Select Glass Lewis (“GL”) Policy Updates and Clarifications for 2025
Glass Lewis recently published their 2025 Proxy Voting Policy Guidelines effective for shareholder meetings held after January 1, 2025. These guidelines include updates to their voting policies as well as clarification of existing policies. U.S. voting policy changes related to compensation matters are summarized below.
| Item |
Description |
Change-InControl (“CIC”) Provisions
Voting Policy Update |
- GL updated its benchmark policy for companies that allow for committee discretion over the treatment of unvested equity awards upon a CIC. Specifically, these companies should now commit to providing clear rationale for the committee’s ultimate decision as to how such awards are treated in the event a CIC occurs
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Approach to Executive Pay Program
Clarifying Amendment |
- GL emphasized that its analysis of pay programs is on a case-by-case basis and there are few program features that, on their own, lead to an unfavorable Say-on-Pay recommendation
- GL further clarified that it does not use a pre-determined scorecard approach when considering individual features of a pay program. Any unfavorable factors are reviewed in the context of rationale, structure, disclosure quality, the program’s ability to align executive pay with performance, as well as the shareholder experience and the trajectory of the program from changes driven by the compensation committee
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ISS’ Ongoing Considerations Related to the Use of Performance- vs. Time-Based Equity
ISS issued its Proposed Benchmark Policy Changes for 2025 and has opened up the comment period from November 18 to December 2, 2024. Final policy changes for 2025 are expected to be announced mid-December. Among the changes proposed, ISS included considerations related to its U.S. executive compensation policy on the use of performance- vs. time-based equity, a summary of which is provided below.
| Item |
Description |
Performance vs. Time-Based Equity Awards Considerations
Planned Change in Approach |
- Based on results from its 2024 Global Benchmark Policy Survey, ISS noted changing viewpoints on U.S. equity award practices among a growing number of investors, highlighting rising concerns over the design and disclosure of performance equity awards, and increased preference for time-vesting awards
- Although not a formal policy change, ISS indicated that for 2025, any design/disclosure concerns regarding performance-based equity will carry greater weight in the qualitative analysis, and that significant concerns in these areas will be more likely to drive an adverse Say-on-Pay recommendation for a company with a quantitative pay-for-performance misalignment
- ISS is also considering a potential policy update for 2026 (or later), whereby LTI programs with a significant mix of time-vested awards would no longer in itself raise concerns in a company’s qualitative review. As such, ISS is currently seeking additional feedback for the following questions:
- If, in the future, U.S benchmark policy were to no longer view a predominance of time-vesting equity awards as concerning in itself, what criteria would you consider most important for analyzing timevesting equity awards? (for example, vesting periods, award magnitude, holding period requirements, or any other significant factors)
- If U.S. benchmark policy were to no longer view a predominance of regular-cycle time-vesting equity awards as concerning, do you believe the same standard should be applied to any off-cycle/onetime equity awards?
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This report was authored by Yonat Assayag, Richard Lilly, and Kalyanne Neel. To discuss this topic and any additional issues, please visit our website or call us at 212-886-1022.
