Proxy advisory firms Institutional Shareholder Services (ISS) and Glass, Lewis & Co. (Glass Lewis) recently published updated guidelines governing shareholder meetings for the 2021 proxy season. The ISS Benchmark Policies for Canadian issuers and Glass Lewis Guidelines focused on key issues, including gender diversity, environmental and social risk oversight, board refreshment, and other corporate governance matters.

These updates come in addition to the recent guidelines by ISS and Glass Lewis published in response to the COVID-19 pandemic.

Board Diversity

Glass Lewis has provided that board of directors with less than two female directors would be noted as a concern in 2021; and in 2022, Glass Lewis will recommend withholding a vote for the nominating committee chair when a board of directors has less than two female directors (for a board with six or fewer members, this changes to only one female director).

With a similar approach, currently ISS will generally recommend withholding a vote for a chair of a nominating committee, or other directors responsible for board nominations, of “widely-held” companies where the company has either (i) no formal gender diversity policy; or (ii) zero women on its board of directors. Beginning in February 2022, ISS will recommend withholding a vote for the chair of the nominating committee, or other directors responsible for board nominations,  where either: (i) women comprise less than 30% of the board and the company has not disclosed a formal written gender diversity policy; or (ii) the company’s formal policy does not include a commitment to achieve at least 30% women on the board over a reasonable timeframe. The existing policy will continue to apply to TSX-listed, non-TSX Composite Index companies which are considered “widely-held” by the ISS.[1]

Environmental and Social Risk Oversight

Glass Lewis will note as a concern when board of directors of companies in the S&P/TSX 60 index do not provide clear disclosure concerning the board-level oversight afforded to environmental and/or social issues. Further, beginning with shareholder meetings held in 2022, Glass Lewis will recommend withholding a vote for the governance committee chair of a company in such the S&P/TSX 60 Index which fails to provide explicit disclosure concerning the board of directors’ role in overseeing these issues.

Current ISS policy recommends withholding votes for individual directors, committee members and entire boards due to, among other things, material failures of governance, stewardship, risk oversight or fiduciary responsibilities at the company. Commencing 2021, ISS policy guidelines expand risk oversight failure examples to expressly include failures relating to environmental and social factors, including climate change.

Exclusive Forum

Glass Lewis and ISS have made updates to their policies in response to an increasing number of Canadian companies adopting exclusive forum bylaws, which designate and require corporate litigation to be conducted in a single jurisdiction.

Glass Lewis recommends that shareholders vote against any amendments to the bylaws or articles seeking to adopt an exclusive forum provision unless the company: (i) provides a compelling argument on why the provision would directly benefit shareholders; (ii) provides evidence of abuse of legal process in other, non-favored jurisdictions; (iii) narrowly tailors such provision to the risks involved; and (iv) maintains a strong record of good corporate governance practices.

Beginning February 2021, ISS will recommend voting on a case-by-case to proposals adopting exclusive forum bylaws or amending bylaws. Case-by-case determinations will take into account: (i) the company’s jurisdiction of incorporation; (ii) board rationale for adopting the bylaw provision; (iii) legal actions subject to the bylaw provision; (iv) evidence of past harm as a result of shareholder action against the company originating outside of the jurisdiction of incorporation; (v) the company’s governance provisions and shareholder rights; and (vi) any other problematic provisions that raise concerns regarding shareholder rights.

Additional key updates include the following:

Glass Lewis

  • Board Refreshment: Glass Lewis will note instances where the average tenure of a non-executive directors is 10 years or more and no new independent directors have joined the board in the past five years as a potential concern.
  • Financial Expertise: Glass Lewis will increase scrutiny on the level of professional expertise on audit committees, which should have members with sufficient professional experience to fit the role.
  • Director Attendance / Committee Meeting Disclosure: Glass Lewis will recommend against voting for the governance committee chair when records for board and committee meeting attendance are not disclosed and the number of audit committee meetings that took place are not disclosed. Additionally, Glass Lewis will recommend against voting for the audit committee chair if the committee did not meet at least four times during the year.
  • Change of Continuance: Proposals requesting a continuance to another jurisdiction will be evaluated on a case-by-case basis to determine if they are in the best interests of the company and its shareholders.
  • Poor Disclosure: Additional scrutiny will be given to companies with disclosure standards that are unclear, poor, contradictory, or outdated.
  • Clarifying Amendments: Glass Lewis made some additional clarifying amendments to its independence classification, provided additional factors for compensation committee performance, provided additional factors for evaluation of a company’s short-term and long-term incentive plans, added language regarding option exchanges and repricing proposals, and announced a change of its peer group data provider.


  • Equity-Based Evergreen Compensation Plans: ISS will recommend against voting for the compensation committee members (or the board chair, as applicable) for Canadian Securities Exchange listed companies, if the company maintains an evergreen equity compensation plan but has not sought shareholder approval in the past two years and is not seeking approval at the upcoming meeting.

For a discussion on these topics, as well as other considerations for issuers as they prepare for the 2021 proxy season, Fasken will be hosting its annual Proxy Season Preview, this year titled “Recent Developments in Corporate Governance and the Importance of ESG Considerations” through a webinar to be held on January 14,, 2021 at noon (EST).

[1] Note: “widely-held” companies is defined as S&P/TSX Composite Index companies and other companies designated as such by ISS based on the number of ISS clients holding securities of the company.