ISS and Glass Lewis Update Their Proxy Voting Guidelines for the 2020 Proxy Season

Ropes & Gray LLP

Ropes & Gray LLP

Institutional Shareholder Services Inc. (ISS) and Glass, Lewis & Co. (Glass Lewis) have both released updates to their proxy voting guidelines.1 This Alert briefly summarizes the more significant changes to each firm’s policies for the 2020 proxy season. Overall, these policy changes represent relatively modest updates from last year and appear to reflect the social and governance concerns of many institutional investors. Companies should review and consider the applicability of the new proxy voting guidelines in light of their individual situations.

ISS’s revised policies will apply to annual meetings held on or after February 1, 2020, while Glass Lewis’s revised policies will generally apply to meetings held on or after January 1, 2020.

Key Updates to ISS’s Proxy Voting Guidelines

Board Gender Diversity

ISS’s updated policy on board gender diversity provides that it will generally issue adverse voting recommendations against nominating committee chairs (and other directors on a case-by-case basis) at companies in either the Russell 3000 or S&P 1500 indices where there are no women directors. This updated policy will be in effect for the 2020 proxy season. In addition, ISS clarified that, for companies with no women directors, a firm commitment to appoint one will only be a mitigating factor for 2020 but not for subsequent years.

Problematic Governance Structures at Newly-Public Companies

ISS cited the increasing prevalence of multi-class capital structures with disparate voting rights among newly-public companies as the main rationale for revising its policy approach for newly-public companies by creating two separate policies that address (i) multi-class capital structures with unequal voting rights, and (ii) other problematic governance provisions.

Under the first policy, ISS will generally issue adverse voting recommendations against the entire board (except new nominees, who will be considered on a case-by-case basis) if, prior to or in connection with the company’s IPO, the company adopted a multi-class capital structure with unequal voting rights without a reasonable, time-based sunset provision of no more than seven years. ISS will continue to issue adverse voting recommendations against incumbent directors in subsequent years, unless the problematic capital structure is reversed or removed. In assessing the reasonableness of a time-based sunset provision, ISS will consider the company’s lifespan, its post-IPO ownership structure and the board’s disclosed rationale for the selected sunset period. No sunset period greater than seven years from the date of the IPO will be considered to be reasonable.

ISS clarified and narrowed the focus of the second policy to certain “highly problematic” governance structures, such as supermajority vote requirements to amend a company’s charter or bylaws, a classified board structure and other “egregious” provisions. This policy also provides that a reasonable sunset provision will be considered a mitigating factor.

Share Repurchase Programs

ISS generally recommends in favor of management-sponsored share buyback proposals absent company-specific concerns. ISS updated its delineation of those concerns by identifying greenmail, manipulation of incentive compensation metrics and buybacks that threaten a company’s long-term viability. Unlike most of ISS’s capital-related policies (which are based on a company’s country of incorporation), this ISS policy will cover foreign-incorporated domestic issuers that are listed on a U.S. stock exchange. The policy recognizes that most U.S. companies implement share buyback programs without shareholder approval.

Rule 14a-8 No-Action Requests

As we described in this prior Alert, the SEC’s Division of Corporation Finance recently announced that it would not necessarily respond to all Rule 14a-8 no-action requests, either in writing or at all. The staff’s response to a request for no-action relief could be that the staff concurs, disagrees or declines to state a view with respect to a company’s asserted basis for exclusion. In addition, beginning in the 2019-20 proxy season, the staff may respond to some requests orally, instead of in writing.

Unlike Glass Lewis (as discussed below), ISS’s latest policy updates do not directly address the SEC staff’s new procedures for handling Rule 14a-8 no-action requests. It is worth noting that, before the staff’s announcement, ISS’s governance failures policy provided that it would generally recommend a vote against one or more directors (based on case-specific facts and circumstances) if a company omitted a shareholder proposal from its proxy materials when it had not obtained: (i) voluntary withdrawal of the proposal by the proponent, (ii) no-action relief from the SEC, or (iii) a U.S. District Court ruling that it can exclude the proposal.

Shareholder Proposals

Independent Board Chair. ISS has revised its policy to specifically identify the factors that will generally result in an ISS recommendation in support of an independent board chair proposal, which largely codifies ISS’s existing practice.

Pay Gap Reporting. ISS has added “race or ethnicity” to its existing policy on shareholder proposals requesting a report on a company’s pay data by gender or a report on a company’s policies and goals to reduce any gender pay gap. ISS’s policy remains to generally make recommendations on pay gap proposals on a case-by-case basis.

Compensation-Related Policies

U.S. Equity Plan Scorecard (EPSC). In its policy updates, ISS cited the significant decline in the number of companies submitting their equity plans for shareholder approval after the Section 162(m) performance-based compensation exception was repealed by the Tax Cuts and Jobs Act of 2017. As a result, ISS will include the presence of an evergreen feature in an equity plan as an “overriding factor” in its EPSC, which may result in a negative recommendation on an equity plan proposal, regardless of its EPSC score. ISS explained its belief that the presence of evergreen provisions in equity plans “circumvent[s] regular shareholder reapproval of such plans within reasonable time intervals” and “may perpetuate plans with shareholder-unfriendly features.”

Economic Value Added (EVA) Data. During the 2019 proxy season, ISS began including EVA metrics in its proxy research reports for informational purposes only. For the 2020 proxy season, ISS plans to incorporate EVA metrics as a secondary financial performance assessment screen in its pay-for-performance model. More details regarding this change will be available in a white paper, which ISS expects to publish in December 2019.

Non-Employee Director Pay. ISS’s policy on excessive levels of non-employee director compensation was first introduced for the 2018 proxy season. However, since a negative recommendation from ISS would be triggered only after a recurring pattern of excessive non-employee director compensation (i.e., for companies where ISS has identified excessive pay without compelling rationale in two or more consecutive years), the 2020 proxy season will be the first proxy season during which ISS may potentially issue a negative recommendation under this policy.

Additional ISS Policy Updates

In addition to the key policy updates summarized above, ISS is expected to release a complete set of updated policies and FAQs (including related to U.S. compensation policies) before year-end and updated proxy voting guidelines for shareholder proposals at U.S. listed companies in January 2020.

Key Updates to Glass Lewis’s Proxy Voting Guidelines

Exclusive Forum

While Glass Lewis typically recommends voting against the governance committee chair where a company has adopted an exclusive forum provision without shareholder approval, Glass Lewis has clarified its policy to make exceptions where the exclusive forum provision is narrowly crafted to suit the company’s unique circumstances or includes a reasonable sunset provision.

Nominating and Governance Committee

Glass Lewis has codified additional factors that it will consider when evaluating the performance of governance committee members.

Excluded Shareholder Proposals. Glass Lewis believes that companies should only omit proposals in cases where the SEC staff has explicitly concurred with the company’s asserted basis for exclusion. As a result, Glass Lewis has adopted a new policy whereby it will generally recommend voting against all members of the governance committee in cases where the SEC staff has declined to state a view on a company’s no-action request and the company excludes that shareholder proposal from its proxy materials.

Where the SEC staff has orally responded to a company’s no-action request and there is “no written record provided by the SEC,” Glass Lewis expects the company to provide some disclosure concerning this no-action relief in its proxy statement. In cases where a company has excluded a proposal from its proxy materials without including such disclosure, Glass Lewis will generally recommend against all members of the governance committee. After Glass Lewis issued its policy updates, the SEC staff announced that it would be posting a chart on its website showing its disposition of all no-action requests (as discussed in this Alert). This chart should satisfy Glass Lewis’ “written record” requirement, although it has not yet publicly commented on the staff’s announcement.

Board Attendance. Glass Lewis will generally recommend voting against the governance committee chair when directors’ records for board and committee meeting attendance are either not disclosed or if the disclosure about a director’s attendance at less than 75% of board and committee meetings is vague. This policy update is an important reminder that, where applicable, companies should consider proxy statement disclosure that also explains the reasons for any director’s poor attendance.

Compensation Committee

Company Responsiveness to Low Say-on-Pay Vote. Glass Lewis has expanded its discussion of what it considers to be an appropriate response following low shareholder support for a company’s say-on-pay proposal (i.e., 80% or less), including differing levels of responsiveness depending on the severity and persistence of shareholder opposition. Glass Lewis expects robust disclosure of the company’s shareholder engagement activities and specific changes made to the compensation program in response to shareholder feedback. Absent such disclosure, Glass Lewis may recommend voting against all members of the compensation committee.

Say-on-Pay Frequency. Glass Lewis has updated its compensation committee performance policy and will generally recommend voting against all members of the compensation committee when the board adopts a frequency for its say-on-pay vote other than the frequency approved by a plurality of the company’s shareholders.

Shareholder Proposals

Supermajority Voting. Glass Lewis has codified its policy concerning shareholder proposals requesting that companies eliminate their supermajority voting provisions. In instances where shareholder proposals seeking to eliminate supermajority voting provisions are submitted at controlled companies, Glass Lewis may recommend that shareholders vote against such proposals. Glass Lewis believes that, in these instances, supermajority vote provisions may act to protect minority shareholders and thus should be maintained.

Gender Pay Equity. With respect to gender pay gap shareholder proposals, Glass Lewis will review, on a case-by-case basis, proposals that request that companies disclose their median gender pay ratios (as opposed to proposals asking that such information be adjusted based on factors such as job title, tenure and geography). Glass Lewis will generally recommend voting against these proposals where companies have provided sufficient information concerning their diversity initiatives and how they are ensuring gender pay parity.

Compensation-Related Policies

Contractual Payments and Arrangements. Glass Lewis clarified its policy on contractual payments and arrangements by highlighting executive employment terms that may drive a negative say-on-pay recommendation, including excessively broad change-in-control triggers, inappropriate severance entitlements, inadequately explained or excessive sign-on arrangements, guaranteed bonuses (especially multi-year), and the failure to address any concerning practices in amended employment agreements.

Change in Control. Glass Lewis clarified that it considers double-trigger change-in-control arrangements, which require both a change-in-control and an employment termination or constructive termination, to be best practice, and that any arrangement that is not explicitly double-trigger may be considered a single-trigger or modified single-trigger arrangement. In addition, Glass Lewis believes that excessively broad definitions of change-in-control are potentially problematic.

Short-Term Incentives. Glass Lewis clarified its policy relating to short-term incentives by indicating that, where a company has applied upward discretion (including where it lowers goals mid-year or increases calculated payouts), Glass Lewis expects a robust discussion of why the compensation committee felt it was necessary to exercise such discretion.

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.

© Ropes & Gray LLP | Attorney Advertising

Written by:

Ropes & Gray LLP

Ropes & Gray LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide

JD Supra Privacy Policy

Updated: May 25, 2018:

JD Supra is a legal publishing service that connects experts and their content with broader audiences of professionals, journalists and associations.

This Privacy Policy describes how JD Supra, LLC ("JD Supra" or "we," "us," or "our") collects, uses and shares personal data collected from visitors to our website (located at (our "Website") who view only publicly-available content as well as subscribers to our services (such as our email digests or author tools)(our "Services"). By using our Website and registering for one of our Services, you are agreeing to the terms of this Privacy Policy.

Please note that if you subscribe to one of our Services, you can make choices about how we collect, use and share your information through our Privacy Center under the "My Account" dashboard (available if you are logged into your JD Supra account).

Collection of Information

Registration Information. When you register with JD Supra for our Website and Services, either as an author or as a subscriber, you will be asked to provide identifying information to create your JD Supra account ("Registration Data"), such as your:

  • Email
  • First Name
  • Last Name
  • Company Name
  • Company Industry
  • Title
  • Country

Other Information: We also collect other information you may voluntarily provide. This may include content you provide for publication. We may also receive your communications with others through our Website and Services (such as contacting an author through our Website) or communications directly with us (such as through email, feedback or other forms or social media). If you are a subscribed user, we will also collect your user preferences, such as the types of articles you would like to read.

Information from third parties (such as, from your employer or LinkedIn): We may also receive information about you from third party sources. For example, your employer may provide your information to us, such as in connection with an article submitted by your employer for publication. If you choose to use LinkedIn to subscribe to our Website and Services, we also collect information related to your LinkedIn account and profile.

Your interactions with our Website and Services: As is true of most websites, we gather certain information automatically. This information includes IP addresses, browser type, Internet service provider (ISP), referring/exit pages, operating system, date/time stamp and clickstream data. We use this information to analyze trends, to administer the Website and our Services, to improve the content and performance of our Website and Services, and to track users' movements around the site. We may also link this automatically-collected data to personal information, for example, to inform authors about who has read their articles. Some of this data is collected through information sent by your web browser. We also use cookies and other tracking technologies to collect this information. To learn more about cookies and other tracking technologies that JD Supra may use on our Website and Services please see our "Cookies Guide" page.

How do we use this information?

We use the information and data we collect principally in order to provide our Website and Services. More specifically, we may use your personal information to:

  • Operate our Website and Services and publish content;
  • Distribute content to you in accordance with your preferences as well as to provide other notifications to you (for example, updates about our policies and terms);
  • Measure readership and usage of the Website and Services;
  • Communicate with you regarding your questions and requests;
  • Authenticate users and to provide for the safety and security of our Website and Services;
  • Conduct research and similar activities to improve our Website and Services; and
  • Comply with our legal and regulatory responsibilities and to enforce our rights.

How is your information shared?

  • Content and other public information (such as an author profile) is shared on our Website and Services, including via email digests and social media feeds, and is accessible to the general public.
  • If you choose to use our Website and Services to communicate directly with a company or individual, such communication may be shared accordingly.
  • Readership information is provided to publishing law firms and authors of content to give them insight into their readership and to help them to improve their content.
  • Our Website may offer you the opportunity to share information through our Website, such as through Facebook's "Like" or Twitter's "Tweet" button. We offer this functionality to help generate interest in our Website and content and to permit you to recommend content to your contacts. You should be aware that sharing through such functionality may result in information being collected by the applicable social media network and possibly being made publicly available (for example, through a search engine). Any such information collection would be subject to such third party social media network's privacy policy.
  • Your information may also be shared to parties who support our business, such as professional advisors as well as web-hosting providers, analytics providers and other information technology providers.
  • Any court, governmental authority, law enforcement agency or other third party where we believe disclosure is necessary to comply with a legal or regulatory obligation, or otherwise to protect our rights, the rights of any third party or individuals' personal safety, or to detect, prevent, or otherwise address fraud, security or safety issues.
  • To our affiliated entities and in connection with the sale, assignment or other transfer of our company or our business.

How We Protect Your Information

JD Supra takes reasonable and appropriate precautions to insure that user information is protected from loss, misuse and unauthorized access, disclosure, alteration and destruction. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. You should keep in mind that no Internet transmission is ever 100% secure or error-free. Where you use log-in credentials (usernames, passwords) on our Website, please remember that it is your responsibility to safeguard them. If you believe that your log-in credentials have been compromised, please contact us at

Children's Information

Our Website and Services are not directed at children under the age of 16 and we do not knowingly collect personal information from children under the age of 16 through our Website and/or Services. If you have reason to believe that a child under the age of 16 has provided personal information to us, please contact us, and we will endeavor to delete that information from our databases.

Links to Other Websites

Our Website and Services may contain links to other websites. The operators of such other websites may collect information about you, including through cookies or other technologies. If you are using our Website or Services and click a link to another site, you will leave our Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We are not responsible for the data collection and use practices of such other sites. This Policy applies solely to the information collected in connection with your use of our Website and Services and does not apply to any practices conducted offline or in connection with any other websites.

Information for EU and Swiss Residents

JD Supra's principal place of business is in the United States. By subscribing to our website, you expressly consent to your information being processed in the United States.

  • Our Legal Basis for Processing: Generally, we rely on our legitimate interests in order to process your personal information. For example, we rely on this legal ground if we use your personal information to manage your Registration Data and administer our relationship with you; to deliver our Website and Services; understand and improve our Website and Services; report reader analytics to our authors; to personalize your experience on our Website and Services; and where necessary to protect or defend our or another's rights or property, or to detect, prevent, or otherwise address fraud, security, safety or privacy issues. Please see Article 6(1)(f) of the E.U. General Data Protection Regulation ("GDPR") In addition, there may be other situations where other grounds for processing may exist, such as where processing is a result of legal requirements (GDPR Article 6(1)(c)) or for reasons of public interest (GDPR Article 6(1)(e)). Please see the "Your Rights" section of this Privacy Policy immediately below for more information about how you may request that we limit or refrain from processing your personal information.
  • Your Rights
    • Right of Access/Portability: You can ask to review details about the information we hold about you and how that information has been used and disclosed. Note that we may request to verify your identification before fulfilling your request. You can also request that your personal information is provided to you in a commonly used electronic format so that you can share it with other organizations.
    • Right to Correct Information: You may ask that we make corrections to any information we hold, if you believe such correction to be necessary.
    • Right to Restrict Our Processing or Erasure of Information: You also have the right in certain circumstances to ask us to restrict processing of your personal information or to erase your personal information. Where you have consented to our use of your personal information, you can withdraw your consent at any time.

You can make a request to exercise any of these rights by emailing us at or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

You can also manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard.

We will make all practical efforts to respect your wishes. There may be times, however, where we are not able to fulfill your request, for example, if applicable law prohibits our compliance. Please note that JD Supra does not use "automatic decision making" or "profiling" as those terms are defined in the GDPR.

  • Timeframe for retaining your personal information: We will retain your personal information in a form that identifies you only for as long as it serves the purpose(s) for which it was initially collected as stated in this Privacy Policy, or subsequently authorized. We may continue processing your personal information for longer periods, but only for the time and to the extent such processing reasonably serves the purposes of archiving in the public interest, journalism, literature and art, scientific or historical research and statistical analysis, and subject to the protection of this Privacy Policy. For example, if you are an author, your personal information may continue to be published in connection with your article indefinitely. When we have no ongoing legitimate business need to process your personal information, we will either delete or anonymize it, or, if this is not possible (for example, because your personal information has been stored in backup archives), then we will securely store your personal information and isolate it from any further processing until deletion is possible.
  • Onward Transfer to Third Parties: As noted in the "How We Share Your Data" Section above, JD Supra may share your information with third parties. When JD Supra discloses your personal information to third parties, we have ensured that such third parties have either certified under the EU-U.S. or Swiss Privacy Shield Framework and will process all personal data received from EU member states/Switzerland in reliance on the applicable Privacy Shield Framework or that they have been subjected to strict contractual provisions in their contract with us to guarantee an adequate level of data protection for your data.

California Privacy Rights

Pursuant to Section 1798.83 of the California Civil Code, our customers who are California residents have the right to request certain information regarding our disclosure of personal information to third parties for their direct marketing purposes.

You can make a request for this information by emailing us at or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

Some browsers have incorporated a Do Not Track (DNT) feature. These features, when turned on, send a signal that you prefer that the website you are visiting not collect and use data regarding your online searching and browsing activities. As there is not yet a common understanding on how to interpret the DNT signal, we currently do not respond to DNT signals on our site.

Access/Correct/Update/Delete Personal Information

For non-EU/Swiss residents, if you would like to know what personal information we have about you, you can send an e-mail to We will be in contact with you (by mail or otherwise) to verify your identity and provide you the information you request. We will respond within 30 days to your request for access to your personal information. In some cases, we may not be able to remove your personal information, in which case we will let you know if we are unable to do so and why. If you would like to correct or update your personal information, you can manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard. If you would like to delete your account or remove your information from our Website and Services, send an e-mail to

Changes in Our Privacy Policy

We reserve the right to change this Privacy Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our Privacy Policy will become effective upon posting of the revised policy on the Website. By continuing to use our Website and Services following such changes, you will be deemed to have agreed to such changes.

Contacting JD Supra

If you have any questions about this Privacy Policy, the practices of this site, your dealings with our Website or Services, or if you would like to change any of the information you have provided to us, please contact us at:

JD Supra Cookie Guide

As with many websites, JD Supra's website (located at (our "Website") and our services (such as our email article digests)(our "Services") use a standard technology called a "cookie" and other similar technologies (such as, pixels and web beacons), which are small data files that are transferred to your computer when you use our Website and Services. These technologies automatically identify your browser whenever you interact with our Website and Services.

How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

  1. Improve the user experience on our Website and Services;
  2. Store the authorization token that users receive when they login to the private areas of our Website. This token is specific to a user's login session and requires a valid username and password to obtain. It is required to access the user's profile information, subscriptions, and analytics;
  3. Track anonymous site usage; and
  4. Permit connectivity with social media networks to permit content sharing.

There are different types of cookies and other technologies used our Website, notably:

  • "Session cookies" - These cookies only last as long as your online session, and disappear from your computer or device when you close your browser (like Internet Explorer, Google Chrome or Safari).
  • "Persistent cookies" - These cookies stay on your computer or device after your browser has been closed and last for a time specified in the cookie. We use persistent cookies when we need to know who you are for more than one browsing session. For example, we use them to remember your preferences for the next time you visit.
  • "Web Beacons/Pixels" - Some of our web pages and emails may also contain small electronic images known as web beacons, clear GIFs or single-pixel GIFs. These images are placed on a web page or email and typically work in conjunction with cookies to collect data. We use these images to identify our users and user behavior, such as counting the number of users who have visited a web page or acted upon one of our email digests.

JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit
  • New Relic - For more information on New Relic cookies, please visit
  • Google Analytics - For more information on Google Analytics cookies, visit To opt-out of being tracked by Google Analytics across all websites visit This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at:

- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.