Key Takeaways

• The 0–100 Pay Scorecard: Glass Lewis replaces qualitative ratings for a five-part scorecard that directly links CEO incentives (both STI and LTI) to Total Shareholder Return and governance red flags.
• Closing the Equity Loophole: Minimum shareholding targets for CEOs with low fixed remuneration will now be measured considering total remuneration opportunity and market practice rather than just fixed pay.
• Guidelines on International Benchmarking: a new section provides stricter criteria for boards to justify international benchmarking peers. Boards must demonstrate genuine global operations rather than using international benchmarks to inflate pay.

We analyse the key changes to the Glass Lewis 2026 Benchmark Policy Guidelines for remuneration that will inform Glass Lewis’ approach to voting recommendations for the 2026-27 proxy season for ASX listed entities.

What are the changes to be aware of?

Glass Lewis’ tone has changed. It has stripped out first-person phrasing. No more personable “we” or “our”.  Now a formal reference to the “Benchmark Policy”.

The policy’s intent is to reflect broad investor opinion and governance principles informed by market “best practice”, regulation and prevailing investor “sentiment”. As with other proxy advisers, “best” practice is conflated with market practice. “Sentiment”, according to dictionary definitions, is an opinion driven by emotion. This is not in dispute with Glass Lewis or other proxy advisers, although some would prefer proxy and governance guidelines to be more grounded in a rational assessment of what is good for shareholder value.

In a nod to various regimes who want to regulate proxy advisers like activist investors, Glass Lewis positions its benchmark policy as a tool in its role as a service provider.

There are a few important remuneration guideline changes of note. There is a new Pay-for-Performance methodology; a new section on international benchmarking; and share ownership guidelines for CEOs have been tightened up.

What is the new Pay-for-Performance (P4P) methodology and how does it work?

The P4P framework for S&P/ASX 300 companies serves as the foundation for Glass Lewis’ remuneration analysis. Glass Lewis, in line with many investors, state that management should be rewarded for outperforming peers, and not for “free kicks” from industry tailwinds. In effect, it is not dissimilar to ISS’ P4P framework. The method of performance review against peers replaces broad qualitative ratings of “poor”, “fair”, and “good” with a proprietary scorecard model.

Companies now receive an aggregated score from 0 to 100 based on five weighted tests against both broad-based (i.e. index based) and bespoke peer groups. Each component is subject to size-based ranking and considered on a weighted basis.

More focus will be given to the bespoke peer group which will comprise companies typically from the same industry, with comparable business models and share price drivers. Where not possible to identify sufficient bespoke peers, the index-based peer group will be relied on.

The tests focus on incentive outcomes rather than the quantum of total pay given that in Australia the focus on quantum is typically at appointment, or where there is a material increase. For ongoing analysis, the focus is on outcomes.

The 5 weighted tests are a useful guide for RemCo’s when considering final incentive payouts. The five tests:

• CEO STI Payout vs. Relative TSR: Measures short-term incentive payout as a percentage of maximum against relative Total Shareholder Return (TSR) over the most recent financial year. As with other proxy advisers, this fails to recognise that STI measures are typically based on “look back” financials achieved, and not annual TSR, which is largely driven by the market’s assessment of future financial results.
• CEO LTI Payout vs. Relative TSR: Evaluates long-term incentive payout as a percentage of maximum against relative TSR over the performance period.
• CEO STI Track Record: Assesses STI payouts as a percentage of maximum against relative TSR over a 5-year weighted average (minimum 3 years).
• CEO LTI Track Record: Assesses LTI payouts as a percentage of maximum against relative TSR over a 5-year weighted average (minimum 3 years).
• Qualitative tests: Consideration of one-off grants, upward discretion, fixed pay exceeding variable pay, uncapped incentives, and cash payouts exceeding equity.

Where the company operates without a CEO the highest paid executive may be considered, or if there has been a change in CEO the focus will be on the outcomes of the person who served in the role for the longest.

While poor scores will increase scrutiny and the likelihood of negative voting recommendations, as in the prior guidelines, Glass Lewis benchmark policy says that P4P results will not automatically trigger a vote against. Glass Lewis says that remuneration reports will continue to be evaluated on a case-by-case basis. Realistically, as with another proxy adviser, this does not appear too evident in prior recommendations for most companies outside the ASX 100.

What are the key updates to CEO share ownership guidelines?

Glass Lewis expectations of ownership have been the highest of any proxy adviser, often reaching 3 times fixed pay for major ASX 20-50 entities. The 2026 policy has added to this. If a CEO’s fixed pay is low compared to market peers (for example if a company deliberately weights the package towards variable incentives), their minimum shareholding requirement will now be judged against total remuneration opportunity and market practice. This addresses that a shareholding requirement expressed as a multiple of low fixed pay, may translate to a modest holding. A meaningful holding is expected regardless of package structure.

What does Glass Lewis expect for international benchmarking?

The 2026 Benchmark Policy introduces new international benchmarking guidelines recognising boards may compete in an international talent pool to attract and retain executives. To prevent international benchmarking applied by default or ‘too loosely’ drawing Australian practice towards more generous practices of offshore markets, the Benchmark Policy expects selective international peers with a clear commercial or strategic rationale. A reasonable balance is needed between prevailing Australian practice and the international markets the company operates in.

Where a company relies on international benchmarking, the peer groups used, the board’s rationale and transparent disclosure of the benchmarking process is expected. To Glass Lewis’ credit, we know the local Australian operation does engage with overseas colleagues in assessing peer and level reasonableness, at least for the larger ASX listed companies.

Specifically, considerations will be had for:

• Whether the relevant executives are based outside Australia.
• The scale and geographic spread of the company’s operations.
• The proportion of revenue and costs generated offshore.
• Whether there is a commercially sound and strategic rationale for adopting a broader frame of reference.
• The weight given to international comparators relative to Australian peers.
• Whether the international reference is being used to import pay structures (e.g. grant design or fixed/variable mix), not only to inform quantum.
• How the pay structures and quantum selected by the board compare with Glass Lewis’ data and knowledge of pay practices in the relevant international markets.

The bottom line

ASX 300 boards should familiarise themselves with the new pay-for-performance methodology. This is a new quantitative framework that investors can easily apply to assess company performance against CEO pay. Consideration of if your outcomes are defensible may be required if performance is not up to scratch.

© Guerdon Associates 2026 Back to all articles