Glass Lewis has published its 2020 UK Proxy Paper Guidelines which provide an overview of its approach to governance and proxy research in the UK.  Glass Lewis review companies’ adherence to the Investment Association’s principles and also expect to see widespread compliance and/or reporting against the provisions of the revised UK Corporate Governance Code (UKCGC) emerge during 2020.

Summary of changes for the 2020 UK Policy Guidelines

  • Gender diversity – Glass Lewis may recommend voting against the chair of the nomination committee at any FTSE 350 board that has neither met the 33% gender diversity target, as set out in the Hampton-Alexander Review, nor disclosed any cogent explanation or plan to address the issue.
  • Board Skills – their analysis of director election proposals, including an explicit assessment of skills disclosure, has been extended to FTSE 350 companies (previously FTSE 100). In addition, if a board has not addressed major issues of board composition, including the mix of skills, and experience of the non-executive element of the board, they may recommend voting against the chair of the nomination committee.
  • Audit Committee meetings – Glass Lewis will usually recommend voting against the election of the audit committee chair at any FTSE 350 company where the audit committee has, without explanation, failed to hold a minimum of three meetings during the year under review.
  • Smaller premium-listed companies – under the UKCGC at least half the board, excluding the chair, should be independent non-executive directors (there is no longer a dispensation for smaller companies) and all directors should be subject to annual re-election (not just FTSE 350 companies).  Glass Lewis support these proposals and by 2021, they will generally expect boards to meet the UKCGC's independence provision without the need for transitional explanations in lieu of compliance.
  • Salaries and pensions – there is an expectation that any salary increase and pension provisions for executive directors is justified and appropriate when compared to those available to the wider workforce.
  • Incentive plans – Glass Lewis expect all incentive plans to feature clear and transparent award limits, ideally expressed as a multiple of base salary per employee.
  • Remuneration – remuneration policies should include post-exit shareholding requirements.  This follows recommendations made by the Investment Association’s Principles of Remuneration 2019. In addition they expect long-term incentive plans to allow for no more than 25% vesting for threshold performance. There is also an expectation that remuneration committees should consider exercising downward discretion where a company has suffered an exceptional negative event, even if formulaic targets have been met.

As with the UKCGC, which seeks to move away from a prescriptive approach to comply or explain, Glass Lewis will continue to take a holistic view of the operation and composition of the board together with the prevailing culture at the company.

Glass Lewis 2020 UK Proxy Paper Guidelines


This document provides a general summary and is for information/educational purposes only. It is not intended to be comprehensive, nor does it constitute legal advice. Specific legal advice should always be sought before taking or refraining from taking any action.