ISS

Proxy adviser Institutional Shareholder Services Inc. (“ISS”) published its 2020 benchmark voting policy on 19 November 2019. It will be effective for general meetings on or after 1 February 2020. New policies are being introduced for application in Continental Europe, UK and Ireland with regard to board gender diversity. These policies will generally provide for recommending a vote “against” the chair of a company’s nomination committee (or other relevant directors on a case-by-case basis) where the company has no female directors on the board. Also, as many EU member states are implementing the EU Shareholder Rights Directive II that prescribes a shareholder vote on remuneration policies and reports, policy updates are being introduced for European companies that consider the responsiveness of companies to significant shareholder dissent on pay-related votes, and how remuneration committees use and explain their use of discretion in managing executive pay, including how relevant environmental, social, and governance (ESG) matters have been taken into account when determining executive remuneration outcomes. Such factors may include workplace fatalities and injuries, significant environmental incidents, large or serial fines or sanctions from regulatory bodies and/or significant adverse legal judgments or settlements. A policy change on maximum director election terms is also being announced for European companies that will take effect beginning in 2021. Following the one-year transition period, the policy update will expand to all Continental European markets the expectation that votes on directors’ elections will be for terms of a maximum of four years. Here you can find a link to the 2020 policy.

Glass Lewis

Proxy adviser Glass Lewis also published the 2020 guidelines for Continental Europe. Here you can find a link to the 2020 European policy. This policy is supplemented by the key policies that apply specifically to companies listed in the Netherlands and the relevant regulatory background to which Dutch companies are subject, where they differ from Europe as a whole. Here you can find the policy for the Netherlands.

Glass Lewis has made revisions in the following areas:

Executive remuneration: updated to clarify the policy approach to the executive remuneration proposals mandated by the EU Shareholder Rights Directive.

Board responsiveness: to outline when and how Glass Lewis may recommend shareholder action on the basis of an inadequate response to shareholder dissent, generally defined as 20% or more of minority shareholders voting against, and/or actively abstaining from supporting, a management proposal. The updated guidelines also outline how the adequacy of a board’s response to such dissent are assessed.

Board skills: updated to outline when and how Glass Lewis may recommend shareholder action on the basis of a failure to address major and continued issues of board composition, including the composition and mix of skills and experience of the non-executive element of the board.