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Glass Lewis has published its 2026 U.S. benchmark policy updates, which will take effect for shareholder meetings on or after Jan. 1, 2026.¹  The substantive changes pertain to mandatory arbitration provisions and Glass Lewis’s pay-for-performance (PFP) methodology, which is addressed in more detail in a separate document.²  Other sections of the guidelines have been clarified, including supermajority voting provisions, certificate and bylaw amendments that reduce shareholder rights, and company omissions of shareholder proposals.

Glass Lewis has also updated the language in the document to clarify that the guidelines contain the views of its benchmark policy, which reflects broad investor opinion and widely accepted governance principles.  Beginning in 2027, it will transition from a single house view to a suite of research perspectives to inform clients’ proxy voting decisions.³

Mandatory Arbitration Provisions

Glass Lewis has amended its benchmark policy to include its approach to mandatory arbitration provisions, which restrict shareholders’ legal recourse and limit the transparency and legal certainty that public court rulings provide.   In September 2025, the SEC issued a policy statement that facilitated companies’ ability to include these provisions in their governing documents, if consistent with state law, when contemplating an initial public offering (IPO).⁴

If a company’s governing documents include a mandatory arbitration provision or other potentially negative provision following completion of its IPO, spin-off or direct listing, Glass Lewis may recommend against the governance committee chair or the entire committee.  Glass Lewis will also oppose any bylaw or charter amendment seeking to adopt a mandatory arbitration provision without a compelling rationale, among other factors. 

PFP Evaluation

Glass Lewis has made significant changes to its proprietary PFP model, including replacing its historical A-F letter grade system with a scorecard-based approach to evaluating PFP alignment relative to Glass Lewis-selected peers over a five-year measurement period.  Final alignment scores, which range from 0 to 100, are determined by the weighted sum of up to six tests, each with their own concern rating (ranging from severe to negligible).  The tests include:

• CEO granted pay vs. total shareholder return (TSR)
• CEO granted pay vs. financial performance (revenue growth, return on equity, return on assets and sector-specific metrics)
• CEO short-term incentive (STI) payouts (as a percentage of target) vs. TSR
• Total named executive officer (NED) granted pay vs. financial performance
• CEO compensation actually paid vs. TSR
• Qualitative features (downward modifier)

This analysis informs Glass Lewis’s voting decisions on say-on-pay proposals.  Companies with an overall rating of “severe” or “high” concern are more likely to receive a negative recommendation.

 Shareholder Rights

Currently, Glass Lewis recommends against the chair of the governance committee, or the entire committee, if the board unilaterally amends the governing documents to reduce or remove important shareholder rights, or to otherwise impede the ability of shareholders to exercise such rights.  Glass Lewis has added the following to its list of board actions that would prompt a negative recommendation:

• The adoption of provisions that limit shareholders’ ability to submit proxy proposals.
• The adoption of provisions that limit shareholders’ ability to file derivative suits.
• The adoption of a plurality, rather than a majority, voting standard in director elections.

The updates reflect recent revisions to the Texas Business Organizations Code (TBOC) which allow publicly listed companies domiciled in the state to impose higher ownership thresholds for shareholders to submit proposals than required under SEC Rule 14a-8.  In addition, certain states, such as Texas and Nevada, have adopted laws permitting companies to impose ownership thresholds for shareholders to initiate derivative actions.

 Amendments to the Certificate of Incorporation and/or Bylaws

Glass Lewis has consolidated its approach to amendments to the certificate and/or bylaws into a single section of the policy document.  In its case-by-case evaluation, Glass Lewis will generally support amendments proposed by management that are unlikely to have a material negative impact on shareholders’ interests, such as technical amendments.  It will continue to discourage the practice of bundling amendments into a single proposal, which could lead to an adverse recommendation if any of the amendments are of significant concern.

Supermajority Voting

Glass Lewis is codifying a case-by-case approach to management proposals to repeal supermajority voting provisions to take into account situations where the company has a large or controlling shareholder and a supermajority requirement may protect the interests of minority shareholders.   In such cases, Glass Lewis will oppose the resolution.  Its current policy favors a simple majority vote to approve all matters presented to shareholders.

Excluded Shareholder Proposals

Glass Lewis adheres to the view that shareholders should be afforded the opportunity to vote on all matters of material importance.   Currently, it makes note of instances where a company has successfully petitioned the SEC to exclude a shareholder proposal through the no-action process.  If it believes that the exclusion is detrimental to shareholders, it may recommend against the governance committee members.

Glass Lewis has removed this guideline in view of the SEC’s mid-November announcement that, due to resource constraints following the recent government shutdown, it will not be responding to most no-action requests through Sep. 30, 2026.  Glass Lewis will monitor the SEC’s ongoing changes to the shareholder proposal process and may update its policy on omissions prior to or during the 2026 proxy season.