Update on meetings on certain corporate governance topics with Proxy Advisors

In October 2023, the Committee on Corporate Governance met with Glass Lewis and Institutional Shareholder Services Inc.  respectively, to discuss their respective proxy voting guidelines in the light of the Committee’s Recommendations on Corporate Governance.

  • 24. november 2023
  • Nyt fra Komitéen for god Selskabsledelse på corporategovernance.dk

In September 2022, the Committee on Corporate Governance (the “Committee”) met with Glass Lewis and Institutional Shareholder Services Inc. (“ISS”), respectively, at which it was agreed to have a yearly meeting. The meeting this year was held in October 2023. The purpose of this year's meeting was to discuss how the Danish listed companies best address Glass Lewis’s and ISS’s proxy voting guidelines, and how the listed companies may engage in a dialogue with Glass Lewis and ISS regarding specific questions about the proxy voting guidelines. The Committee also wanted to discuss some of the latest changes in Glass Lewis’s and ISS’s proxy voting guidelines. 

Prior to the meetings, the Committee had selected the following topics for discussion purposes:

  • Gender diversity and diversity in general
  • Multiple share classes 
  • Indemnification 
  • Remuneration 
  • Proxy Advisors’ inclusion of other stakeholders

Following the meetings, the Committee would like to inform Danish listed companies of the following key points.

Gender diversity and diversity in general

The topic is still considered relevant due to new Danish legislation in this area and the EU directive on improving the gender balance among directors of listed companies and related measures. Glass Lewis informed the Committee that if a company does not comply with their 30 % gender balance-requirement, or their “one of each sex”-requirement (depending on the company’s market cap), Glass Lewis requires that the company in question provide a proper explanation for not meeting such requirements. Glass Lewis does not base its policy strictly on Danish legislation. 

Both proxy advisors will consider reviewing their guidelines in this regard once the member states have implemented the EU directive.

ISS and Glass Lewis agree that so far, the primary focus has been on diversity regarding biological sex but note that the focus will shift to diversity in a broader perspective, not only gender and ethnicity, but also diversity in backgrounds, skills, and other elements that encourage diversity of thinking.

This is not common in the EU for example, since it is not possible to collect data about ethnicity, as it is in the US or the UK. However, ISS collects data about board members who identify with a gender identity that is different from their biological sex to the extent that such data is disclosed by the company. Glass Lewis takes other gender identities into consideration by recommending that one gender should not be overrepresented, instead of focusing on underrepresentation. 

Multiple share classes

Glass Lewis and ISS have both introduced voting recommendations in their newest proxy voting guidelines which are of importance to companies having multiple share classes with differential voting rights. Last year the Committee chose to comment on ISS’s voting recommendations about multiple share classes in connection with the public consultation. Many Danish listed companies have multiple share classes and the proxy advisors’ voting guidelines may therefore have a big impact on these companies share structures.

ISS informed the Committee that, generally, global investors consider the use of multiple share classes to be bad governance practice, since multiple share classes with differential voting rights are considered to constitute unequal treatment of shareholders and may potentially increase governance risks. Moreover, one-share-one-vote is an accepted governance principle and adopted under the ICGN governance principles, to which many international investors subscribe. ISS received feedback from their investors that ISS’s proxy voting guidelines should reflect this to hold boards accountable for maintaining an unequal voting rights structure. Glass Lewis also informed the Committee that the increase in the use of “loyalty shares” in Europe has raised the need for voting recommendations in this area. 

Glass Lewis informed the Committee that, if both share classes were listed, Glass Lewis would not give special consideration in this regard. But if the share class with the enhanced voting rights was not listed, Glass Lewis would look at the companies’ corporate governance in general, whether good governance practices are maintained and whether the opinion of minority shareholders are taken into consideration. Glass Lewis acknowledges that the use of multiple share classes in the Nordics is a long-standing practice and accepted market feature, and Glass Lewis does not base its recommendations on the existence of an established multi-class share structure alone. Glass Lewis and ISS both await the EU-proposal on multiple-vote share structures in companies that seek the admission to trading of their shares on an SME growth market. It was stated that the proposed minority safeguards, for example sunset clauses, make sense for SME growth markets, where multiple share classes with differential voting rights may be useful tools to get more companies to list. Both proxy advisors follow the proposal closely. 


In the latest years many Danish listed companies have adopted indemnification policies for management. Indemnification have primarily been used as a tool to supplement the traditional D&O-insurance. On 13 April 2023, the Danish Business Authority have issued a guiding opinion about indemnification regarding a specific company. The Committee wanted to hear more about Glass Lewis’s and ISS’s view on indemnification policies for management. 

Glass Lewis and ISS informed the Committee that neither have any immediate plans to introduce voting recommendations regarding indemnification policies for management in their proxy advisor guidelines. Indemnification will continue to be assessed on a case-by-case basis, when taking into consideration what is the standard market practice. In general, ISS believes that officers and directors should only be eligible for indemnification and liability protection, if they have acted in good faith on company business and have been found innocent of any civil or criminal charges for duties performed on behalf of the company. Providing the above, ISS would look at whether the indemnification clause would entirely eliminate directors' and officers' liability for monetary damages for violating the duty of care or would expand cover beyond legal expenses to liability for acts that are more serious violations of the fiduciary obligation than mere carelessness.


Both Danish legislation and Glass Lewis’s and ISS’s proxy advisor guidelines are very extensive regarding remuneration, and in a lot of instances Danish legislation is more extensive. Glass Lewis’s and ISS’s proxy advisor guidelines also cover recommendations that are mandated by Danish legislation. This makes it hard for the companies to know how to take into consideration the proxy advisor guidelines. Glass Lewis and ISS are not expecting to change their proxy advisor guidelines in this regard for the 2024 season. Glass Lewis did however say that they would take it into consideration and perhaps try to make it clearer which parts of the guidelines about remuneration are apply to Danish companies. 

Glass Lewis and ISS believe that it is very important that companies are transparent with respect to the judgements they have made when adopting remuneration guidelines and reports, since lack of transparency may lead to voting recommendations against reasonable remuneration guidelines and policies. For example, Glass Lewis highlights that they have recommended against remuneration reports to increase the fixed pay for management because the companies had not adequately explained the reasons for such increase.  

Proxy Advisors’ inclusion of other stakeholders

The Committee recommends that, through ongoing dialogue and interaction, the management ensure that shareholders, investors, and other stakeholders gain the relevant insight into the company's affairs, and that the board of directors obtain the possibility of hearing and including their views in their work. The Committee wanted to know to what extent Glass Lewis and ISS interacted with other stakeholders when drafting their proxy voting guidelines.

Glass Lewis and ISS informed the Committee that other stakeholders, such as workforce, creditors, customers, suppliers and affected communities are only consulted to a limited extent but, if it their customers wished to interact more with other stakeholders, this would be taken into consideration. The policy formulation process, however, is open and transparent, and, as part of this process, ISS speaks and engages with a large variety of stakeholders including investors, issuing companies, academics, and interest groups.

Glass Lewis also interacts with stakeholders such as investors, issuers and regulatory bodies throughout the year and takes into account these discussions when drafting the policy guidelines.

Glass Lewis and ISS also informed the Committee that it will always be possible for their customers to have voting guidelines customised to the relevant customer’s specific wishes and needs. This could, for example, be voting guidelines that focus more on ESG. In this instance it could be relevant to confer with other stakeholders. 

New voting policy guidelines for 2024

ISS’ proposed benchmark policy changes for 2024 are open for comments from 21 November 2023 until 30 November 2023, do not touch on the voting recommendations covering Continental Europe.

In November, Glass Lewis published 2024 policy guidelines for Continental Europe and the country specific voting recommendations Denmark. 

The Committee follows this closely and will contact ISS and Glass Lewis for further clarification, if the proposed policy changes do require it.

Comments to the Committee prior to next year’s meetings with proxy advisors

The Danish Committee on Corporate Governance intends to hold annual meetings with ISS and Glass Lewis to discuss specific issues prior to the companies’ general meetings. The Committee encourages anyone to send suggestions for topics for next year’s meetings with ISS and Glass Lewis in a timely manner, preferably no later than 1. July 2024, to the Secretariat of the Committee at cg-komité@erst.dk