Glass, Lewis & Co., LLC (Glass Lewis), a leading governance and proxy voting firm, has recently released its 2018 Policy Guidelines for Proxy Advice in Canada. The following are three of its key changes from the 2017 Policy Guidelines:

Board Gender Diversity

In the new year, Glass Lewis will not make voting recommendations solely on the basis of board diversity. However, starting in 2019, Glass Lewis claims that it will generally recommend voting against the nominating committee chair of a board that has no female members, or has not adopted a formal written gender diversity policy. This recommendation may extend to other nominating committee members depending on considerations such as the size of the company, industry, governance profile of the company, and/or whether the board has provided a sufficient rationale for failing to have any female board members or adopting a formal policy.

Virtual Shareholder Meetings

Glass Lewis' opinion is that virtual-only meetings have the potential to prevent shareholders from meaningfully communicating with the company's management. A "hybrid meeting", however, may create a complimentary marriage of technology and shareholder meetings, which could encourage and expand participation of shareholders who are unable to attend in person. In 2018, Glass Lewis will not make voting recommendations solely on the basis that a company is holding a virtual-only meeting. However, starting in 2019, Glass Lewis plans to generally recommend voting against governance committee members where the board is planning (and does not provide disclosure) to hold a virtual-only meeting.

Proxy Access

In 2018, Glass Lewis will examine the regulatory landscape within Canada to assess whether existing proxy access rights are sufficient or preferable over US-style proxy access rights. Glass Lewis has observed that a number of shareholder proposals have requested that Canadian companies adopt the latter. In situations where, in Glass Lewis' opinion, the existing laws, policies or regulations either provide shareholders with adequate proxy access rights or would prohibit a company's adoption of the requested provision, it will recommend that shareholders vote against such US-style proposals. In so doing, Glass Lewis will continue to monitor how similar companies in the target company's market are responding to proxy access issues as well as any regulatory changes that may affect access rights.

The author would like to thank Peter Choi, articling student, for his assistance in preparing this legal update.

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