Recently, Glass, Lewis & Co., LLC (Glass Lewis) released a
new version of its Proxy Paper Guidelines (the Guidelines)
(updated as of December 30, 2014), previously released on November
Four key changes to the 2015 Guidelines are as follows:
1. Majority voting – Glass Lewis
recommends that, for uncontrolled companies listed on the Toronto
Stock Exchange (TSX), shareholders withhold votes from all members
of those companies' governance committees. This
recommendation was updated to align the Guidelines with the
TSX's announcement on February 13, 2014 that uncontrolled TSX
companies with fiscal year end-dates of June 30, 2014 or later
would have to adopt a majority voting policy.
2. Shareholder rights plan –
Glass Lewis clarifies factors taken into consideration when
analyzing shareholder rights plans (also known as "poison
pills"). Specifically, the Guidelines note that Glass
Lewis will consider supporting a poison pill if, amongst others
factors: (a) the trigger threshold is not unreasonably low (i.e.,
lower than 20%); (b) the form of offer does not have to be an
all-cash transaction; (c) the offer does not have to remain open
for more than 90 business days; and (d) the plan does not allow the
board the discretion to amend material provisions absent
3. Voting pills - Glass Lewis
notes that it will generally oppose the adoption of "voting
pills" that expand the circumstances of when a poison pill
could be triggered. Definitions of beneficial ownership in
shareholder rights plans will be reviewed to determine whether or
not ownership is defined to include shares that are not owned, but
rather "directed to vote" by a shareholder.
4. Advance notice policies –
Glass Lewis states that it will generally support advance notice
policies where the terms are "reasonable and not unduly
restrictive" for shareholders. The Guidelines note that
a recommendation to vote against advance notice provisions may be
made if the minimum notice period is either too close to (e.g., 10
days) or too far in advance of (e.g., 60 days) the annual
meeting. Other factors that will be taken into consideration
include whether the nominations process requires: (a) excessive
disclosure requirements; (b) commitments to abide by
"unnecessarily broad or restrictive agreements"; or (c)
"other impediments" that may deter shareholder ability or
willingness to utilize the nomination process.
Norton Rose Fulbright Canada LLP
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