As we reported in our Preparing for the 2025 Proxy Season client alert, Glass Lewis announced on February 18, 2025, that it was reviewing its diversity-related voting guidelines “in the face of the U.S. Administration’s recent Executive Orders and overall stance on DEI,” which are further described in our 2025 Environmental and Social Developments client alert. On March 4, 2025, Glass Lewis emailed its clients that it had completed its review and decided, beginning on March 10, to “implement a bifurcated approach to offering voting guidance on board elections and DEI-related shareholder proposals at U.S companies.”
Under this bifurcated approach, Glass Lewis will stand by its original voting guidelines regarding diversity, but if it recommends votes against a director “related in any way to diversity,” it will include a “flag pointing clients to a supporting rationale they can leverage if their preference is to vote differently from the recommendation.” Glass Lewis stated that this approach “allows Glass Lewis to deliver the vote recommendations expected by clients while also clearly flagging the potential risk that may result from an AGAINST vote decision and providing a clear path should some clients choose to vote FOR the proposal.” Glass Lewis further stated that it believes “the risk of supporting DEI-related proposals could be significant so we encourage clients to ensure internal alignment on how to execute proxy votes related to diversity.” The bifurcated approach taken by Glass Lewis puts it in stark contrast with Institutional Shareholder Services (ISS), which abandoned its diversity-related voting guidelines, as well as institutional investors like Blackrock, Vanguard, and State Street, which each have softened their approach to diversity guidelines.
As a reminder, the Glass Lewis guidelines for the 2025 proxy season state that Glass Lewis will generally recommend a vote against the chair of the nominating committee if the board is not at least 30 percent gender diverse, or all members of the nominating committee of a board with no gender diverse directors, at companies within the Russell 3000 index; for all other companies, Glass Lewis’s policy requires one gender diverse director. In addition, Glass Lewis will generally recommend a vote against the nominating committee chair if the board of a company in the Russell 1000 Index does not include at least one director who self-identifies as belonging to an underrepresented community. Glass Lewis defines “underrepresented community director” as an individual who self-identifies as Black, African American, North African, Middle Eastern, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian, or Alaskan Native, or who self-identifies as a member of the LGBTQIA+ community.
Glass Lewis had earlier removed[1] from the diversity discussion in its guidelines any reference to stock exchange diversity disclosure rules due to Nasdaq’s removal of board diversity rules from its listing requirements.[2]
[1] The update from Glass Lewis on December 17, 2024, stated that it has “removed [its] discussion on page 42 of stock exchange diversity disclosure requirements.”
[2] On December 11, 2024, the U.S. Court of Appeals for the Fifth Circuit vacated the SEC’s order approving Nasdaq’s board diversity rules and, effective February 4, 2025, following the SEC’s approval, Nasdaq removed its board diversity rules from its listing standards.