Board Gender Diversity. For authorizations of increases in authorized preferred stock, GL has clarified that it will generally recommend voting against preferred stock authorizations or increases, unless the company discloses (i) a commitment to not use such shares as an anti-takeover defense or in a shareholder rights plan or (ii) a commitment to submit any shareholder rights plan to a shareholder vote prior to its adoption. If the companys disclosure includes a rationale or plan to address a lack of board diversity, the 2022 GL policy updates indicate that GL may refrain from issuing negative voting recommendations. ISS has amended its considerations for evaluating a say-on-pay votes. For all other companies, ISS has codified its broad case-by-case framework for evaluating climate-related proposals submitted by shareholders and by management. Beginning in 2023, GL will generally recommend voting against the chair of the nominating and/or governance committee if a company in the S&P 500 index has not provided any individual or aggregate demographic diversity disclosure. Big-Data Initiative in Intl. This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. The results of board representation indicate: Further detailed discussion of the Review can be found here. Institutional Shareholder Services (ISS) recently published its 2022 updates to its benchmark proxy voting policies. These updates reflect the continuing trend of institutional investors, shareholder advisory firms, and other stakeholders pushing companies to increase representation of women and historically underrepresented groups on their boards. Proposed Climate Disclosure related to strategy, risk management and metrics and targets would be included in the issuers AIF (or annual MD&A if no AIF is filed). In November 2021, GL announced that it had released its 2022 Policy Guidelines for the United States. For those individuals, the test will be whether he or she serves on more than four public company boards. If a company has adopted exclusive federal forum provisions for claims that arise under the Securities Act of 1933 without seeking shareholder approval, GL will generally take the same approach it takes when a board has adopted exclusive forum provisions designating state courts as the exclusive venue for certain matters and will generally recommend voting against the chair of the governance committee. The disclosure of GHG emissions as well as other climate-related disclosure targets is in line with emerging climate-related guidance trends. Currently, there is no requirement under Canadian securities law or corporate law that a reporting issuer hold an SoC vote. The policies will govern ISS voting recommendations for shareholder meetings held on or after February 1, 2022. For further discussion on Proposed Climate Disclosure, please see here. Antitrust Services for Life Sciences Companies, Consumer Financial Services Enforcement + Government Investigations, Financial Industry Transactional Services, Hatch-Waxman, Biologics and Biosimilars Litigation, Life Sciences Patent Prosecution + Counseling, Life Sciences Securities Litigation + Healthcare Fraud, Proposition 65 + Food Labeling Litigation, Strategic Technology Transactions and Licensing, 2022 Policy Guidelines for the United States, Nasdaq board diversity disclosure rules approved, Overall Approach to Environmental, Social & Governance. The companys related commitment, disclosure, and performance compared to its industry peers. 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Gardner Volunteer Leadership Award, Jack McDonald Military Service Appreciation Award, Overview of Long-Term Career & Executive Coaches, Overview of Alumni Consulting Team Volunteers, Overview of Stanford GSB Alumni Association, Overview of Companies, Organizations, & Recruiters, Overview of Recruiting Stanford GSB Talent, Overview of Leveraging Stanford GSB Talent, Overview of Internships & Experiential Programs, Overview of Alumni Consulting Team for Nonprofits, Social Innovation & Nonprofit Management Resources, Postdoctoral Fellowship in Organizational Behavior. The updates add two new policies which provide a framework for analyzing both management and shareholder proposals with respect to a companys climate transition action plans and related disclosure. The completeness and rigor of the companys climate-related disclosure; The companys actual greenhouse gas (GHG) emissions performance; Whether the company has been the subject of recent, significant violations, fines, litigation, or controversy related to its GHG emissions; and. The extent to which the companys climate related disclosures are in line with TCFD recommendations and meet other market standards; Disclosure of the companys operational and supply chain GHG emissions (Scopes 1, 2, and 3); The completeness and rigor of companys short-, medium-, and long-term targets for reducing operational and supply chain GHG emissions in line with Paris Agreement goals (Scopes 1, 2, and 3 if relevant); Whether the company has sought and received third-party approval that its targets are science-based; Whether the company has made a commitment to be net zero for operational and supply chain emissions (Scopes 1, 2, and 3) by 2050; Whether the company discloses a commitment to report on the implementation of its plan in subsequent years; Whether the companys climate data has received third-party assurance; Disclosure of how the companys lobbying activities and its capital expenditures align with company strategy; Whether there are specific industry decarbonization challenges; and. the completeness and rigor of the companys climate-related disclosure; the companys actual GHG emissions performance; whether the company has been the subject of recent, significant violations, fines, litigation or controversy related to its GHG emissions; and. This document provides GL guidance rather than voting policies. Say-on-pay resolutions are not yet mandated for reporting issuers, with approximately 30% of TSX issuers under ISS coverage providing these resolutions. GL has revised its policies regarding disclosure of director diversity and skills. For venture issuers, ISS will now generally vote withhold for the continuing compensation committee members (or, where no compensation committee has been identified, the board chair or full board), if the company maintains an evergreen plan (including those adopted prior to an initial public offering) and has not sought shareholder approval in the past two years and does not seek shareholder approval of the plan at the meeting. For companies that are on the Climate Action 100 Focus List (167 companies mostly airlines and companies involved in the chemical, energy, automobile, and very large consumer products industries), ISS will recommend voting against responsible incumbent directors, which will usually mean the relevant committee chair or board chair in the first year, if the company has not taken ISSs minimum steps to understand, assess and mitigate climate change risks. ISS will target companies with dual class share structures (what they call unequal voting rights) more aggressively in 2023, removing the grace period for newly public companies and the grandfathering exception for other companies. For state laws relating to director gender diversity, the 2022 updates provide that GL will make recommendations in accordance with applicable state law gender diversity mandates. If a company is planning to hold a virtual only shareholder meeting and does not provide this disclosure, GL will generally recommend voting against the governance committee members. Finally, there is more specific focus on dual class share structures and other governance provisions that the firms have historically disfavored. The Review found a correlation between issuers adopting board refreshment and/or renewal measures and the proportion of board seats held by women. Where issuers had adopted targets with respect to the representation of women on their boards (32%), a greater proportion of the board (28%) was comprised of women as compared to issuers without board targets (18%). This change was supported by the ISS major clients participating in a 2021 roundtable, and by the fact that other major ISS markets all have thresholds of 70% or higher. According to ISS, the diversity disclosure required by National Instrument 58-101 Disclosure of Corporate Governance Practices has been a catalyst for the addition of women to the boards of TSX-listed issuers. ISS Benchmark Voting Policies updated effective February 1, 2022 board gender diversity and ESG provisions of key interest. Gender diverse includes both women and directors who identify their gender as other than male or female. The first would not require the disclosure of Scope 1, Scope 2 and Scope 3 GHG emissions and their related risks, provided reasons for not providing this information are disclosed. For U.S. issuers, there are three primary focus areas: climate change and related risks, board diversity, and what ISS calls board accountability. The ISS policy updates will generally be applicable to shareholder meetings taking place on or after February 1, 2022. This includes structures where some classes of common stock afford shareholders differential rights on: ISS will recommend voting against all nominees for director of the applicable companies. Exceptions to this policy will be available for non-S&P/TSX Composite Index issuers that are: As part of its rationale for these updated policy positions, ISS cites the fact that gender diversity has remained a high-profile corporate governance issue in the Canadian market. For qualitative ESG metrics, GL expects companies to provide shareholders with a thorough understanding of how these metrics will be or were assessed. GL will review a companys disclosure about diversity matters before making voting recommendations. GL guidelines now refer to gender diverse directors, rather than female directors. To embed, copy and paste the code into your website or blog: Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra: [HOT] Read Latest COVID-19 Guidance, All Aspects [SCHEDULE] Upcoming COVID-19 Webinars & Online Programs, [GUIDANCE] COVID-19 and Force Majeure Considerations, [GUIDANCE] COVID-19 and Employer Liability Issues. Stikeman Elliott LLP var today = new Date(); var yyyy = today.getFullYear();document.write(yyyy + " "); | Attorney Advertising. As of November 2017, nine board members is the average number of members across all GQS coverage companies this equates to the typical company receiving full credit with one-third of the board comprised of women. For annual meetings held after August 8, 2022, GL will recommend voting against the chair of the governance committee of Nasdaq companies that fail to make the disclosure required by Nasdaq board diversity disclosure rules approved by the U.S. Securities and Exchange Commission in August 2021. ISS also addressed the following policy changes applicable to venture-listed issuers only: For meetings of venture issuers on or after February 1, 2023, ISS will generally vote withhold for individual director nominees who: This policy is now aligned with the ISS existing policy for non-venture issuers (TSX and NEO). In instances where state laws relating to gender diversity do not mandate board composition requirements, are non-binding, or impose only disclosure or reporting requirements, the 2022 updates indicate that GL will generally refrain from recommending against directors on the basis of the GL state law diversity policies. By continuing to browse this website you accept the use of cookies. The percentage of women is another factor that is scored in all regions. ISS will consider a wide range of information when assessing a proposal, including, but not limited to: ISS will also apply this policy to climate transition related ambitions, or commitment to reporting on the implementation of a climate plan. Existing ISS Governance QualityScore (GQS) factors also highlight the importance of female representation. Lastly, in considering the number of women in leadership roles, including board chair, the majority of relevant ISS policy survey respondents indicated that they considered overall diversity when evaluating boards. Copyright var today = new Date(); var yyyy = today.getFullYear();document.write(yyyy + " "); JD Supra, LLC. The updates include changes to a number of policies for issuers listed on Canadian exchanges, including with respect to gender diversity and environment, social and governance (ESG) issues. Below is an overview of key 2022 policy changes and clarifications adopted by ISS. ISS will evaluate on a case-by-case basis whether a withhold recommendation is warranted for additional directors at companies that fail to meet the gender diversity policy that would apply to the issuers constituent group over two years or more. Below is an overview of key GL policy changes and clarifications for 2022 shareholder meetings. Beginning in 2022, GL may recommend voting against the chair of the nominating and/or governance committee of companies in the S&P 500 index if the companys disclosure is particularly poor, which means the company has failed to provide any disclosure in each of the categories set forth in the GL policies. Dual Class Shares. whether the company discloses a commitment to report on the implementation of its plan in subsequent years. Federal Forum Provisions. Authorizations/Increases in Authorized Preferred Stock. Dual Class Structures, Anti-Takeover Provisions and Classified Boards. ISS is updating its policy coverage of TSX-listed issuers to explicitly state that the guidelines will apply to companies listed on the TSX and the NEO Exchange. ISS believes the new provisions provide a transparent framework of analysis that will allow for consistency across markets. disclosure of the companys operational and supply chain GHG emissions and the completeness and rigor of companys targets for reducing GHG emissions; whether the company has sought and approved third-party approval that its targets are science-based; whether the company has made a commitment to be net zero for operational and supply chain emissions by 2050; and. 
For companies that have become public companies through a business combination with a SPAC, GL has added a new policy under which it will recommend voting against all directors who were serving as board members when the company became publicly traded if the company has adopted overly restrictive governing documents or, before the company became publicly traded, the board adopted a multi-class share structure under which voting rights are not aligned with economic interest or an anti-takeover provision, such as a poison pill or classified board, if the board: (i) did not submit these provisions to a shareholder vote on an advisory basis at the meeting at which shareholders voted on the business combination, (ii) did not commit to submitting these provisions to a shareholder vote at the companys first shareholder meeting following the company becoming publicly traded, or (iii) did not provide a reasonable sunset of these provisions, generally equal to three to five years in the case of a classified board or poison pill and seven years or less in the case of a dual or multi-class share structure. Proposed Climate Disclosure related to governance would be required to be included annually in the issuers management information circular, or AIF or annual managements discussion and analysis (MD&A) where the issuer does not send a management information circular to its securityholders. The two dominant proxy advisory firms Institutional Shareholder Services (ISS) and Glass Lewis (GL) have issued their policy updates for the 2022 proxy season. 
Time-phased voting rights that allow shares held for a certain number of years to have more votes per share than shares held for a shorter period. companies that have recently transitioned from the TSXV; or, are CEOs of public companies who serve on the boards of. GL has published a supplemental document that essentially describes what GL believes are best practices for virtual meetings. Beginning in 2022, GL will note as a concern in its research reports when boards of Russell 1000 companies do not provide clear disclosure concerning board-level oversight of environmental and/or social issues. To meet this test, companies must: ISS indicated that companies can expect these minimum steps to increase in future years. In addition, in November 2021, the CSA published Multilateral Staff Notice 58-313 Review of Disclosure Regarding Women on Boards and in Executive Officer Positions (the Review) representing the 7th consecutive year of data being published regarding women on boards and in executive officer positions since the comply and explain rules came into force. Lauren Visek was a contributing author to this alert. Climate Change. Waivers of Age and Tenure Policies. Full credit of this factor is earned when three or more women are on the board. GL expects that this disclosure will include shareholders ability to ask questions at the meeting; procedures, if any, for posting appropriate questions received during the meeting and the companys answers on its public website; and logistical details for meeting access and technical support. Virtual-Only Shareholder Meetings. Noteworthy updates center on gender and racial/ethnic diversity on boards of directors; environmental, social and governance (ESG) issues; and governance practices for companies that have become public as a result of a combination with a special purpose acquisition company (SPAC). Recently, the Canadian Securities Administrators (CSA) proposed climate-related disclosure requirements in National Instrument 51-107 Disclosure of Climate-related Matters (Proposed Climate Disclosure). Similarly to management proposals, ISS will make recommendations on a case-by-case basis for shareholder proposals that request the company to disclose a report providing its GHG emissions levels and reduction targets and/or its upcoming/approved climate transition action plan and provide shareholders the opportunity to express approval or disapproval of these measures. These policies supplement the other GL policies on board diversity. Which ballot items they are allowed to vote on; or. Beginning with shareholder meetings held after January 1, 2023, GL will apply a percentage-based approach, rather than the fixed numerical approach described in the previous paragraph. This alert summarizes the principal changes applicable to U.S. companies for the 2022 proxy season and into 2023. The Proposed Climate Disclosure focuses on four core disclosure elements: governance, strategy, risk management and metrics and targets. This section expands and clarifies prior GL guidance on how it evaluates company policies and disclosure and notes that its perspective is long-term shareholder value. We note that proposed new CSE policies will impose new shareholder approval requirements for certain CSE-listed issuers, if adopted. In December 2021, Institutional Shareholder Services (ISS) announced its governance policy updates for 2022. Currently, issuers listed on the TSX and TSX-V are required to obtain shareholder approval in certain circumstances. ISS reports that based on their data, TSX-listed company boards with no female directors appear to be outliers. The 2022 policies will extend this position requirements to all companies for meetings after February 1, 2023. The 2022 updates include a separate section titled Overall Approach to Environmental, Social & Governance. In addition, there is a heightened expectation that boards will take a more active role in overseeing management of environmental and economic sustainability risks, including climate change risks, and disclose to shareholders the controls and procedures the company has in place to do so. Glass Lewis has also recently published its updated Policy Guidelines for 2022 which provide for an expanded policy on board gender diversity (as we recently discussed). According to ISS, in 2021, there were over two dozen SoC proposals on ballot across the globe, including in Canada and the United States, along with France, South Africa, Spain, Switzerland, the United Kingdom and Australia. Overall Approach to ESG Matters. SPAC Director Overboarding. In addition, the Canadian Coalition for Good Governance recommended in its comment letter of March 2021 that where a say-on-pay vote receives low support (below 80%) the board should report back in a reasonable time on its efforts to understand shareholder concerns. 
For companies that have become public companies through a business combination with a SPAC, GL has added a new policy under which it will recommend voting against all directors who were serving as board members when the company became publicly traded if the company has adopted overly restrictive governing documents or, before the company became publicly traded, the board adopted a multi-class share structure under which voting rights are not aligned with economic interest or an anti-takeover provision, such as a poison pill or classified board, if the board: (i) did not submit these provisions to a shareholder vote on an advisory basis at the meeting at which shareholders voted on the business combination, (ii) did not commit to submitting these provisions to a shareholder vote at the companys first shareholder meeting following the company becoming publicly traded, or (iii) did not provide a reasonable sunset of these provisions, generally equal to three to five years in the case of a classified board or poison pill and seven years or less in the case of a dual or multi-class share structure. Proposed Climate Disclosure related to governance would be required to be included annually in the issuers management information circular, or AIF or annual managements discussion and analysis (MD&A) where the issuer does not send a management information circular to its securityholders. The two dominant proxy advisory firms Institutional Shareholder Services (ISS) and Glass Lewis (GL) have issued their policy updates for the 2022 proxy season. Time-phased voting rights that allow shares held for a certain number of years to have more votes per share than shares held for a shorter period. companies that have recently transitioned from the TSXV; or, are CEOs of public companies who serve on the boards of. GL has published a supplemental document that essentially describes what GL believes are best practices for virtual meetings. Beginning in 2022, GL will note as a concern in its research reports when boards of Russell 1000 companies do not provide clear disclosure concerning board-level oversight of environmental and/or social issues. To meet this test, companies must: ISS indicated that companies can expect these minimum steps to increase in future years. In addition, in November 2021, the CSA published Multilateral Staff Notice 58-313 Review of Disclosure Regarding Women on Boards and in Executive Officer Positions (the Review) representing the 7th consecutive year of data being published regarding women on boards and in executive officer positions since the comply and explain rules came into force. Lauren Visek was a contributing author to this alert. Climate Change. Waivers of Age and Tenure Policies. Full credit of this factor is earned when three or more women are on the board. GL expects that this disclosure will include shareholders ability to ask questions at the meeting; procedures, if any, for posting appropriate questions received during the meeting and the companys answers on its public website; and logistical details for meeting access and technical support. Virtual-Only Shareholder Meetings. Noteworthy updates center on gender and racial/ethnic diversity on boards of directors; environmental, social and governance (ESG) issues; and governance practices for companies that have become public as a result of a combination with a special purpose acquisition company (SPAC). Recently, the Canadian Securities Administrators (CSA) proposed climate-related disclosure requirements in National Instrument 51-107 Disclosure of Climate-related Matters (Proposed Climate Disclosure). Similarly to management proposals, ISS will make recommendations on a case-by-case basis for shareholder proposals that request the company to disclose a report providing its GHG emissions levels and reduction targets and/or its upcoming/approved climate transition action plan and provide shareholders the opportunity to express approval or disapproval of these measures. These policies supplement the other GL policies on board diversity. Which ballot items they are allowed to vote on; or. Beginning with shareholder meetings held after January 1, 2023, GL will apply a percentage-based approach, rather than the fixed numerical approach described in the previous paragraph. This alert summarizes the principal changes applicable to U.S. companies for the 2022 proxy season and into 2023. The Proposed Climate Disclosure focuses on four core disclosure elements: governance, strategy, risk management and metrics and targets. This section expands and clarifies prior GL guidance on how it evaluates company policies and disclosure and notes that its perspective is long-term shareholder value. We note that proposed new CSE policies will impose new shareholder approval requirements for certain CSE-listed issuers, if adopted. In December 2021, Institutional Shareholder Services (ISS) announced its governance policy updates for 2022. Currently, issuers listed on the TSX and TSX-V are required to obtain shareholder approval in certain circumstances. ISS reports that based on their data, TSX-listed company boards with no female directors appear to be outliers. The 2022 policies will extend this position requirements to all companies for meetings after February 1, 2023. The 2022 updates include a separate section titled Overall Approach to Environmental, Social & Governance. In addition, there is a heightened expectation that boards will take a more active role in overseeing management of environmental and economic sustainability risks, including climate change risks, and disclose to shareholders the controls and procedures the company has in place to do so. Glass Lewis has also recently published its updated Policy Guidelines for 2022 which provide for an expanded policy on board gender diversity (as we recently discussed). According to ISS, in 2021, there were over two dozen SoC proposals on ballot across the globe, including in Canada and the United States, along with France, South Africa, Spain, Switzerland, the United Kingdom and Australia. Overall Approach to ESG Matters. SPAC Director Overboarding. In addition, the Canadian Coalition for Good Governance recommended in its comment letter of March 2021 that where a say-on-pay vote receives low support (below 80%) the board should report back in a reasonable time on its efforts to understand shareholder concerns.