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 5, 2014.
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 shareholder approval.
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.
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