On December 4, Glass Lewis updated its benchmark proxy voting guidelines. The updates applicable to U.S. companies are briefly summarized below.
Where a company has implemented a mandatory arbitration provision (or other negative governance practices) following an IPO, spin-off, or direct listing transaction, Glass Lewis may recommend voting against the chair of the governance committee, or in certain cases the entire committee. Further, Glass Lewis will generally recommend voting against any bylaw or charter amendment that seeks to introduce a mandatory arbitration provision absent sufficient rationale and disclosure from the company.
Glass Lewis is replacing its single letter grade system of “A” through “F” with a scorecard-based approach consisting of up to six tests, each receiving a rating, with a weighted aggregate score ranging from 0 to 100.
Glass Lewis has clarified circumstances under which it may recommend votes against the governance committee chair (or the entire committee) where boards amend governing documents to reduce or remove key shareholder rights. Examples include amendments that (i) limit shareholders’ ability to submit shareholder proposals; (ii) limit shareholders’ ability to file derivative lawsuits; and (iii) implement plurality voting in lieu of majority voting for director elections.
Glass Lewis has consolidated its approach to amendments to the certificate of incorporation and/or bylaws. It will now evaluate amendments on a case-by-case basis, noting its opposition to bundled proposals that package multiple amendments together, because they prevent shareholders from reviewing each amendment on its own merit. In general, Glass Lewis will recommend voting for amendments unlikely to impose a material negative impact on shareholder interests.
Where companies seek to abolish supermajority requirements, Glass Lewis will evaluate the proposals on a case-by-case basis, recognizing that at companies with a large or controlling shareholder, supermajority thresholds may protect minority holders. In such cases, Glass Lewis may oppose elimination of supermajority voting.
In view of the dynamic U.S. landscape and changes to the Securities and Exchange Commission’s (SEC) former no‑action process, Glass Lewis has refined certain language regarding its general approach to shareholder proposals. Glass Lewis will now generally approach these matters under the premise that shareholders should have the opportunity to vote on matters of material importance. Glass Lewis notes the possibility of further updates to its benchmark policy around shareholder proposals should its approach change, or if regulatory developments warrant such updates.
The updated policies generally apply to shareholder meetings taking place on or after January 1, 2026.
Companies contemplating IPO, spin-off, or direct listing transactions should anticipate heightened scrutiny of mandatory arbitration provisions. Where such provisions are considered, boards should ensure their adoption is supported by clear rationale and robust disclosure, recognizing the potential for negative vote recommendations at the governance committee level if investor rights are perceived as curtailed.
With Glass Lewis’ transition to a score-based pay-for-performance model, compensation committees should expect a more granular, multi-dimensional assessment of incentive alignment. This may amplify the importance of transparent disclosure on goal rigor, metric selection, peer benchmarking, and realized versus realizable pay outcomes to contextualize the 0–100 scorecard result in shareholder communications.
Boards should also be mindful that amendments to governing documents that limit shareholder rights may trigger adverse recommendations against the governance committee chair or the full committee. Where amendments are necessary, companies should articulate the specific problem being addressed, explain the investor impact, and consider alternatives that preserve key rights.
When proposing changes to supermajority requirements, issuers with concentrated ownership should proactively address how any shift would affect minority shareholder protections. Glass Lewis’ willingness to support the retention of supermajority thresholds in such contexts signals an expectation that governance structures balance control dynamics against minority protections.
Finally, in light of the SEC’s recent changes to the shareholder proposal process, companies should continue to prioritize constructive engagement with their shareholders, provide enhanced issue-specific disclosure, and approach procedural decisions with an appreciation for Glass Lewis’ baseline view that shareholders should be able to vote on matters of material importance. Given the possibility of mid-season policy adjustments, boards and management teams should monitor developments throughout the 2026 proxy cycle.