ISS and Glass Lewis Release Proxy Voting Policy Changes for 2025

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Institutional Shareholder Services Inc. (“ISS”) recently released its updates to its Proxy Voting Guidelines. These updates will take effect for all annual meetings held after February 1, 2025. This year, the policy updates are largely incremental; ISS is mostly clarifying existing considerations as opposed to introducing new policies or changing existing policies. Additionally, Glass, Lewis & Co. LLC (“Glass Lewis”) recently released its 2025 Proxy Voting Policy Guidelines, which include several new and revised policies that will be effective for 2025 annual meetings. Some of the ISS updates and noteworthy Glass Lewis policy changes include the following.

Stockholder Rights Plans. ISS has clarified the factors it will consider when evaluating a short-term rights plan adopted without stockholder approval. When deciding whether to penalize directors at the next annual meeting after adopting such a plan, ISS will consider the trigger threshold and other terms of the plan, the context in which the plan was adopted (including “the company’s size and stage of development, sudden changes in its market capitalization and extraordinary industry-wide or macroeconomic events”) and the company’s “overall track record on corporate governance and responsiveness to shareholders.” ISS further states that its analysts were already considering these factors under its “other factors” catch-all; but since almost all rights plans are now initially adopted without stockholder approval, ISS is providing more detail.

We note that Section 2-201(c) of the Maryland General Corporation Law (the “MGCL”) specifically validates stockholder rights plans, including short-term plans that are initially approved by the board in its sole discretion. The MGCL also validates “slow-hand” provisions that limit, for a period not to exceed 180 days, the power of a future director to vote for the redemption, modification or termination of the rights, options or warrants issued under a rights plan.

Natural Capital Proposals.[1] ISS also clarified how it analyzes stockholder proposals that ask the company to conduct a report or audit on the environmental impact of the company’s policies and operations. ISS will still generally vote case by case on these proposals but will specifically consider the “[a]lignment of current disclosure of applicable policies, metrics, risk assessment report(s) and risk management procedures with relevant, broadly accepted reporting frameworks.” In its release, ISS notes the emergence of frameworks including the Taskforce on Nature-related Financial Disclosure and Kunming-Montreal Global Biodiversity Framework. ISS will now analyze whether the company’s existing disclosure aligns with the expectations of these frameworks when evaluating these proposals.

Board Oversight of Artificial Intelligence ("AI") Technology. In the absence of “material incidents related to a company’s use or management of AI-related issues,” Glass Lewis will not consider “oversight of, or disclosure concerning, AI-related issues” when evaluating directors. However, when “there is evidence that insufficient oversight and/or management of AI technologies has resulted in material harm to shareholders,” Glass Lewis will expect disclosure of which directors or board committees have been tasked with AI oversight. At these companies, Glass Lewis will consider management of AI issues and AI-related disclosure when evaluating director nominees.

Shareholder Proposals. Glass Lewis previously updated its policy to clarify that it expects boards to engage with stockholders and provide related disclosure anytime more than 20% of stockholders vote contrary to the management’s recommendation on director nominees or management-sponsored proposals. However, this policy was silent with regard to stockholder proposals. Glass Lewis has updated its policy to add that it expects boards to engage with stockholders and provide related disclosure anytime more than 30% of stockholders vote contrary to the company’s recommendation on stockholder proposals.

Glass Lewis states that abstentions will be considered votes “contrary to the recommendation of management.” We disagree with this policy as it relates to Maryland corporations because under Maryland law, abstentions are not considered votes cast and therefore have no effect on director elections or stockholder proposals that require a majority of votes cast in order to be approved. A better policy would be for Glass Lewis to align with state law and to only consider votes for or against when calculating vote totals.


[1] ISS uses "Natural Capital" to refer to proposals that relate to potential social and/or environmental impacts of company operations.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. Attorney Advertising.

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