Glass Lewis and ISS updates to UK proxy voting guidelines for 2025

Glass Lewis, the US proxy advisor, has published updates to its UK voting policy guidelines for AGMs of listed companies held from 1 January 2025 onwards. Updates from ISS, the other most significant global advisory service, are not yet final but have been published in draft form for comment.

Amendments to the Glass Lewis 2024 guidelines include the following changes:

• Executive remuneration – This area is where most of this year's changes are concentrated, following on from the revised Principles of Remuneration published by the Investment Association (IA) in October. Helpfully, Glass Lewis has decided to update its guidance in line with the IA's new approach. Changes will affect hybrid incentive plans, dilution limits, and pension contributions. The guidelines also clarify existing policies relating to restricted share plans, annual bonus deferrals, salaries, remuneration committee engagement, and the overall approach to executive remuneration. For more information on the Glass Lewis’ changes affecting the evaluation of executive remuneration proposals, see our client briefing here.
• Director tenure – Glass Lewis will now consider extensions to the tenure of a board chair beyond nine years on a case-by-case basis due to the “general market acceptance of a wide range of rationales".
• Diversity – Given the now well-established UK Listing Rules expectation that all Main Market companies should aspire to 40% gender diversity, Glass Lewis will review companies' disclosures and practices for any potentially “tokenistic approach". Specifically, Glass Lewis will now generally recommend against the re-election of the chair of the nomination committee where a board has failed to appoint at least two gender diverse directors without a clear explanation of why this is the case. Absent mitigating circumstances, Glass Lewis also continues to expect FTSE 350 boards to achieve a gender diversity level of at least 33%. In addition, Glass Lewis will also recommend against re-electing the nomination committee chair unless they have appointed at least one ethnically diverse director.
• Board oversight of AI – A new section of the Glass Lewis guidance requires boards to be aware of, and take steps to mitigate, material risks arising from the use or development of AI. Companies are expected to adopt strong internal frameworks that include ethical considerations and to ensure effective oversight of how AI is being used. Clear disclosure on how company boards are overseeing AI and expanding their collective expertise and understanding in this area is also seen as likely to be of value to shareholders. In instances where there is evidence that insufficient oversight and/or 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.
• Virtual shareholder meetings – As before, Glass Lewis supports hybrid shareholder meetings but not virtual-only meetings. The revised guidance states that, in “egregious" cases and where a board has failed to address legitimate shareholder concerns about the way in which the company is holding its shareholder meetings, it may recommend that shareholders vote against the re-election of accountable directors, or other AGM resolutions.
• Multi Class Share Structures – Acknowledging the updated UK Listing Rules, a new section clarifies that where a board has adopted a multi-class share structure in connection with an IPO, spin-off, or direct listing in the past year, and a share class with superior rights is unlisted, Glass Lewis will generally recommend voting against the chair of the governance committee (or equivalent) or a representative of the major shareholder up for election if the board: (i) did not also commit to submitting the multi-class structure to a shareholder vote at the company's first shareholder meeting following the IPO; or (ii) did not provide for a reasonable sunset of the multi-class structure (generally seven years or less). This approach is consistent with the Glass Lewis global approach to multi-class share structures.
• Special Purpose Acquisition Companies (SPACs) – A new section outlines specific considerations in relation to SPACs. Glass Lewis will generally defer to management and the board when a SPAC seeks a reasonable business combination deadline extension. In addition, and recognizing the unique nature and role of SPAC executives, Glass Lewis will not necessarily consider former SPAC executives to be affiliated with the company post-combination, and will generally apply the higher limit (up to five board roles) when reviewing executive time commitments.
• Conflicts of interest and related party transactions – The guidelines now clarify that Glass Lewis may recommend a vote against the relevant senior director for “particularly egregious" transactions between an executive and the company which may pose a risk to shareholders' interests.
• Proxy voting results – Glass Lewis believes that all public companies should provide a full breakdown of their voting results after the AGM, although voting sanctions are only contemplated for FTSE 350 companies which fail to publish this information.

The changes proposed by ISS for the next AGM season also mainly affect provisions on executive remuneration and are aligned with the publication of the IA's updated Principles of Remuneration. The comment period is open until 2 December 2024, with the final version of the guidance published soon after. The ISS changes begin to apply for meetings held from 1 February 2025 onwards.

See Glass Lewis 2025 Policy Guidelines: United Kingdom and press release.

See also ISS Proposed Benchmark Policy Changes for 2025 and press release.