Introduction

Glass Lewis released the first of its updated benchmark voting policies for 2025 for the UK and Continental Europe on 14 November 2024. It subsequently released the voting policies for individual major European markets including France, Germany, Italy, the Netherlands, Spain, and Switzerland. The new benchmark policies will be effective from January 2025.

This memo is structured as follows:

  • Updates applicable across the UK & Europe
  • UK-specific policy updates
  • Updates applicable across Continental Europe
  • Country-specific policy updates in Continental Europe

Updates applicable across the UK & Europe

Board Oversight of Artificial Intelligence

Glass Lewis believes that companies “that use or develop AI technologies should consider adopting strong internal frameworks that include ethical considerations and ensure they have provided a sufficient level of oversight of AI. As such, boards may seek to ensure effective oversight and address skills gaps by engaging in continued board education and/or appointing directors with AI expertise”.

In this context, companies that“develop or employ the use of AI in their operations should provide clear disclosure concerning the role of the board in overseeing issues related to AI, including how companies are ensuring directors are fully versed on this rapidly evolving and dynamic issue.”

Glass Lewis believes that it is important that shareholders understand the seriousness with which companies take this issue. Generally, they will not make voting recommendations on the basis of a company’s oversight of AI-related issues in the absence of material incidents. However, in instances where there is evidence that insufficient oversight of AI technologies has resulted in material harm to shareholders, Glass Lewis will review a company’s overall governance practices and identify which directors or board-level committees have been charged with oversight of AI-related risks.

The 2024 voting policies for the UK and Continental Europe made no reference to artificial intelligence.

UK-specific policy updates

Director Tenure

The 2024 voting policy for the UK states that Glass Lewis will “generally recommend against the chair of the nomination committee where the tenure of the chair of the board exceeds nine years and a defined succession plan and definitive timeline for retirement has not been disclosed.”

Given the general market acceptance of a wide range of rationales when extending the tenure of a board chair beyond nine years, for 2025 Glass Lewis has updated its benchmark policy to outline that the assessment of the rationale provided will be on a case-by-case basis. Therefore, Glass Lewis will become less strict in applying this principle.

Board Level Gender Diversity

In 2024, Glass Lewis’ policy was to recommend against the chair of the nomination committee of companies listed in the UK that did not have at least one gender diverse director on its board. For FTSE 350 companies, Glass Lewis would recommend against the nomination committee chair if fewer than 33% of their board was gender diverse. Glass Lewis also references the FCA listing rules on board diversity which require 40% gender diversity on a ‘comply or explain’ basis.

In 2025, Glass Lewis has now made their requirement on main market company boards stricter stating that they should have at least two gender diverse directors. This means that the existing policy requiring one gender diverse director now only applies to AIM-listed companies. Additionally Glass Lewis will now review companies’ disclosures and practices for any potentially tokenistic approach to gender diversity.

Board Level Ethnic Diversity

Glass Lewis has updated the section on board-level ethnic diversity to state that, from 2025, they will generally recommend against the re-election of the chair of the nomination committee at any FTSE 250 board that has failed to appoint at least one director from an ethnic minority background or has failed to provide a clear and compelling rationale. The 2024 voting policy only covered recommending against the nomination committee chairs of FTSE 100 companies that had not reached this target.

Pension Contributions

In previous policies, Glass Lewis has stated that they expect executive pension contribution rates to be in line with the wider workforce and that, absent a cogent rationale for non-compliance, they may recommend against the relevant remuneration proposal. From the 2025 AGM season, Glass Lewis make explicit that they will generally recommend against the relevant remuneration proposal where executive pension contribution rates exceed those applying to the majority of the workforce. Additionally, they expect no element of variable pay to be pensionable.

Hybrid Plans

A new section has been introduced outlining Glass Lewis’ assessment of “hybrid incentive plans” in executive remuneration policies, which refer to long-term incentive schemes which typically combine performance shares and restricted shares, and their general expectation of company disclosures which should provide:

  • “A rationale as to why a hybrid model is preferred over a single structure;
  • A reduction in maximum opportunity compared to the previous LTIP, with an explanation on the methodology used to determine the discount rate; and
  • A total vesting and post-vesting holding period of at least five years”.

Dilution Limits

The 2024 voting policy states executive and employee equity participation plans should stipulate dilution limits and that they should not exceed 10% of total issued share capital in any 10-year period and that, specifically, grants to executives should not exceed 5% over the same period. In consideration of the Investment Association’s Principles of Remuneration, has updated its voting policy so that “potential dilution of over 5% over a ten-year period in relation to executive (discretionary) schemes will no longer generally lead to a recommendation to oppose equity awards”.

Voting Structure

A new section to Glass Lewis’ guidelines has been added, addressing multi-class voting structures at UK companies, in line with their global policy. They have clarified that “where a board adopts a multi-class share structure in connection with an IPO, spin-off, or direct listing within the past year, and a share class with superior rights is unlisted, the benchmark policy will generally recommend voting against the chair of the governance committee (or equivalent) or a representative of the major shareholder up for election if the board: (i) did not also commit to submitting the multi-class structure to a shareholder vote at the company’s first shareholder meeting following the IPO; or (ii) did not provide for a reasonable sunset of the multi-class structure (generally seven years or less)”.

Special Purpose Acquisition Companies

Finally, Glass Lewis has introduced specific guidelines in relation to Special Purpose Acquisition Companies (SPACs). They will “defer to management and the board when a SPAC seeks a reasonable business combination deadline extension.” They “do not necessarily consider a former SPAC executive to be affiliated with the company post-combination, recognising the unique nature of a SPAC executive”. They will therefore apply a higher limit for company directorships of five public company boards, when reviewing potential overcommitment.

Updates applicable across Continental Europe

Shareholder Meeting Format

The section of Glass Lewis’s guidelines previously titled “Virtual Shareholder Meetings” has been restructured providing further insight into their expectations for when companies hold, or propose to amend their bylaws to allow for, shareholder meetings that do not permit in-person attendance. In particular, the most important changes are the following:

  • Glass Lewis have amended their policy to make clearer that closed-door shareholder meetings should be avoided in all but exceptional circumstances. However, given the rapidly evolving market practice and ongoing legal process in this area in Italy, Glass Lewis states that they will introduce a formal policy on closed-door shareholder meetings in 2026.
  • Glass Lewis now makes explicit that it will recommend against amendments to articles of association that will allow for closed-door shareholder meetings, unless this meeting format may only be used in exceptional circumstances. There were previously no references to closed-door shareholder meetings in the Glass Lewis European voting policy.
  • They have introduced a section stating that “in egregious cases where a board has failed to address legitimate shareholder concerns regarding the manner in which the company is holding its shareholder meetings”, Glass Lewis may recommend against the re-election of accountable directors or other matters up for a shareholder vote.
  • They also clarified that companies should engage with their shareholders on this matter and provide rationale for their choice when in-person attendance is not permitted, given the concerns raised by institutional shareholders.
  • Finally, Glass Lewis clarified that the assessment of shareholder meeting format and proposed article amendments will also take into consideration local legal requirements for such meetings.

Restricted Share and ‘Hybrid’ Plans

Glass Lewis introduced a new extensive section covering how it would assess a company’s decision “to partially or fully remove performance conditions from its long-term incentive plan”, moving to a restricted or hybrid share plan. Hybrid plans refer to long-term incentive schemes which typically combine performance shares and restricted shares. Glass Lews is generally sceptical of such proposals and will assess them on a case-by-case basis taking into account the rationale provided, the inclusion of structural elements that are intended to align executives’ interests to the long-term performance of the company, and an adequate reduction in target opportunity to reflect the reduced risk profile.  

Appointment of Auditor for Sustainability Reporting

Glass Lewis has introduced a section into its European voting policy on the appointment of auditors for sustainability reporting. It states that when companies provide a shareholder vote on the appointment of an auditor for sustainability reporting, they will generally recommend that “shareholders support the company’s proposed choice, subject to the company providing sufficient information on the identity of and fees paid to the auditor, as well as the independence and performance of the auditor”.

Audit Fees Disclosure

In previous voting policies, if insufficient information had been disclosed regarding the fees paid to the auditor and there was no shareholder vote on these fees, Glass Lewis would recommend voting against the appointment of the auditor as well as the re-election of the audit committee chair (or its most senior member). Under the 2025 voting policy, Glass Lewis will continue to generally recommend against the appointment of the audit committee chair (or its most senior member) but would only recommend abstaining from the auditor re-appointment. Glass Lewis is therefore narrowing the focus of its opposition to the audit committee to emphasise that the disclosure of these auditor fees is the responsibility of the board and not the auditor.

France-specific policy updates

Multi-Class Share Structures

Glass Lewis introduced a new section to its French voting guidelines on multi-class share structures to incorporate the “attractivity law” which was passed in June 2024. The law introduces the possibility of issuing preferred shares with multiple voting rights during IPOs. Glass Lewis will now generally recommend voting against the chair of the governance committee (or equivalent) or a representative of the major shareholder up for election in the case of a board adopting a multi-class share structure, where the share class with superior rights is unlisted and the board has not committed to submitting the multi-class structure to a shareholder vote at the first shareholder meeting post its IPO or if there is no reasonable sunset provision for the structure (generally seven years or less). In instances where there are no directors up for election at the first shareholder meeting after the company’s IPO, Glass Lewis will recommend voting against other relevant proposals. The policy on multi-class share structures in the French voting guidelines now mirrors the policy seen in the Continental European voting guidelines.

Virtual Shareholder Meetings

For information on Glass Lewis’s updated approach to virtual shareholder meetings, see section “Shareholder Meeting Format” above.

Appointment of Auditors for Sustainability Reporting

For information on Glass Lewis’s updated approach to the appointment of auditors for sustainability reporting, see section “Appointment of Auditor for Sustainability Reporting” above.

Gender Diversity

The guidelines have been updated to specify that from 30 June 2026, employee representatives and employee shareholders’ representatives will be counted when assessing whether at least 40% of the company’s board seats are held by directors of each gender.

Issuance of Shares and/or Convertible Securities
Glass Lewis have restructured and expanded the section on share and convertible security issuances to provide further insight into how they assess these resolutions.

Germany-specific policy updates

CEO Pay Ratio

The ‘Management Board Remuneration Report’ section of the German voting guidelines has been expanded to clarify how companies should disclose the five-year development of CEO pay and average employee pay, as mandated by SRD II. Companies are expected to disclose the values of the CEO’s total pay and the average employee’s pay and show how this has developed over 5 years, not just the year-on-year change of this ratio.

Supervisory Board Remuneration

The guidelines have been updated to further align with the Continental European policy to oppose “substantial increases to fees for non-executive directors when compelling rationale has not been provided, particularly in cases where the current or proposed fees exceed those paid to market peers”.

Conditional Capital Authorities

The ‘conditional capital’ section of the guidelines have been updated to incorporate the adoption of the Future Financing Act (“Zukunftsfinanzierungsgesetz”). The limit on share issuance authorities without pre-emptive rights has increased from 10% to 20% of issued share capital and the limit on share increases through conditional capital pools has increased from 50% to 60%.

Italy-specific policy updates

Shareholder Meeting Format

In line with the Continental Europe Policy, a specific section dedicated to the “Shareholder Meeting Format” is now included in Italian voting guidelines as well. The Capitali law recently provided Italian companies (via a by-laws amendment) with the possibility to continue allowing participation at shareholder meetings exclusively through the so-called “Rappresentante Designato” (Designated Proxyholder), resulting in a closed-door shareholder meeting: Glass Lewis will generally recommend against by-laws amendments intended to provide for this possibility, unless such amendments “specify that the closed-door meeting format would only be used in exceptional circumstances, such as a public health crisis”, also including a commitment to disclose in the notice of meeting the exceptional circumstance justifying the use of the format. The provision also specifies that: (i) Glass Lewis will introduce a formal policy on closed-door shareholder meetings from their 2026 guidelines; (ii) for all other shareholder meeting formats, the approach will be the same as in Glass Lewis Continental Europe Policy.

Authority to Issue Shares Without Preemptive Rights

The new guideline clarifies that the 10% dilution limit is applied on proposed authorities in combination with pre-existing authorities to issue shares without pre-emptive rights, recommending against the proposed resolution should the threshold be exceeded. However, if the capital increase is “related to a specific purpose or transaction” the proposal will be evaluated on a case-by-case basis, “considering a company's rationale for such issuance”.

Netherlands-specific policy updates

Supervisory Board Remuneration

The Dutch voting guidelines have been updated to further align with the Continental European policy to oppose “substantial increases to fees for non-executive directors when compelling rationale has not been provided, particularly in cases where the current or proposed fees exceed those paid to market peers”.

Hybrid or Restricted Share Plans

For information on Glass Lewis’s updated approach to hybrid and restricted share plans, see section “Hybrid or Restricted Share Plans” above.

Spain-specific policy updates

Appointment/Ratification of Auditor

The Spanish voting guidelines on the appointment and ratification of auditors has been updated to reflect the current regulations and wording of the Spanish Auditing Act regarding the maximum tenure of the auditor. Previously, the guidelines stated that auditors needed to be rotated “every ten years, however, the maximum term may be extended by four more years in case an additional auditor is appointed to act as a co-auditor”. The new guidelines state that the auditors need to be rotated “every ten years, with an additional term of up to ten years when the audit is tendered, or 14 years when a joint audit is adopted.”

Virtual Shareholder Meetings

For information on Glass Lewis’s updated approach to virtual shareholder meetings, see section “Shareholder Meeting Format” above.

Switzerland-specific policy updates

Appointment of Auditor

The Swiss voting guidelines have added a new section to reflect the regulations governing the appointment of statutory auditors. The new policy emphasises that companies with long-tenured auditors should provide detailed disclosure regarding audit tender processes adopted by the board along with justifications for these.

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