Glass Lewis Benchmark Policy Changes for 2025

In late November 2024, proxy advisor Glass, Lewis & Co., LLC (“Glass Lewis”) released its 2025 Benchmark Policy Guidelines for Canada. These changes come into effect for shareholder meetings taking place after January 1, 2025, unless otherwise stated.

Here are the key changes affecting Canadian issuers for the upcoming proxy season:

• Board Oversight of Artificial Intelligence (“AI”): Glass Lewis is now expecting boards to take steps to mitigate exposure and any material risks that could arise from their use or development of AI. In instances where there is evidence that insufficient management of AI technologies has resulted in material harm to shareholders, Glass Lewis may recommend that shareholders vote against the re-election of accountable directors, or other matters up for a shareholder vote, as appropriate.
• Shareholder Meeting Format: Glass Lewis has clarified that, given the concerns raised by institutional shareholders on shareholder meetings that do not allow for in-person attendance, companies should engage with their shareholders on this matter and provide rationale for their choice of shareholder meeting format when in-person attendance is not permitted. Glass Lewis may recommend against the chair of the governance committee, or any other relevant directors, in cases where the board has failed to sufficiently respond to legitimate shareholder concerns regarding a virtual-only shareholder meeting format.
• Disclosure of Professional Skills and Experience: Glass Lewis recognizes the importance of companies providing substantive disclosure in their proxy filings about the experience and expertise of board nominees. In cases where the disclosure of a S&P/TSX 60 company does not allow for a meaningful assessment of the key skills and experience of incumbent directors and nominees to a board, Glass Lewis may recommend a vote against the chair of the nominating committee (or equivalent).
• Approach to Executive Pay Program: Glass Lewis has provided some clarifying statements to emphasize its holistic approach to analyzing executive compensation programs whereby there are few program features that, on their own, lead to an unfavorable recommendation from the benchmark policy for a say-on-pay proposal, with pay programs reviewed on a case-by-case basis. Glass Lewis does not utilize a pre-determined scorecard approach when considering individual features such as the allocation of the long-term incentive between performance-based awards and time-based awards. Unfavorable factors in a pay program are reviewed in the context of rationale, overall structure, overall disclosure quality, the program’s ability to align executive pay with performance and the shareholder experience and the trajectory of the pay program resulting from changes introduced by the compensation committee.
• Governance Committee Meetings: Glass Lewis now expects the governance committee on all TSX boards to meet at least once during the year in review. In cases where the governance committee fails to have at least one meeting, Glass Lewis will generally recommend against the chair of the committee in question or, in the absence of a chair, the senior member of this committee.

The Sodali & Co Canadian team will continue to monitor market developments and provide necessary updates in a timely manner.

Contact our experts at canada@sodali.com to find out what influence Glass Lewis has on your shareholder base, what these changes mean for your organization, or for any advisory needs.