Proxy Advisors Release Updated Canadian Voting Guidelines for 2026

Ahead of the 2026 proxy season, Institutional Shareholder Services (ISS) and Glass Lewis, North America’s two leading proxy advisory firms, have released updates to their Canadian benchmark proxy voting guidelines. Public company investors often rely on recommendations from ISS and Glass Lewis, which are informed by these guidelines, to make voting decisions at shareholder meetings.

ISS’s and Glass Lewis’s benchmark proxy voting guidelines apply to all Canadian publicly-listed issuers. The 2026 updates, outlined below, provide guidance on a range of corporate governance matters, including, among other things, advance notice provisions, executive compensation, shareholder proposals, audit committee nominations, and director elections.

ISS

ISS’s updated 2026 proxy voting guidelines apply to shareholder meetings occurring on or after February 1, 2026. The guidelines include the following policy updates:

• Advance Notice Provisions: ISS recognizes that advance notice policies are adopted to prevent stealth proxy contests, provide a reasonable framework for shareholders to nominate directors by allowing shareholders to submit director nominations within a reasonable timeframe, and to provide shareholders with information about potential nominees. In the past several years, ISS has advised that a disclosure request within an advance notice provision would be considered problematic if it requires information that exceeds what is required under a dissident circular or goes beyond what is required under law or regulation. ISS has clarified its previous guidance to make it explicit that questionnaires may be considered problematic where they: (i) require disclosure exceeding the requirements under the relevant Business Corporations Act or provincial and territorial securities laws applicable to the issuer; or (ii) are not made publicly available.
  
• Equity-Based Compensation Plan Amendments: ISS has generally recommended that shareholders vote against proposed plan amendments that would allow for public company boards to make certain changes to plan provisions without first obtaining shareholder approval. ISS clarified that a plan amendment must explicitly require shareholder approval for any reduction in the exercise price and the cancellation and reissue of options or other entitlements. If it does not, ISS may conclude that the proposed amendment provisions do not sufficiently limit the board’s ability to unilaterally amend the plan.
  
• Non-Employee Director Deferred Share Unit Plans: ISS clarified that a Non-Employee Director deferred share unit (DSU) plan should explicitly state that DSUs may only be granted in lieu of cash fees on a value-for-value basis. In the absence of a clear statement to this effect, shareholders should interpret the plan as permitting discretionary or other grants of DSUs.
  
• Environmental & Social (E&S) Shareholder Proposals: ISS clarified its approach to evaluating E&S shareholder proposals, emphasizing a consistent case-by-case framework across all markets. The updated guidelines introduce an additional factor ISS will consider: whether the proposal addresses substantive matters that could affect shareholders’ interests or rights.

Glass Lewis

In its 2026 Benchmark Policy Guidelines, Glass Lewis introduced certain updates that apply to shareholder meetings held after January 1, 2026. Key updates include:

• Financial Restatements: In the event that an issuer has restated annual and/or multiple interim financial statements, Glass Lewis will generally recommend that shareholders withhold votes from all audit committee members if they served during the period when the financial statements had to be restated, and if the restatement resulted in:
  

(i) an adjustment greater than 5% to cost of goods sold, operating expenses or operating cash flows; or

(ii) an adjustment greater than 5% to net income, an adjustment of 10% to assets or shareholders’ equity, or cash flows from financing or investing activities.

Additionally, Glass Lewis will generally recommend opposing the election of audit committee members if the restatement involved revenue recognition issues, fraud or insider manipulation, or is associated with an investigation by a provincial securities commission or federal authority.

• Pay-for-Performance Methodology: Glass Lewis updated its evaluation of pay-for-performance. The new methodology replaces the previous grading system, which rated companies from “A” through “F”, with a scorecard-based approach and extends the analysis period from three to five years. Glass Lewis will assess a range of quantitative factors, including:
  

(i) granted CEO pay versus total shareholder return (TSR),

(ii) granted CEO pay versus financial performance,

(iii) CEO short-term incentive payouts versus TSR,

(iv) total granted NEO pay versus financial performance, and

(v) realized CEO pay versus TSR.

These factors are each weighted to produce an overall score ranging from 0 to 100, which is then categorized from “Severe Concern” to “Negligible Concern”. If a company receives a “Severe Concern” or “High Concern” rating, it is more likely to receive a negative recommendation under the updated benchmark policies. However, qualitative factors, such as incentive structure, program trajectory, operational and economic context, performance metrics, and long-term payout levels, will also be taken into consideration. Glass Lewis further clarified that it compares each company’s pay-for-performance results against a proprietary group composed of market and industry peers, as well as the company’s self-disclosed peers and the peers of those self-disclosed peers.

Glass Lewis also clarified its Majority Vote for Election of Directors policy. Glass Lewis emphasized the importance of a majority voting standard. In line with the Council of Institutional Investors’ Policies on Corporate Governance and the International Corporate Governance Network’s Global Governance Principles, directors should generally be elected only if they receive a majority of votes. While most majority voting policies include a resignation clause, the board often retains final authority over whether to accept the resignation. Glass Lewis notes that such conditional resignations limit shareholders’ influence over election outcomes.

Canadian issuers and their professional advisors are encouraged to review the updates outlined above, along with the complete set of guidelines from each of ISS and Glass Lewis. Understanding and incorporating these updated guidelines into a company’s ongoing corporate governance practices will help issuers ensure their internal standards remain consistent with shareholder expectations and market best practices.

For further information on ISS’s and Glass Lewis’s 2026 updates or their benchmark policies generally, please contact any member of our Capital Markets Group.