SEC Extends Review Period for Nasdaq’s Board Diversity Proposal

On the heels of our post of our summary deck yesterday on Nasdaq’s December 2020 Board Diversity Proposal, the SEC announced last night that it needs more time to consider Nasdaq’s proposal and associated comment letters.  With the extension, the SEC has until March 11, 2021 to either approve or disapprove the proposal, or institute proceedings to aid its determination.  
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Nasdaq’s Board Diversity Proposal

The SEC continues to consider and take public comment on Nasdaq’s December 2020 Board Diversity Proposal. That proposal, if approved as written, would require Nasdaq-listed issuers to disclose their board diversity composition annually and eventually have two “diverse” directors on their boards, or explain why not. Limited exceptions would also apply.

There’s been much speculation as to whether the SEC will approve these proposed amendments to Nasdaq’s listing requirements, decline to do so, or propose, at some point in time, its own board diversity disclosure requirements.
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State Street’s 2021 Proxy Voting Agenda

State Street Global Advisors (SSGA) released its eagerly awaited 2021 proxy voting agenda earlier this week and, unsurprisingly, climate change risk and the lack of racial and ethnic diversity are among the investor’s top priorities. In the annual letter from the President and CEO Cyrus Taraporevala (CEO’s Letter), companies are urged to increase their transparency around racial and ethnic diversity.
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ISS Releases Its Compensation-Related Policy FAQs for 2021

On December 21, 2020, ISS released its updated compensation-related FAQs for 2021.  For U.S. companies, this set of guidance consists of ISS’ Compensation Policies FAQ, Equity Compensation Plans FAQ, Pay-for-Performance Mechanics and Peer Group FAQ. As we previously discussed, ISS released its 2021 U.S. Proxy Voting Benchmark Policy Recommendations in November. The updated policies and FAQs are effective for shareholder meetings occurring on or after February 1, 2021.
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DOL Finalizes Proxy Voting and Shareholder Rights Rule

The U.S. Department of Labor (“DOL”) issued a final rule on December 11, 2020 to clarify how and when the ERISA fiduciary duties apply to the exercise of shareholder rights, including proxy voting, proxy voting guidelines and the use of proxy advisory firms. The final rule requires fiduciaries to put the economic interest of plan participants and beneficiaries first and to ensure that voting decisions advance these interests.
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SEC Proposes Amendments to Modernize Rule 701 and Form S-8 and Temporary Rules to Allow for “Platform Worker” Participation

On November 24, 2020, the SEC released proposed amendments and proposed temporary rules relating to the federal securities laws that govern the issuance of equity securities to service providers pursuant to compensatory arrangements. Each proposal will be subject to a 60-day public comment period following publication in the Federal Register.

  • First, the SEC proposed amendments to modernize the framework for securities offerings and sales to workers under Rule 701 of the Securities Act of 1933 and registration statements on Form S-8.

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The Taskforce on Scaling Voluntary Carbon Markets – An Introduction

In September 2020, the Institute of International Finance (IIF), the global financial services industry association, convened the Taskforce on Scaling Voluntary Carbon Markets. The Taskforce is working to scale a voluntary carbon market which would allow companies to meet their carbon reduction or net-zero commitments. In November 2020, the Taskforce released for public comment its Consultation Document, which includes a draft blueprint for a voluntary carbon market and a companion roadmap to implementation.
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Glass Lewis Makes Key Changes to Proxy Voting and ESG Proposal Guidelines – Full Summary

On November 24, 2020, Glass Lewis (GL) released its 2021 Proxy Voting Policy Guidelines for the United States and its 2021 “Environmental, Social and Governance (‘ESG’) Initiatives,” which outlines the firm’s approach to ESG shareholder proposals.  The policies are effective for shareholder meetings held after January 1, 2021.  Feedback on GL’s policies may be submitted using the link at the top of GL’s voting policy guidelines page.
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Glass Lewis Releases 2021 Proxy Voting Guidelines

Glass Lewis (GL) announced yesterday that its 2021 Proxy Voting Policy Guidelines for the United States are now available. In addition, the proxy advisor announced the release of its 2021 “Environmental, Social and Governance (‘ESG’) Initiatives,” which includes the firm’s approach to shareholder proposals.

We are preparing a more fulsome Briefing: Governance blogpost summary.  In the meantime, the following are a few key changes:

  • BOARD GENDER DIVERSITY.   

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ISS Releases 2021 Benchmark Policies Updates

On November 12, 2020, ISS announced the release of its 2021 benchmark policy updates that will apply to shareholder meetings occurring on or after February 1, 2021. The updated policies substantially adopt the policies as ISS proposed in October 2020 relating to (1) racial and ethnic diversity, (2) board oversight of environmental and social risks, including climate risks and (3) exclusive forum provisions, which we previously discussed here.
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