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On November 16, Glass Lewis released its 2024 U.S. Benchmark
Policy Guidelines. The guidelines provide a detailed overview of
the key policies Glass Lewis will apply for shareholder meetings
held in 2024.
This post is the second in a two-part series discussing
ESG-related updates to the guidelines. In the last post, we discussed Glass Lewis’ 2024
policy updates regarding board oversight of ESG matters. In this
post, we discuss amendments relating to board diversity.
Gender diversity
Ahead of the 2023 proxy season, Glass Lewis announced that, for
Russell 3000 companies, it will generally recommend shareholders
vote against the chair of the nominating committee if the board is
not at least 30% gender diverse, or against the entire nominating
committee if there are no gender diverse directors. Prior to 2023,
Glass Lewis took a fixed numerical approach to board gender
diversity. Outside of the Russell 3000, Glass Lewis’
pre-existing expectation that companies have at least one gender
diverse director remained in place.
The 2023 board gender diversity policy remains in place for
2024. However, for the 2024 proxy season, Glass Lewis has further
clarified the guidelines to indicate that it may refrain from
recommending that shareholders vote against directors if the
company’s board gender diversity disclosure provides a
sufficient rationale for the lack of gender diversity, or a plan to
address the lack of diversity, including the timeline for
appointing additional gender diverse directors (generally by the
next annual meeting or as soon as is reasonably
practicable).
In the case of a recommendation to vote against, Glass Lewis may
extend its recommendation to additional members of the nominating
committee if the committee chair is not standing for election due
to a classified board, or based on other factors, including the
company’s size and industry, applicable laws in its state of
headquarters and its overall governance profile.
Underrepresented community diversity
The 2023 guidelines introduced a policy on board representation
from underrepresented communities. That policy indicated that, for
Russell 1000 companies, Glass Lewis generally will recommend voting
against the chair of the nominating committee if the board has no
directors from an underrepresented community. The 2023 policy
continues in place for 2024.
The 2023 definition of “underrepresented
communities” included individuals who self-identify as Black,
African American, North African, Middle Eastern, Hispanic, Latino,
Asian, Pacific Islander, Native American, Native Hawaiian, Alaskan
Native, gay lesbian, bisexual or transgender. The 2024 guidelines
revise the reference to individuals who self identify as “gay
lesbian, bisexual or transgender” to “members of the
LGBTQIA+ community.”
The 2024 guidelines have been further clarified to indicate that
Glass Lewis will carefully review a company’s disclosure of
its diversity considerations and may refrain from recommending that
shareholders vote against directors when the board has provided a
sufficient rationale or plan to address the lack of board
diversity, including a timeline for appointing directors from an
underrepresented community (generally by the next annual meeting or
as soon as is reasonably practicable). In the case of a
recommendation to vote against, Glass Lewis may extend its
recommendation to additional members of the nominating committee if
the committee chair is not standing for election due to a
classified board, or based on other factors, including the
company’s size and industry, applicable laws in its state of
headquarters and its overall governance profile.
The 2024 guidelines continue to address state laws on diversity,
disclosure of director diversity and skills and stock exchange
diversity disclosure requirements. Those aspects of the guidelines
have not changed for 2024 and are therefore not discussed in this
post.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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