committee chairs

Question 1

If there is no committee chair, we recommend voting against

Answer 1

the longest-serving committee member or, if the longest-serving committee member cannot be determined, the longest-serving board member serving on the committee (i.e., in either case, the “senior director”)

Question 2

If there is no committee chair, but multiple senior directors serving on the committee

Answer 2

we recommend voting against both (or all) such senior directors.

Question 3

Glass Lewis believes that a designated committee chair

Answer 3

maintains primary responsibility for the actions of his or her respective committee. As such, many of our committee-specific voting recommendations are against
the applicable committee chair rather than the entire committee (depending on the seriousness of the issue).

Question 4

On the contrary, in cases where there is a designated committee chair and the recommendation is to vote
against the committee chair, but the chair is not up for election because the board is staggered,

Answer 4

we do not recommend voting against any members of the committee who are up for election; rather, we will note the concern with regard to the committee chair.

Question 5

Audit committees play an integral role in overseeing

Answer 5

the financial reporting process because stable capital markets depend on reliable, transparent, and objective financial information to support an efficient and effective capital market process. Audit committees play a vital role in providing this disclosure to shareholders.

Question 6

When assessing an audit committee’s performance, we are aware

Answer 6

that an audit committee does not prepare financial statements, is not responsible for making the key judgments and assumptions that affect the financial statements, and does not audit the numbers or the disclosures provided to investors. Rather, an audit committee member monitors and oversees the process and procedures that management and auditors perform.

Question 7

Do we recommend against audit committee members when expertise is lacking?

Answer 7

We are skeptical of audit committees where there are members that lack expertise as a Certified Public Accountant (CPA), Chief Financial Officer (CFO) or corporate controller, or similar experience. While we will not necessarily recommend voting against members of an audit committee when such expertise is lacking, we are
more likely to recommend voting against committee members when a problem such as a restatement occurs and such expertise is lacking

Question 8

if the audit committee does not have a financial expert or the committee’s financial expert does not have a demonstrable financial background sufficient to understand the financial issues unique to public companies.

Answer 8

vote against the audit committee chair

Question 9

when options were backdated, there is a lack of adequate controls in place, there was a resulting restatement, and disclosures indicate there was a lack of documentation with respect to the option grants

Answer 9

vote against All members of the audit committee

Question 10

if the audit committee did not meet at least four times during the year.

Answer 10

vote against the audit committee chair

Question 11

if the committee has less than three members

Answer 11

vote against the audit committee chair

Question 12

sits on more than three public company audit committees

Answer 12

vote against audit committee member unless the audit committee member is a retired CPA, CFO, controller or has similar experience, in which case the limit shall be four committees, taking time and availability into consideration including a review of the audit committee member’s attendance at all board and committee meetings

Question 13

if audit and audit-related fees total one-third or less of the total fees billed by the auditor.

Answer 13

vote against all members of an audit committee who are up for election and who served on the committee at the time of the audit

Question 14

tax and/or other fees are greater than audit and audit-related fees paid to the auditor for more than one year in a row (in which case we also recommend against ratification of the auditor).

Answer 14

vote against the audit committee chair

Question 15

fees paid to the auditor are not disclosed

Answer 15

vote against the audit committee chair

Question 16

non-audit fees include fees for tax services (including, but
not limited to, such things as tax avoidance or shelter schemes) for senior executives of the company.
Such services are prohibited by the Public Company Accounting Oversight Board (“PCAOB”).

Answer 16

vote against all members of an audit committee

Question 17

reappointment of an auditor that we no longer consider to be independent for reasons unrelated to fee proportions

Answer 17

vote against all members of an audit committee

Question 18

audit fees are excessively low, especially when compared

with other companies in the same industry.

Answer 18

vote against all members of an audit committee

Question 19

if the committee failed to put auditor ratification on the ballot for share-
holder approval.

Answer 19

vote against the audit committee chair. However, if the non-audit fees or tax fees exceed audit plus audit-related fees in either the current or the prior year, then Glass Lewis will recommend voting against the entire audit committee.

Question 20

the auditor has resigned and reported that a section 10A

letter has been issued.

Answer 20

vote against all members of an audit committee

Question 21

material accounting fraud occurred at the com-

pany.

Answer 21

vote against all members of an audit committee at a time when material accounting fraud occurred at the company

Question 22

vote against All members of an audit committee at a time when annual and/or multiple quarterly financial state-
ments had to be restated, and any of the following factors apply

Answer 22

• The restatement involves fraud or manipulation by insiders;
• The restatement is accompanied by an SEC inquiry or investigation;
• The restatement involves revenue recognition;
• The restatement results in a greater than 5% adjustment to costs of goods sold, operating expense, or operating cash flows; or
• The restatement results in a greater than 5% adjustment to net income, 10% adjustment to assets or shareholders equity, or cash flows from financing or investing activities.

Question 23

what is an exemption for number of audit committee withholds?

Answer 23

Glass Lewis may exempt certain audit committee members from the above threshold if, upon further analysis of relevant factors such as the director’s
experience, the size, industry-mix and location of the companies involved and the director’s attendance at all the companies, we can reasonably determine
that the audit committee member is likely not hindered by multiple audit committee commitments.

Question 24

Auditors are required to report all potential

Answer 24

illegal acts to management and the audit committee unless they are clearly inconsequential in nature

Question 25

If the audit committee or the board fails to take appropriate action on an act that has been determined to be a violation of the law

Answer 25

the independent auditor is required to send a section 10A letter to the SEC. Such letters are rare and therefore we believe should be taken seriously.

Question 26

if the company repeatedly fails to file its financial reports in a timely fashion. For example, the company has filed two or more quarterly or annual financial statements late within the last five quarters.

Answer 26

A vote against all members of an audit committee

Question 27

when it has been disclosed that a law enforcement agency

has charged the company and/or its employees with a violation of the Foreign Corrupt Practices Act (FCPA).

Answer 27

vote against all members of an audit committee

Question 28

when the company has aggressive accounting policies and/or poor disclosure or lack of sufficient transparency in its financial statements.

Answer 28

vote against all members of an audit committee

Question 29

when there is a disagreement with the auditor and the auditor resigns or is dismissed (e.g., the company receives an adverse opinion on its financial statements from the auditor).

Answer 29

vote against all members of an audit committee

Question 30

if the contract with the auditor specifically limits the auditor’s liability to the company for damages.

Answer 30

vote against all members of an audit committee

Question 31

the company has reported a material weakness that has
not yet been corrected, or, when the company has an ongoing material weakness from a prior year that has not yet been corrected.

Answer 31

vote against all members of the audit committee who served since the date of the company’s last annual meeting, and when, since the last annual meeting

Question 32

When a problem such as a material weakness, restatement or late filings occurs, we take into consideration, in forming our judgment with respect to the audit committee

Answer 32

the transparency of the audit committee report. We also take a dim view of audit committee reports that are boilerplate, and which provide little or no information or transparency to investors.

Question 33

Compensation committees have a critical role in determining

Answer 33

the compensation of executives. This includes deciding the basis on which compensation is determined, as well as the amounts and types of compensation
to be paid. This process begins with the hiring and initial establishment of employment agreements, including the terms for such items as pay, pensions and severance arrangements. It is important in establishing compensation arrangements that compensation be consistent with, and based on the long-term economic performance of, the business’s long-term shareholders returns.

Question 34

Compensation committees are also responsible for

Answer 34

the oversight of the transparency of compensation. This oversight includes disclosure of compensation arrangements, the matrix used in assessing pay for performance, and the use of compensation consultants.

Question 35

In order to ensure the independence of the board’s compensation consultant, we believe the compensation committee should only engage

Answer 35

a compensation consultant that is not also providing any services to the company or management apart from their contract with the compensation committee. It is important to investors that they have clear and complete disclosure of all the significant terms of compensation arrangements in order to make informed decisions with respect to the oversight and decisions of the compensation committee.

Question 36

compensation committees are responsible for oversight of internal controls over the executive compensation process. This includes

Answer 36

controls over gathering information used to determine compensation, establishment of equity award plans, and granting of equity awards. For example, the use of a compensation consultant who maintains a business relationship with company management may cause the committee to make decisions based on information that is compromised by the consultant’s conflict of interests. Lax controls can also contribute to improper awards of compensation such as through granting of backdated or spring-loaded options, or granting of bonuses when triggers for bonus payments have not been met.

Question 37

if the company entered into excessive employment agreements and/or severance agreements.

Answer 37

vote against All members of the compensation committee (during the relevant time period)

Question 38

the committee failed to address shareholder concerns following majority shareholder rejection of the say-on-pay proposal in the previous year.

Answer 38

vote against all members of a compensation committee during whose tenure the committee failed to address shareholder concerns following majority shareholder rejection of the say-on-pay proposal in the previous year. Where the proposal was approved but there was a significant shareholder vote (i.e., greater than 20% of votes cast) against the say-on-pay proposal in the prior year, if the board did not respond sufficiently to the vote including actively engaging shareholders on this issue, we will also consider recommending voting against the chair of the compensation committee or all members of the compensation committee, depending on the severity and history of the compensation problems and the level of shareholder opposition.

Question 39

the company failed to align pay with performance if shareholders are not provided with an advisory vote on executive compensation at the annual meeting

Answer 39

vote against all members of the compensation committee who are up for election and served when the company failed to align pay with performance if shareholders are not provided with an advisory vote on executive compensation at the annual meeting

Question 40

If a company provides shareholders with a say-on-pay proposal, we will initially

Answer 40

only recommend voting against the company’s say-on-pay proposal
and will not recommend voting against the members of the compensation committee unless there is a pattern of failing to align pay and performance
and/or the company exhibits egregious compensation practices. However, if the company repeatedly fails to align pay and performance, we will then
recommend against the members of the compensation committee in addition to recommending voting against the say-on-pay proposal.

Question 41

For cases in which the disconnect between pay and performance is marginal and the company has outperformed its peers,

Answer 41

we will consider not recommending against compensation committee members In addition, if a company provides shareholders with a say-on-pay proposal, we will initially only recommend voting against the company’s say-on-pay proposal and will not recommend voting against the members of the compensation committee unless there is a pattern of failing to align pay and performance and/or the company exhibits egregious compensation practices. However, if the company repeatedly fails to align pay and performance, we will then recommend against the members of the compensation committee in addition to recommending voting against the say-
on-pay proposal.

Question 42

performance goals were changed (i.e., lowered) when employees failed or were unlikely to meet original goals, or performance-based compensation was paid despite goals not being attained

Answer 42

All members of the compensation committee

Question 43

if excessive employee perquisites and benefits were allowed.

Answer 43

All members of the compensation committee

Question 44

the compensation committee did not meet during the year

Answer 44

The compensation committee chair

Question 45

the company repriced options or completed a “self tender offer” without shareholder approval within the past two years

Answer 45

All members of the compensation committee

Question 46

vesting of in-the-money options is accelerated

Answer 46

All members of the compensation committee

Question 47

option exercise prices were backdated

Answer 47

All members of the compensation committee. Glass Lewis will recommend voting against an executive director who played a role in and participated in option backdating.

Question 48

option exercise prices were spring-loaded or otherwise timed around the release of material information

Answer 48

All members of the compensation committee

Question 49

new employment contract is given to an executive that does not include a clawback provision and the company had a material restatement,
especially if the restatement was due to fraud

Answer 49

All members of the compensation committee

Question 50

the CD&A provides insufficient or unclear information about performance metrics and goals, where the CD&A indicates that pay is not tied to per-
formance, or where the compensation committee or management has excessive discretion to alter performance terms or increase amounts of awards in contravention of previously defined targets

Answer 50

The chair of the compensation committee

Question 51

committee failed to implement a shareholder proposal regarding a compensation-related issue, where the proposal received the af-
firmative vote of a majority of the voting shares at a shareholder meeting, and when a reasonable analysis suggests that the compensation committee (rather than the governance committee) should have taken steps to implement the request

Answer 51

All members of the compensation committee

Question 52

board has materially decreased proxy statement disclosure regarding executive compensation policies and procedures in a manner which sub-
stantially impacts shareholders’ ability to make an informed assessment of the company’s executive pay practices.

Answer 52

All members of the compensation committee

Question 53

new excise tax gross-up provisions are adopted in employment agreements with executives, particularly in cases where the company previously committed not to provide any such entitlements in the future

Answer 53

All members of the compensation committee

Question 54

board adopts a frequency for future advisory votes on executive compensation that differs from the frequency approved by shareholders

Answer 54

All members of the compensation committee

Question 55

The nominating and governance committee is responsible for

Answer 55

the governance by the board of the company and its executives; selection of ob-
jective and competent board members, providing leadership on governance policies
adopted by the company, such as decisions to implement shareholder proposals that have received a majority vote. (At most companies, a single committee is charged with these oversight functions; at others, the governance and nominating responsibilities are apportioned among two separate committees.)

Question 56

Consistent with Glass Lewis’ philosophy that boards should have diverse backgrounds and members with a breadth and depth of relevant experience, we believe that nominating and governance committees should

Answer 56

consider diversity when making director nominations within the context of each specific company and its industry. In our view, shareholders are best served when boards make an effort to ensure a constituency that is not only reasonably diverse on the basis of age, race, gender and ethnicity, but also on the basis of geographic
knowledge, industry experience, board tenure and culture.

Question 57

shareholder proposal relating to important shareholder rights received support from a majority of the votes cast (excluding ab-stentions and broker non-votes) and the board has not begun to implement or enact the proposal’s subject matter

Answer 57

All members of the governance committee. Examples of such shareholder proposals include those seeking a declassified board structure, a majority vote standard for director elections, or a right to call a special meeting. In determining whether a board has sufficiently implemented such a proposal, we will examine the quality
of the right enacted or proffered by the board for any conditions that may unreasonably interfere with the shareholders’ ability to exercise the right (e.g., overly restrictive procedural requirements for calling a special meeting).

Question 58

a shareholder resolution is excluded from the meeting agenda but the SEC has declined to state a view on whether such resolution should be excluded, or when the SEC has verbally permitted a company to exclude a shareholder proposal but there is no written record provided by the SEC about such determination and the company has not provided any disclosure concerning this no-action relief

Answer 58

All members of the governance committee

Question 59

chair is not independent and an independent lead or presiding director has not been appointed

Answer 59

The governance committee chair,

Question 60

when there are less than five or the whole nominating committee when there are more than 20 members on the boardThe governance committee chair, when the committee fails to meet at all during the year

Answer 60

In the absence of a nominating committee, the governance committee chair

Question 61

when for two consecutive years the company provides what we consider to be “inadequate” related party transaction disclosure (i.e., the nature of such transactions and/or the monetary amounts involved are unclear or excessively vague, thereby preventing a shareholder from being able to reasonably interpret the independence status of multiple directors above
and beyond what the company maintains is compliant with SEC or applicable stock exchange listing requirements).

Answer 61

The governance committee chair

Question 62

If the board does not have a committee responsible for governance oversight and the board did not implement a shareholder proposal that received the requisite support, we will recommend

Answer 62

voting against the entire board. If the shareholder proposal at issue requested that the board adopt a declassified structure, we will recommend voting against all director nominees up for election

Question 63

Where a compensation-related shareholder proposal should have been implemented, and when a reasonable analysis suggests that the members of the compensation committee (rather than the governance committee) bear the responsibility for failing to implement the request

Answer 63

we recommend that shareholders only vote against members of the compensation committee.

Question 64

We believe that one independent individual should be appointed to serve as the lead or presiding director. When such a position is rotated among directors from meeting to meeting

Answer 64

we will recommend voting against the governance committee chair as we believe the lack of fixed lead or presiding director means that, effectively, the board does not have an independent board leader.

Question 65

during the past year the board adopted a forum selection clause (i.e., an exclusive forum provision)28 without shareholder approval29, or if the board is currently seeking shareholder approval of a forum selection clause pursuant to a bundled bylaw amendment rather than as a separate proposal.

Answer 65

The governance committee chair

Question 66

the board adopted, without shareholder approval, provisions in its charter or bylaws that, through rules on director compensation, may inhibit the ability of shareholders to nominate directors

Answer 66

All members of the governance committee

Question 67

the board takes actions to limit shareholders’ ability to vote on matters material to shareholder rights (e.g., through the practice of excluding a shareholder proposal by means of ratifying a management proposal that is materially different from the shareholder proposal).

Answer 67

The governance committee chair

Question 68

directors’ records for board and committee meeting attendance are not disclosed, or when it is indicated that a director attended less than 75% of board and committee meetings but disclosure is sufficiently vague that it is not possible to determine which specific director’s attendance was lacking.

Answer 68

The governance committee chair

Question 69

detailed record of proxy voting results from the prior annual meeting has not been disclosed.

Answer 69

The governance committee chair

Question 70

where the board has amended the company’s governing documents to reduce or remove important shareholder rights, or to otherwise impede the ability of shareholders to exercise such right, and has done so without seeking shareholder approval.

Answer 70

we may recommend that shareholders vote against the chair of the governance committee, or the entire committee

Question 71

(BYLAW AMENDMENTS) Examples of board actions that may cause such a recommendation include:

Answer 71

the elimination of the ability of shareholders to call a special meeting or to act by written consent; an increase to the ownership threshold required for shareholders to call a special meeting; an increase to vote requirements for charter or bylaw amendments; the adoption of provisions that limit the ability of shareholders to pursue full legal recourse — such as bylaws that require arbitration of shareholder claims or that require shareholder plaintiffs to pay the company’s legal expenses in the absence of a court victory (i.e., “fee-shifting” or “loser pays” bylaws); the adoption of a classified board structure; and the elimination of the ability of shareholders to remove a director without cause.

Question 72

the committee nominated or renominated an individual who had a significant conflict of interest or whose past actions demonstrated a lack of integrity or inability to represent shareholder interests

Answer 72

All members of the nominating committee

Question 73

if the nominating committee did not meet during the year

Answer 73

The nominating committee chair

Question 74

the chair is not independent, and an independent lead or presiding director has not been appointed

Answer 74

In the absence of a governance committee, the nominating committee chair. In the absence of both a governance and a nominating committee, we will recommend voting against the board chair on this basis, unless if the chair also serves as the CEO, in which case we will recommend voting against the longest-serving director.

Question 75

A forum selection clause is

Answer 75

is a bylaw provision stipulating that a certain state, typically where the company is incorporated, which is most often Delaware, shall be the exclusive forum for all intra-corporate disputes (e.g., shareholder derivative actions, assertions of claims of a breach of fiduciary duty, etc.).

Question 76

A forum selection clause limits

Answer 76

a shareholder’s legal remedy regarding appropriate choice of venue and related relief offered under that state’s laws and rulings

Question 77

forum section clause exception

Answer 77

Glass Lewis will evaluate the circumstances surrounding the adoption of any forum selection clause as well as the general provisions contained therein.
Where it can be reasonably determined that a forum selection clause is narrowly crafted to suit the particular circumstances facing the company and/or a
reasonable sunset provision is included, we may make an exception to this policy.

Question 78

when there are less than five or the whole nominating committee
when there are more than 20 members on the board

Answer 78

The nominating committee chair; In the absence of both a governance and a nominating committee, we will recommend voting against the board chair on this basis, unless if the chair also serves as the CEO, in which case we will recommend voting against the the longest-serving director

Question 79

when a director received a greater than 50% against vote the prior
year and not only was the director not removed, but the issues that raised shareholder concern were not corrected

Answer 79

The nominating committee chair; Considering that shareholder discontent clearly relates to the director who received a greater than 50% against vote rather than the nominating chair, we review the severity of the issue(s) that initially raised shareholder concern as well as company responsiveness to such matters, and will only recommend voting against the nominating chair if a reasonable analysis suggests that it would be most appropriate. In rare cases, we will consider recommending against the nominating chair when a director receives a substantial (i.e., 20% or more) vote against based on the same analysis.

Question 80

when the board has no female directors and has not provided suf-
ficient rationale or disclosed a plan to address the lack of diversity on the board.

Answer 80

The nominating committee chair

Question 81

when, alongside other governance or board performance concerns,
the average tenure of non-executive directors is 10 years or more and no new independent directors have joined the board in the past five years.

Answer 81

The nominating committee chair ; We will not be making voting recommendations solely on this basis in 2021; however, insufficient board refreshment may be a contributing factor in our recommendations when additional board-related concerns have been identified.

Question 82

where the board’s failure to ensure the board has directors with relevant experience, either through periodic director assessment or board refreshment, has contributed to a company’s poor performance.

Answer 82

we may consider recommending shareholders vote against the chair of the nominating committee