31 May 2022
Goodwin Procter LLP
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We have seen a change this yr within the utility by Glass
Lewis of its coverage referring to Post-IPO Governance. Historically,
Glass Lewis was extra lenient than ISS in issuing computerized withhold
suggestions on administrators based mostly on governance provisions adopted
on the time of the IPO.
We have seen a number of corporations that went public final yr
obtain withhold suggestions from Glass Lewis for all of their
administrators on account of their Post-IPO Governance. Glass Lewis has
particularly cited a mix of the next governance
provisions as being problematic: a categorised board; plurality
voting normal for director elections; director removing from
workplace solely “for cause” and by a supermajority vote;
supermajority vote necessities for amendments to the
Company’s governing paperwork; unique discussion board provisions; no
proper for shareholders to name particular conferences or act by written
consent; and an fairness plan with an “evergreen”
provision. It seems to us from the Glass Lewis stories that we
have reviewed that having a categorised board with out both
committing to submit it to a shareholder vote or offering a
affordable pre-decided date at which the categorised board
sunsets, is probably the most problematic of the above referenced governance
provisions in Glass Lewis’ view.
Obviously, we’re nearing the top of annual assembly season for
calendar yr-finish corporations. However, if an organization that went public
final yr has not but held its annual assembly, it needs to be conscious
of this growth. It will even be vital on a go-ahead
foundation for corporations which can be going by way of the IPO course of or are
newly-public to bear in mind that each one of their administrators will doubtless
obtain a withhold suggestion from each ISS and Glass Lewis at
their first annual assembly in the event that they put in place sure governance
provisions on the time of their IPO.
The content material of this text is meant to supply a common
information to the subject material. Specialist recommendation needs to be sought
about your particular circumstances.
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