ISS and Glass Lewis Update Voting Guidelines for 2021 Proxy Season

December 1, 2020

On November 12, 2020, proxy advisory firm Institutional Shareholder Services Inc. (ISS) announced updates to its proxy voting guidelines for the 2021 proxy season, applicable to shareholder meetings on or after February 1, 2021.

Among other changes, ISS has sharpened its focus on board diversity and is adopting, subject to a one-year transition period, a new voting policy with respect to boards that appear to lack racial and ethnic diversity. Beginning in 2022, for companies in the Russell 3000 or S&P 1500 indexes where the board has no apparent racially or ethnically diverse members, ISS will recommend voting against the nominating committee chair. Other notable changes include taking a more accommodating approach to exclusive forum proposals and explicitly noting that significant risk oversight failures related to environmental and social concerns may trigger vote recommendations against board members.

Also, on November 24, 2020, rival proxy advisory firm Glass, Lewis & Co. (Glass Lewis) announced updates to its proxy voting guidelines for the 2021 proxy season.

Like ISS, Glass Lewis has increased its focus on board diversity; however, in Glass Lewis’ case, the focus is primarily on gender diversity. Building on its current requirement of at least one female board member, beginning in 2022, Glass Lewis will generally recommend voting against the nominating committee chair of a board with fewer than two female directors, though boards with six or fewer directors will remain subject to the existing requirement of at least one female director. Other notable updates cover disclosure of director diversity and skills, board refreshment, environmental and social risk oversight, virtual shareholder meeting disclosure and compensation guidelines.

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