TheCorporateCounsel.net

Last week, ISS announced that it would halt consideration of gender and racial and/or ethnic diversity of a company’s board when making vote recommendations on director elections. After the announcement, a common question was: “What will Glass Lewis do?”

This Fried Frank memo says Glass Lewis sent a letter to its clients yesterday stating that it is re-evaluating its DEI-related voting guidance in light of the Administration’s approach. Here’s more:

The letter states that, in light of the Administration’s views on DEI, Glass Lewis “may in fact determine that it is in our clients’ best interest for Glass Lewis to change its approach to voting guidance on board elections and DEI-related shareholder proposals at U.S. companies, particularly in areas where this guidance considers gender, ethnic, and racial diversity of the board.” The letter states, with respect to institutional investors who “remain committed to diversity”: “We will do our best to support your voting preferences, but ask you to understand that may not be fully possible in the end.” Glass Lewis states that it “will spend the next two weeks gathering input from clients” and will issue new guidance on March 3, 2025, following the DOJ’s issuance of its report.

That last sentence refers to the Attorney General’s February 5th memo that directs the Civil Rights Division and the Office of Legal Policy to jointly submit a report with specific recommendations for discouraging private sector “illegal DEI” by March 1st.

This isn’t the only update to board diversity considerations since ISS’s announcement. Reuters reported that Goldman Sachs has also ended its four-year-old policy of only taking companies public if they had two diverse board members.

– Meredith Ervine