Recently, I blogged about how Glass Lewis released its Benchmark Policy changes for 2026, which are included in this 90-page document. Here’s a Cooley Alert penned by Cooley’s Brad Goldberg, Beth Sasfai, Ali Murata, Michael Bergmann, Michael Mencher, Vince Flynn and Jordan Cohen that goes into more detail about the policy changes.
Here’s an excerpt about mandatory arbitration: “In its 2026 Benchmark Policy, Glass Lewis expanded the list of governance provisions it views as “highly restrictive” to include mandatory arbitration provisions. Under the updated policy, Glass Lewis may recommend against governance committee members when boards approve governing documents containing such provisions in connection with an initial public offering, spinoff or direct listing. This approach is consistent with Glass Lewis’ existing policy of opposing other restrictive provisions that are adopted at the time of a public offering, such as classified boards, supermajority vote requirements and exclusive forum provisions.
More broadly, Glass Lewis will generally recommend against any bylaw or charter amendment seeking to adopt a mandatory arbitration provision, unless the company provides a compelling argument on why the provision would benefit shareholders, provides evidence of abuse of legal processes, narrowly tailors the provision to the risks involved, and maintains a strong record of good corporate governance practices.
These updates follow the SEC’s recent shift away from its long-standing position disfavoring the inclusion of mandatory arbitration provisions in a company’s governing documents, under which the SEC would not accelerate the effectiveness of a registration statement if the company’s bylaws had a provision mandating arbitration. While the SEC has adopted a more neutral stance, companies considering such provisions will need to weigh the potential for adverse proxy advisor recommendations, as well as state law limitations.”
Authored by
Broc Romanek