held on or after January 1, 2021. ISS also recently released its final U.S. Voting Policies, which track previously issued draft policies and become effective for shareholder meetings held on or after February 1, 2021.
Glass Lewis
Notable updates to Glass Lewis’ voting policy guidelines include:
Board Gender Diversity. Glass Lewis reaffirmed its commitment to board gender diversity and will now generally recommend voting against the nominating committee chair of a board that has fewer than two female directors, starting with shareholder meetings held after January 1, 2022. In the interim, Glass Lewis will apply its existing guideline of a minimum of one female board member for meetings held in 2021 and will flag companies if their boards have fewer than two female directors. Although Glass Lewis’ voting policy guidelines did not adopt a board diversity policy that goes beyond gender or disclosure (see below), it would not be surprising to see a voting policy that addresses ethnic and/or racial diversity on boards in the future. This is particularly true given ISS’ adoption of such an approach and enhanced scrutiny from investors on boards lacking racial and ethnic diversity.