On 15 November 2024, Glass Lewis (GL) published its 2025 Benchmark Policy Guidelines for the UK and for Shareholder Proposals & ESG-Related Issues.  The UK Guidelines are typically supplemented by guidelines specific to companies listed in Ireland which we anticipate will be published in mid-December.  The Guidelines apply from January 2025.

Notable amendments made to the UK Guidelines this year include the following:

Chair Tenure: GL has somewhat relaxed its approach to board chairs whose tenure exceeds 9 years.  In the past, it would recommend against the chair of the nomination committee in these circumstances where a timeline for succession wasn’t outlined.  Now, it will assess the rational for the extension on a case-by-case basis.

Board Diversity: From 2025, GL will recommend against the re-election of the chair of the nomination committee:

• at any main market board (outside of the FTSE 350) that has failed to appoint at least two gender diverse directors (one in the case of AIM-quoted companies); and
• at any FTSE 250 board that has failed to appoint at least one director from an ethnic minority background,

absent any clear and compelling rationale for the lack of board diversity.  In FTSE 350 companies, GL expects boards to achieve a gender diversity level of at least 33% (unless there are mitigating circumstances).

Pensions: GL will recommend voting against a remuneration proposal where executive pension contribution rates exceed those applying to the wider workforce and GL expects that no element of variable pay should be pensionable.

AGM Procedures: GL clarified some of its existing policies relevant to AGM procedures, including that:

• all PLCs should disclose a full breakdown of their AGM voting results (GL will recommend a vote against the chair of the board where this isn’t done at a FTSE 350 company); and
• GL may recommend a negative vote where a company holds a virtual AGM and the board does not address legitimate shareholder concerns about the format of the meeting.

New sections have been added relating to:

• AI: GL expects companies that develop/use AI to provide clear disclosure on the role of the board in overseeing issues relating to AI. Where insufficient oversight and/or management of AI technologies has resulted in material harm to shareholders, GL may recommend a vote against the re-election of accountable directors (or other matters up for a shareholder vote) where the board’s oversight/response/disclosure was insufficient.
• Hybrid Incentive Plans: GL expects companies to provide a rationale as to why a hybrid model is preferred and, if this includes competition for talent in the US/internationally, GL expects companies to disclose their consideration of relevant peers. GL also sets out its expectations as to maximum opportunity and the vesting/post-vesting holding period.
• SPACs: GL sets out its approach to former SPAC executives’ affiliation with the company post-combination, directorship number limits and situations where SPACs seek a reasonable business combination deadline extension.

Amendments have also been made to the provisions concerning director independence, conflicts of interest, executive remuneration, remuneration committee engagement, annual bonus deferrals, dilution limits for executive (discretionary) schemes, restricted share plans and multi-class share structures.

The only notable amendment made to the Guidelines for Shareholder Proposals & ESG-Related Issues this year relates to the inclusion of a new section on AI which sets out its expectations around disclosures and shareholder proposals relating to AI.