Update on 2026 Glass Lewis Policy Changes

Glass Lewis is slowly releasing new details about its overhauled pay for performance testing methodology. A new blog from FW Cook highlights the criteria that will be used to measure alignment.

Key changes include:

• A numerical scorecard which will replace the previous A to F letter grade system.
• An extension of the performance period from 3 to 5 years along with two new tests introduced.
• An expansion of the relative pay and performance comparisons to include broader general industry and market cap peers (previously was Glass Lewis selected peers).
• Considers different pay definitions including a CAP to TSR benchmark.

The Center submitted comments on Glass Lewis’ 2026 policy survey emphasizing that while transparency is essential, rigid disclosure frameworks obscure rather than clarify board decision-making.

We advocated for the following:

1. Executive Compensation Disclosures: The Need for Flexibility. Proxy statements have steadily grown in length and complexity, but not always in usefulness.

• Adopt a principles-based disclosure framework, allowing boards to articulate their rationale more effectively and enabling investors to better understand how pay outcomes align with company performance.

2. Time-Based Equity: A Tool for Committee Discretion. Glass Lewis revisited the debate on whether time-based equity could serve as an acceptable alternative to PSUs.

• Neither PSUs nor RSUs should be mandated. Compensation committees should retain the discretion to determine structures that best support their company’s strategy and talent needs.

3. Executive Security: Essential, Not a Perk. The survey raised the question of whether executive security expenses should appear in the SCT.

• We oppose this approach, noting that security measures — such as residential systems, protective services, and secure transportation — are business-driven costs, not discretionary perks. Treating them as compensation to an executive is misleading to investors and the Center has previously recommended that the SEC exclude these items under Item 402.

4. Severance: Preserving Board Judgment. Finally, Glass Lewis asked if additional disclosure should be required in the event of a revised severance agreement.

• Current disclosures already provide clear information regarding changes and their rationale. Companies must retain flexibility to adjust severance agreements in the context of leadership transitions, restructurings, or change-in-control scenarios as needed.

The Glass Lewis survey closes on September 15^th and results should be available in November.