Glass Lewis updated the criteria it will use to evaluate companies’ board diversity disclosure. Its disclosure evaluation, formerly limited to the S&P 500, will now be included in its Proxy Paper reports for the Russell 1000.
To achieve the highest rating, disclosure must include the racial/ethnic diversity of directors on an individual basis or aggregate basis (i.e., without identifying specific directors). Disclosure on an individual or aggregate basis that doesn’t specify what measures of diversity are represented won’t be eligible for the highest rating.
Based on Glass Lewis’s review of 2021 disclosures, the Rooney Rule disclosure evaluation was also updated to consider corporate commitments disclosed in the proxy or Nom/Gov Committee charter to include diverse candidates in the director search pool (which is the approach many companies took in 2021); alternatively, companies may disclose in the proxy statement, Nom/Gov Committee charter, or corporate governance guidelines that they use, or require use of, a formal Rooney Rule in their director search process.
The update was accompanied by this report, which shows how Glass Lewis applied its board diversity disclosure methodology to the S&P 500 during the 2021 proxy season. The report shows a significant uptick in disclosure in 2021 compared to 2020.
See our report on Glass Lewis’s 2021 methodology: “Glass Lewis Details How it Will Assess Board Diversity Disclosure” and our November 2021 report: “Glass Lewis Releases 2022 Proxy Season Policy Guidelines” and additional information & resources on our Proxy Advisors page.
This post first appeared in the weekly Society Alert!