On November 4, 2014, Glass, Lewis & Co. (Glass Lewis) released its 2015 proxy season guidelines. Noteworthy updates, which are discussed in more detail below, relate to:

Glass Lewis has adopted a policy for instances where a board has amended, without shareholder approval, a company's governing documents to reduce or remove important shareholder rights, or to otherwise impede the ability of shareholders to exercise these rights. In these instances, depending on the circumstances, Glass Lewis may recommend that shareholders vote against the chairman of the governance committee or against the entire governance committee. Examples of board actions that may cause this recommendation include:

If a shareholder proposal relating to important shareholder rights received support from a majority of the votes cast (excluding abstentions and broker non-votes) and the board failed to respond adequately, Glass Lewis will generally recommend that shareholders vote against all members of the governance committee during whose tenure the board failed to respond adequately. Examples of relevant shareholder proposals include those seeking a:

Glass Lewis has expanded this policy to specify that, in determining whether a board has sufficiently implemented a proposal, Glass Lewis will examine the quality of the right enacted or proffered by the board for any conditions that may unreasonably interfere with the shareholders' ability to exercise the right (such as overly prescriptive procedural requirements for calling a special meeting).

Glass Lewis has increased its scrutiny of provisions adopted in a company's charter or by-laws prior to an IPO. While Glass Lewis will generally refrain from issuing voting recommendations on the basis of most corporate governance best practices (such as board independence, committee membership and structure, and meeting attendance) during the one-year period following an IPO, it will scrutinize certain provisions adopted prior to the IPO. Specifically, Glass Lewis will:

Glass Lewis has a $120,000 materiality threshold for transactions with directors employed by a professional services firm such as a law firm, investment bank or consulting firm, where the company pays the firm and not the individual for services. Glass Lewis has clarified that it may deem a transaction meeting this definition as immaterial where both:

Glass Lewis has added a discussion of its approach to analyzing one-off awards granted outside of existing incentive programs. It believes that shareholders should generally be wary of awards granted outside of a company's standard incentive schemes, as these awards can potentially undermine the integrity of a company's regular incentive plans, the link between pay and performance, or both. However, Glass Lewis recognizes that, in certain circumstances, additional incentives may be appropriate. In these cases, companies should:

In reviewing a company's use of one-off awards, Glass Lewis will review the terms and size of the grants in the context of the company's overall incentive strategy and granting practices, as well as the current operating environment.

Glass Lewis has also provided clarification regarding its qualitative and quantitative approach to say-on-pay analysis by adding another area of focus in reviewing say-on-pay proposals. Glass Lewis will now consider the implementation and effectiveness of a company's executive compensation programs, including pay mix and use of performance metrics in determining pay levels.

Glass Lewis has added a discussion of its approach to analyzing employee stock purchase plans (ESPPs). It uses a quantitative model to estimate the cost of a plan and then compares the cost to ESPPs at similar companies. Except in the most extreme cases, Glass Lewis will generally support these plans given the regulatory purchase limit of $25,000 per employee per year, which Glass Lewis considers reasonable. It also looks at the number of shares requested to see if either:

As such, Glass Lewis will generally recommend against ESPPs that contain "evergreen" provisions that automatically increase the number of shares available under the ESPP each year.