EGC Corporate Governance Practices (May 2018)

EGC Corporate Governance Practices: A Survey and Related Resources PAGE 52 Figure 80 : N=155. The Influence of Proxy Advisory Services When designing corporate governance policies and procedures, EGCs must carefully consider the voting policies of institutional investors and the proxy advisory services that provide voting advice to institutional investors. The two principal proxy advisory services are Institutional Shareholder Services Inc. (“ISS”) and Glass Lewis & Co. (“Glass Lewis”). ISS is the most influential proxy advisory service, typically influencing 20% to 30% of the votes at a typical annual meeting. Glass Lewis, on the other hand, has much less influence on the outcome of voting. Both ISS and Glass Lewis make voting recommendations in accordance with voting guidelines, which provide a roadmap as to how the proxy advisory service will vote on a particular matter. These voting guidelines change over time, as the proxy advisory services seek to improve their approach to particular issues or to add guidelines for dealing with new issues. ISS and Glass Lewis have adopted specific voting guidelines addressing, e.g., voting on: the election of directors; advisory votes on executive compensation; the ratification of auditors; the approval of compensation plans; changes to the certificate of incorporation or bylaws; and shareholder proposals. In many cases, EGCs need to consider what governance policies and procedures should be implemented prior to going public in order to avoid seeking a shareholder vote after going public when the proxy advisory services and institutional investors may be opposed to a particular provision, as well as the impact of governance policies and procedures adopted prior to going public that may negatively impact the EGC’s governance profile, leading to potential negative vote recommendations by the proxy advisory services on a wide range of issues. Yes; 65 No; 90 Use of Non-GAAP Financial Measures (2017) (By Frequency) Yes No