On November 17, 2022, Glass Lewis released its 2023 U.S. Policy Guidelines (U.S. Guidelines) and its 2023 ESG Initiatives Policy Guidelines (ESG Guidelines), effective for shareholder meetings on or after January 1, 2023. On December 13, 2022, Institutional Shareholder Services (ISS) released its 2023 United States Proxy Voting Guidelines Benchmark Policy Recommendations (ISS Guidelines), effective for shareholder meetings on or after February 1, 2023. This alert summarizes updates made to Glass Lewis’s U.S. Guidelines and ESG Guidelines as well as updates made to ISS’s Guidelines.

Glass Lewis U.S. Guidelines

The Glass Lewis U.S. Guidelines included several key updates:

Board of Directors

Board Diversity

• Gender Diversity: As announced in last year’s policy guidelines, in 2023, Glass Lewis will transition to a percentage-based approach for board gender diversity rather than a fixed numerical approach. Under the percentage-based approach, for companies in the Russell 3000 index, Glass Lewis will generally recommend against the chair of a board’s nominating committee if the board is not at least 30 percent gender diverse. For companies outside the Russell 3000 index, Glass Lewis will retain its fixed numerical approach requiring at least one gender diverse director on the board. Companies that do not meet these thresholds need to disclose a sufficient rationale or a plan to address their lack of board diversity with a timeline to appoint additional gender diverse directors in order to avoid an adverse voting recommendation from Glass Lewis.
• Underrepresented Community Diversity: Glass Lewis will now generally advise against the chair of a board’s nominating committee at companies in the Russell 1000 index that do not have at least one director who self-identifies as belonging to an underrepresented community. An “underrepresented community” is defined as Black, African American, North African, Middle Eastern, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian, or Alaskan Native, or gay, lesbian, bisexual, or transgender. Glass Lewis’s determination of diversity will be made solely from the demographic information disclosed in a company’s proxy statement. Glass Lewis’s definition of “underrepresented community” differs slightly from Nasdaq’s definition of “underrepresented minority.” Nasdaq’s definition does not include North African or Middle Eastern, and Glass Lewis’s definition does not include members of the queer community. Nasdaq-listed companies (particularly those in the Russell 1000 index) may want to consider whether to include North African and Middle Eastern in their board diversity matrices as supplementary disclosure. Companies that do not meet this threshold need to disclose a sufficient rationale or plan to address the lack of diversity with a timeline in order to avoid an adverse voting recommendation from Glass Lewis.
• State Laws on Diversity: Until further notice, Glass Lewis will not provide voting recommendations based on a company’s compliance with California’s board diversity laws,¹ since both laws were deemed unconstitutional under the equal protection clause of the California state constitution and remain in the appeals process. However, Glass Lewis will monitor compliance with the requirements of California’s board diversity laws while those laws remain on appeal and will provide voting recommendations “in accordance with mandatory board composition requirements set forth in applicable state laws when they come into effect.”
• Disclosure of Director Diversity and Skills: Glass Lewis will now generally recommend voting against the chair of the governance committee of the board at Russell 1000 companies that do not provide disclosure of individual or aggregate racial/ethnic minority demographic information. Russell 1000 companies also need to provide disclosures in their proxy statement in each of the Glass Lewis tracked categories,² or risk Glass Lewis recommending a vote against the chair of the nominating and/or governance committee.

Board Oversight of Environmental and Social Issues

In 2023, Glass Lewis will generally provide a negative voting recommendation against the chair of the governance committee of the board at a Russell 1000 company that does not explicitly disclose the board’s oversight function of environmental and social (E&S) issues. Glass Lewis believes that a company’s particular oversight structure should generally be left up to the board; accordingly, Glass Lewis will mainly be assessing the sufficiency of disclosure by examining a company’s proxy statement and governing documents, such as committee charters. In addition, while not providing vote recommendations in 2023, Glass Lewis will expand its tracking of board-level oversight of E&S issues to all Russell 3000 companies.  

Director Commitments

Glass Lewis is providing a more nuanced approach to overboarding by including a separate limit for individuals who serve as executive chair at public companies. Accordingly, Glass Lewis will generally recommend against a director who simultaneously serves as executive chair of a public company and on more than two external public company boards. The foregoing is in addition to Glass Lewis’s existing overboarding policies, which provide that Glass Lewis will generally recommend against: a director who is an executive officer (excluding executive chair) of a public company and simultaneously serves on more than one external public company board; and any other director who serves on more than five public company boards. When assessing director commitments, Glass Lewis may consider factors such as size and location of the other companies and the role of the director on the other boards.

Cyber Risk Oversight

Glass Lewis will generally refrain from providing recommendations based on oversight or disclosures regarding cybersecurity-related issues. However, Glass Lewis believes that cybersecurity risks are material for all companies, and if cyberattacks have caused significant harm to shareholders and the related disclosure is deemed insufficient, Glass Lewis may recommend against such nominees who are responsible for cybersecurity-related oversight and disclosure. Glass Lewis encourages companies to clearly disclose the board’s role in cybersecurity oversight and the steps the company is taking to educate their directors on cybersecurity.

Board Accountability for Climate-Related Issues

Glass Lewis may now recommend voting against nominees for director at companies that face financially material risk from their greenhouse gas (GHG) emissions. Companies identified by groups such as Climate Action 100+ are examples of the types of companies that may face financially material risk from their GHG emissions.

Glass Lewis’s guidance calls for clear and comprehensive disclosure about climate-related risks and opportunities, in line with disclosure recommendations by the Task Force on Climate-Related Financial Disclosures. Disclosure should address steps that a company has taken, and can and expects to take, to mitigate climate-related risks, as well as delineate explicit and clearly defined oversight responsibilities of climate-related risks.

Glass Lewis will consider recommending against director nominees who are responsible for climate-related oversight and disclosure when those disclosures are absent or significantly lacking.

Officer Exculpation

Glass Lewis added a new section to its U.S. Guidelines discussing officer exculpation now that § 102(b)(7) of the General Corporation Law of the State of Delaware (DGCL) allows companies to eliminate or limit the monetary liability of certain corporate officers³ for direct claims asserting a breach of the duty of care. DGCL § 102(b)(7) does not allow exculpation of officers for breaches of the duty of loyalty, from derivative claims, or from acts or omissions not in good faith or that involve intentional misconduct, knowing violations of the law, or transactions involving the receipt of any improper personal benefits.

Corporations must affirmatively elect to include an exculpation provision in their certificates of incorporation (COIs) to benefit from the expanded scope of exculpation allowed by DGCL § 102(b)(7), meaning that the addition of officer exculpation to a COI requires a shareholder vote. Glass Lewis will generally recommend voting against amending a COI to add officer exculpation unless the company provides a compelling rationale for the adoption of an exculpation provision and the provision is deemed reasonable. It is worth noting that the initial COI amendment proposals that track DGCL 102(b)(7) and were submitted to a shareholder vote this fall have received support from Glass Lewis; thus, continued monitoring of Glass Lewis’s views on these amendments will be important.

Board Responsiveness

Glass Lewis has clarified its expectations for board responsiveness to shareholders when companies encounter shareholder opposition to management recommendations. Glass Lewis has clarified that when 20 percent or more of shareholders vote contrary to management (including withhold votes from or votes against a director nominee, votes against a management proposal, or votes for a shareholder proposal), then Glass Lewis believes that companies should undertake shareholder engagement that demonstrates some level of initial responsiveness on the relevant topic. If 50 percent or more of shareholders vote contrary to management, then Glass Lewis recommends that companies undertake a more robust response to fully address shareholder concerns. Glass Lewis also clarified that it will evaluate voting results and the level of unaffiliated shareholder (dis)approval at companies with multi-class structures and unequal voting rights on a “one share, one vote” basis.

Compensation Matters

Long-Term Incentives

Glass Lewis raised the minimum percentage of long-term incentive grants that it believes should be performance-based, from 33 percent to 50 percent, to align with market trends. Accordingly, a compensation program may be flagged as concerning if less than 50 percent of an executive’s long-term incentive awards have vesting conditions based on performance, particularly if such program has any other significant issues in its design or operation.

Grants of Front-Loaded Awards

Glass Lewis expanded its discussion of concerns related to front-loaded awards—specifically that front-loaded awards may preclude improvements or changes to compensation programs to respond to evolving business strategies, and that poorly structured front-loaded awards may not incentivize executive retention. Furthermore, front-loaded grants can magnify the importance of the design of such grants, amplifying any perverse incentives and unintended consequences. In assessing front-loaded awards, Glass Lewis assesses the company’s rationale for granting such awards and also expects the company to make a firm commitment not to grant additional awards to the award recipients for a defined period.

Compensation Committee Performance

Against the backdrop of its discussion of front-loaded awards, Glass Lewis clarified that it will generally recommend voting against the chair of the compensation committee of a board that has granted outsized awards that present issues such as excessive quantum, insufficient conditions to performance, and/or are excessively dilutive, and Glass Lewis will include its concerns in its voting recommendation.

One-Time Awards

Glass Lewis clarified its expectations for reasonable disclosure of one-time awards. Specifically, Glass Lewis wants companies to provide a thorough description of the one-time awards, a cogent and convincing explanation of the necessity for the one-time award and why existing awards do not provide sufficient motivation, how the quantum of the one-time award and its structure were determined, and if and how one-time awards impact regular compensation arrangements.

Pay for Performance

Glass Lewis will not change its quantitative pay for performance evaluation methodology in response to the U.S. Securities and Exchange Commission’s (SEC) new pay versus performance disclosure rules. However, Glass Lewis may review the new pay versus performance disclosure in its qualitative evaluation of a company’s pay for performance disclosure.

Short- and Long-Term Incentives

Glass Lewis clarified its view that, while it recognizes the importance of the compensation committee’s exercise of discretion over incentive pay outcomes to account for significant events that would otherwise be excluded from performance results, committees should not apply discretion over incentive pay outcomes unless the company is prepared to provide thorough discussion of how such significant events factored into the compensation committee’s decision to exercise its discretion. This follows increased focus by proxy advisors on the robustness of compensation disclosure.

Compensation Recoupment (“Clawback”) Provisions

Glass Lewis updated its guidance on recoupment provisions to account for the SEC’s new rules. Under the SEC’s new rules, national securities exchanges must update their listing standards to implement the new clawback policy rules, after which listed companies will be required to comply with their exchange’s updated listing standards. For more information on the new rules, see our Client Alert. Proposed securities exchange listing standards are not expected to be released until next year. Until the new securities exchange listing standards become effective, Glass Lewis will continue to raise concerns about companies’ clawback policies that only meet the requirements of Section 304 of the Sarbanes-Oxley Act of 2002; however, Glass Lewis indicated that disclosure of any early efforts to satisfy the standards in the final rules may help mitigate its concerns.

Glass Lewis ESG Guidelines

Glass Lewis’s ESG Guidelines also included several key updates:

Disclosure of Shareholder Proponents

Even though companies are not required to disclose the identity of proponents of Rule 14a-8 shareholder proposals in their proxy statements, Glass Lewis may now recommend voting against a company’s governance committee chair if that company’s proxy statement does not clearly identify the proponent (or lead proponent if multiple proponents have submitted a proposal).

Glass Lewis also encourages companies to provide share ownership information about proponents, so that other shareholders can better understand how the proponent’s financial interests are aligned with those of the company and other shareholders, but does not make voting recommendations on the basis of ownership disclosure.

Racial Equity Audits

While Glass Lewis assesses every shareholder proposal on an individual basis before providing a voting recommendation, it codified its approach to assessing shareholder proposals for racial equity, or civil rights, audits.

When analyzing a proposal for a racial equity audit, Glass Lewis will assess 1) the nature of the company’s operations, 2) the level of disclosure provided by the company and its peers on its internal and external stakeholder impacts and the steps it is taking to mitigate any attendant risks, and 3) any relevant controversies, fines, or lawsuits.

After assessing these company-specific factors, Glass Lewis will generally recommend in favor of well-crafted proposals for racial equity audits if such proposal could help the target company identify and mitigate potentially significant risks.

Retirement Benefits and Severance

Glass Lewis generally supports shareholder proposals that ask companies to adopt a policy whereby shareholders must approve severance payments that exceed 2.99 times the amount of the executive’s base salary plus bonus. However, the ESG Guidelines now provide that Glass Lewis may recommend voting against such proposals where the target company has already adopted a policy to seek shareholder approval for any cash severance payments that exceed 2.99 times the amount of the executive’s base salary plus bonus.

ISS Guidelines

The ISS Guidelines included several key updates:

Board Matters

Gender Diversity

Last year, ISS provided for a one-year transition period for companies outside of the Russell 3000 and S&P 1500 indices to comply with its gender diversity policy. Now that the one-year transition period has passed, ISS will generally recommend a vote against or withhold from the chair of the nominating committee, or other relevant directors, for companies where no women serve on the board, regardless of whether the company is in the Russell 3000 or S&P 1500 index. ISS will make a one-year exception to this policy if at least one woman served on the board in the previous year and the company commits to becoming gender-diverse again within one year.

Poison Pills

ISS has updated its voting policy on poison pills to clarify shareholder approval requirements for poison pills with a term of more than one year (“long-term”) and specifically identify factors used to evaluate poison pills with a term of less than one year (“short-term”). Under its updated policy, ISS will continue to generally recommend a vote against or withhold from all director nominees (except, on a case-by-case basis, new nominees) if the company materially adversely modifies an existing poison pill without shareholder approval, the existing pill has a dead-hand or slow-hand feature,⁴ or the company has a long-term poison pill that public shareholders did not approve. Under its updated policy, ISS will evaluate director nominees on a case-by-case basis when boards adopt short-term poison pills without shareholder approval. When evaluating those nominees, ISS will consider, among other relevant factors, the disclosed rationale for adoption, the trigger, the company’s market capitalization, changes to the company’s market capitalization, and a commitment to put any renewal to a shareholder vote. If a short-term pill will expire before the next shareholder vote but contains a dead-hand or slow-hand provision, ISS will generally recommend a vote against or withhold for nominees at the meeting following the pill’s adoption.

Unequal Voting Rights

Last year, ISS provided for a one-year transition period “for companies that had been grandfathered under the prior policy on unequal voting rights.” Now that this one-year transition period has passed, if a company (regardless of whether it is newly public) has a common stock voting structure with unequal voting rights, ISS will generally provide a negative voting recommendation or withhold recommendation against individual directors, committee members, or the entire board. New nominees will be considered on a case-by-case basis. Exceptions to this voting policy are generally limited to newly public companies with a sunset provision of no more than seven years from the date of going public, situations where super-voting shares represent less than five percent of total voting power and are thus deemed de minimis, or situations where minority shareholders are sufficiently protected by the company. Accordingly, if these exceptions apply, a company should make that clear in its proxy statement.

Problematic Governance Structures—Newly Public Companies

For “newly public companies,” ISS will generally recommend voting against or withholding votes from individual directors, committee members, or the entire board (with new nominees evaluated on a case-by-case basis) if the company: 1) adopts supermajority vote requirements to amend the bylaws or charter; or 2) implements a classified board structure prior to, or in connection with, a company’s public offering. Under its updated policy, ISS has clarified that “newly public companies” means companies that hold or held their first annual meeting of public shareholders after February 1, 2015. ISS has also clarified that, for sunset provisions to act as a potential mitigating factor, the governance structures must sunset within seven years of going public.

Unilateral Bylaw/Charter Amendments and Problematic Capital Structures

Consistent with past practice, ISS generally will continue to recommend voting against individual directors, committee members, or the entire board (with new nominees evaluated on a case-by-case basis) if a company’s board unilaterally amends the bylaws or charter without shareholder approval such that shareholder rights are materially diminished, or shareholders could be adversely impacted. ISS lists the following as examples of when shareholders could be adversely impacted: creating a classified board structure, adopting supermajority voting requirements to amend the bylaws or charter, or eliminating shareholders’ ability to amend bylaws. ISS’s updated policies now also include the adoption of a fee-shifting provision or any other provision deemed egregious as actions that could materially diminish shareholder rights.

Consistent with its current policy, ISS will consider the board’s rationale for not seeking shareholder approval, company disclosure evidencing substantial shareholder engagement regarding the amendment, the level of impairment of shareholders’ rights caused by the board’s unilateral amendment, the board’s track record on past unilateral action on bylaws/charter amendments or other entrenchment provisions, the company’s ownership structure, existing governance provisions, the timing of the amendment in connection with a significant business development, and other appropriate and relevant factors.

Climate Accountability

ISS’s climate accountability voting policy applies to companies that are significant GHG emitters through their operations or value chain. Consistent with the current policy, significant emitting companies are those on the current Climate Action 100+ Focus Group list.

If a covered company fails to take the minimum steps outlined by ISS to understand, assess, and mitigate risks related to climate change to the company and larger economy, ISS will generally recommend voting against or withholding votes from the incumbent chair of the responsible committee or other directors on a case-by-case basis.

ISS asks covered companies to 1) set appropriate GHG emission reduction targets and 2) provide detailed disclosures of climate-related risks, such as would be required by the framework established by the Task Force on Climate-Related Financial Disclosures. ISS’s new policies now define appropriate GHG emissions reductions targets as medium-term GHG reduction targets or Net-Zero-by-2050 GHG reduction targets for a company’s operations and electricity use, updated from “any well-defined GHG reduction targets.” Consistent with ISS’s current policy statement that its expectations for climate mitigation would increase over time, ISS now expects emission reduction targets to cover approximately 95 percent of a company’s operational emissions, which is updated from the current policy requirement that a “significant portion” of direct emissions to be covered by reduction targets.  

Director and Officer Indemnification, Liability Protection, and Exculpation

ISS will continue to recommend votes on a case-by-case basis for proposals on director and officer indemnification and liability protection, and will now do the same for officer exculpation proposals. Similar to Glass Lewis, ISS has generally supported officer exculpation proposals that have been put to a shareholder vote this fall.  

Compensation

Problematic Pay Practices

The ISS Guidelines clarify that while ISS considers pay elements on a case-by-case basis holistically and in the context of the overall pay program and demonstrated pay-for-performance philosophy, ISS lists 1) extraordinary perquisites or tax-gross-ups, 2) a liberal change-in-control (CIC) definition combined with any single trigger CIC benefits, and 3) any other provision or practice deemed to be egregious and present a significant risk to investors as non-exclusive examples of problematic practices. In particular, ISS focuses on practices that are at odds with global pay principles, including problematic practices related to non-performance-based compensation elements, incentives that may motivate excessive risk-taking or present a windfall risk, and pay decisions designed to avoid pay-for-performance linkage.

Equity-Based and Other Incentive Plans—Value Adjusted Burn Rate

Last year, ISS announced a one-year transition period after which new methodology would be implemented when evaluating stock plans. Since the transition period has now concluded, ISS will now evaluate stock plans using a Value-Adjusted Burn Rate (VABR) methodology, benchmarked against industry peers.⁵ In 2022, the VABR was announced to be used for informational purposes with the intent to transition for its use for evaluation in 2023.

The VABR benchmark is calculated as the greater of 1) an industry-specific threshold based on three-year burn rates within the company’s Global Industry Classification Standard group segmented by S&P 500, Russell 3000 index (other than the S&P 500) and non-Russell 3000 index; and 2) a de minimis threshold established separately for each of the S&P 500, the Russell 3000 index other than the S&P 500, and the non-Russell 3000 index. Year-over-year burn-rate benchmark changes will be limited to a predetermined range above or below the prior year’s burn-rate benchmark.

Capitalization

Share Issuance Mandates at U.S. Domestic Issuers Incorporated Outside the U.S.

ISS added a new policy covering share issuances for U.S. domestic issuers incorporated outside of the U.S. and who are solely listed on a U.S. exchange. Under the laws of the country of incorporation, companies incorporated in certain markets are required to obtain shareholder approval for all share issuances. However, U.S. incorporated companies generally can issue shares up to the authorized level of capital as specified in the charter without a shareholder vote unless otherwise required by Nasdaq or the NYSE.

Under its new policy, ISS will generally recommend voting for resolutions to authorize the issuance of common shares up to 20 percent of currently issued common share capital when such proposal is not tied to a specific transaction or financing proposal. ISS will generally recommend voting for resolutions authorizing the issuance of common shares up to 50 percent of the currently issues common share capital for companies that are pre-revenue or other early-stage companies that rely heavily on periodic equity financing. Companies must establish the need for a higher limit. These mandates should be subject to yearly renewal at the company’s annual meeting. ISS will evaluate share issuances for specific transactions or financings on a case-by-case basis.

Social and Environmental Issues

Racial Equity and/or Civil Rights Audit Guidelines

ISS has updated its policy to 1) add consideration of whether a company discloses workforce diversity and inclusion metrics and goals, and 2) remove consideration of whether a company’s actions are aligned with market norms on civil rights, and racial and ethnic diversity when assessing shareholder proposals for racial equity and/or civil rights audits. The updated illustrative list of factors that ISS will consider include: the company’s established process or framework for addressing racial inequity and discrimination internally; whether the company adequately discloses both workforce diversity and inclusion metrics and goals; whether the company has issued a public statement related to its racial justice efforts in recent years, or has committed to internal policy review; whether the company has engaged with impacted communities, stakeholders, or civil rights experts; the company’s track record in recent years of racial justice measures and outreach externally, and whether the company has been the subject of recent controversy, litigation, or regulatory action related to racial inequality or discrimination. ISS will recommend voting for shareholder proposals advocating for an independent racial equity and/or civil rights audit on a case-by-case basis.

ESG Compensation-Related Proposals

ISS generally recommends voting against shareholder proposals aiming to set absolute levels on, or otherwise dictate the amount or form of, compensation used in incentive pay programs. The new policy clarifies that the compensation committee is generally in the best position to set performance metrics while acknowledging that disclosing the rationale for such metrics, including those related to ESG, may benefit shareholders.

ISS will recommend votes on a case-by-case basis for proposals seeking more disclosure regarding a company’s approach to utilizing E&S metrics in its executive compensation strategy. ISS will continue to consider the scope and prescriptive nature of the proposal, the company’s current disclosure levels regarding E&S with the new inclusion of governance disclosures, and whether the company has significant controversies or regulatory violations regarding E&S issues. ISS will also consider the level to which the board or compensation committee already disclosed how it utilizes E&S measures. ISS removed references to industry peer comparisons, management systems, and oversight mechanisms from the evaluation factors.

Political Expenditures and Lobbying Congruency

ISS added a new policy for political and lobbying expenditures. ISS will evaluate shareholder proposals seeking greater transparency of a company’s political contributions, lobbying, and electioneering spending with a company’s publicly stated values and policies on a case-by-case basis. ISS will consider the company’s policies and oversight related to political activities, the company’s disclosure regarding the reason it supports various candidates or groups, inconsistencies between the company’s publicly stated values and its political expenditures, and recent significant controversies related to the company’s political activities, contributions, or lobbying.

ISS will also evaluate shareholder proposals seeking an evaluation of the company’s political spending against objectives that can mitigate material risks for the company, such as limiting global warming, on a case-by-case basis.

Global Approach to E&S Shareholder Proposals

ISS updated this policy to codify its current approach on E&S shareholder proposals. These proposals cover a wide range of issues such as, but not limited to, board diversity, human rights, and consumer safety.

ISS will evaluate shareholder proposals on E&S issues on a case-by-case basis. A combination of factors may be considered when evaluating these proposals, but ISS emphasizes how the proposal increases or protects shareholder value in the long or short term. ISS will consider if the issues in the proposal will be handled effectively by legislation or government regulation rather than if they could be dealt with more appropriately through legislation or regulation as stated in the current policy. Additionally, ISS will consider whether the company already sufficiently responded to the issues raised by the proposal, if the scope or timeframe of the proposal is unduly burdensome or overly prescriptive, the company’s approach to the issue raised by the proposal compared to industry standard, whether there are any significant controversies/fines/penalties/litigation associated with the company’s practices related to the issues raised in the proposal (as opposed to associated with the company’s E&S practices as noted in the current ISS policy), whether reasonable and adequate information is already available to shareholders from the company or another publicly available source if the proposal is seeking increased disclosure, and if the proposal seeks increased disclosure but compliance would reveal proprietary or confidential information that would competitively disadvantage the company.

Recommendations

These updated guidelines reflect a continued focus on board diversity, concerns relating to what ISS and Glass Lewis view as problematic governance structures, and disclosures relating to E&S and board oversight. Companies should consider reviewing their existing disclosures against these updated voting guidelines with a view to determining whether any updates or clarifications to existing disclosures may be useful to address proxy advisory firm or shareholder concerns.

[1] See California Corporations Code Sections 301.3 and 301.4.

[2] The tracked categories include: 1) the board’s current percentage of racial/ethnic diversity; 2) whether the board’s definition of diversity explicitly includes gender and/or race/ethnicity; 3) whether the board has adopted a policy requiring women and minorities to be included in the initial pool of candidates when selecting new director nominees (aka “Rooney Rule”); and 4) board skills disclosure.

[3] Covered officers include president; chief executive officer; chief operating officer; chief financial officer; chief legal officer; controller; treasurer; chief accounting officer; “named executive officers” in SEC filings; and those who have agreed to be identified as officers of the corporation.

[4] A “dead-hand” or “slow-hand” poison pill limits a future board’s ability to redeem the poison pill rights to only members of the board who were on the board when the poison pill provision was adopted, or their chosen successors.

[5] VABR is calculated as ((# options * option’s dollar value using a Black-Scholes model) + (# of full-value awards * stock price)) / (Weighted average common shares * stock price). Note that ISS uses its own assumptions for Black-Scholes calculations (including that the maximum term of the option should be its expected life) and not the assumptions used in an issuer’s financial statements.