Given the challenges presented by the COVID-19 pandemic, many companies have been revising their proxy statements to allow them to make their annual meeting a virtual one if necessary. As such, in light of Glass Lewis’ immediate policy guidance on virtual meetings, it is recommended that:
- For virtual shareholder meetings taking place from March 1, 2020 through June 30, 2020, companies should disclose their rationale for doing so, including citing COVID-19; and
- Companies should include a statement about their intent to return to in-person shareholder meetings once the COVID-19 crisis passes.
Glass Lewis’ immediate policy update states that it will review virtual meetings on a case-by-case basis, and will note whether companies indicate their intention to resume holding in-person or hybrid meetings under normal circumstances.
Moving forward, we expect ISS and other governance-based holders to follow with similar guidelines.
Glass Lewis Immediate Policy Update
For the duration of the 2020 proxy season (March 1, 2020 through June 30, 2020), Glass Lewis will take into account the extenuating circumstance of the COVID-19 pandemic when applying their policy on virtual-only shareholder meetings. It will review these on a case-by-case basis and will also note whether companies state their intention to resume holding in-person or hybrid meetings under normal circumstances.
For companies opting to hold a virtual-only shareholder meeting due to COVID-19 between March 1, 2020 and June 30, 2020, Glass Lewis will generally refrain from recommending to vote against members of the governance committee on this basis, provided that the company discloses, at a minimum, its rationale for doing so, including citing COVID-19.
Additionally, should these companies opt to continue holding virtual-only shareholder meetings in subsequent years, Glass Lewis expects future proxy statements to include the robust disclosure concerning shareholder participation described below. The standard policy on virtual shareholder meetings will apply in those future years.
Finally, for all shareholder meetings occurring after June 30, 2020, the standard policy on virtual shareholder meetings will apply, and Glass Lewis will expect robust disclosure in the proxy statement concerning shareholder participation. Even if the pandemic continues well beyond this date, companies have been given sufficient time to address shareholder concerns as outlined in the standard policy.
For an illustration of what Glass Lewis will support through June 30, 2020, please refer to the example set by Starbucks on March 4. A complete copy of the updated guidelines for the United States and Canada can be accessed here.
