Glass Lewis’ 2024 Voting Policy Changes: What it Means for Board Oversight, Executive Compensation

Glass Lewis announced updates to its voting policy guidelines following the results of its first  annual benchmark survey. Full 2024 guidance can be found here.

So, what’s new? Key changes include:

Board Oversight and Accountability

• “E” and “S” issues. Glass Lewis is taking the stance that ESG must be formally assigned to a specific committee and will be reviewing charters to ensure oversight is meaningful. This is a powerful indicator of the importance investors will place on committee oversight of ESG going forward.

Executive Compensation

• Clawbacks. Policies are expected to not only meet new Dodd-Frank requirements but to allow the board to claw back pay in the event of reputational harm and misconduct. Glass Lewis goes so far as to stipulate that the board should disclose their rationale in cases where they choose not to claw back pay, but it seems unlikely that most companies would adopt this.
  
  
• Executive stock ownership. Policies now explicitly state that counting unearned performance-based full value award and/or unexercised stock options is inappropriate. Companies should provide a “cogent rationale” should they choose to count these awards.

The new policies provide additional discussion of board responsiveness, board gender diversity, non-GAAP to GAAP reconciliation, PVP disclosure and company responsiveness to Say on Pay opposition.

Why does it matter? Glass Lewis lacks the market share of larger competitor ISS, but still commands the interest of most investors, especially larger pension funds, so companies are wise to pay attention to policy voting guidelines.