2019 PROXY PAPER™ GUIDELINES AN OVERVIEW OF THE GLASS LEWIS APPROACH TO PROXY ADVICE CONTINENTAL EUROPE Table of Contents GUIDELINES INTRODUCTION ........................................................................................................................ 1 Voting Recommendations .................................................................................................................................................................1 Summary of Changes for the 2019 Continental Europe Policy Guidelines ....................................................................1 A BOARD OF DIRECTORS THAT SERVES THE INTEREST OF SHAREHOLDERS .................... 3 Election of Directors ...........................................................................................................................................................................3 Independence ........................................................................................................................................................................................3 Control-Enhancing Mechanisms ........................................................................................................................................................................6 Controlled Companies ...........................................................................................................................................................................................6 Other Considerations for Individual Directors ..........................................................................................................................6 Performance ..............................................................................................................................................................................................................6 Experience .................................................................................................................................................................................................................. 7 External Commitments .......................................................................................................................................................................................... 7 Conflicts of Interest ................................................................................................................................................................................................ 7 Board Structure and Composition ................................................................................................................................................8 Separation of the Roles of Chair and CEO ....................................................................................................................................................8 Size of the Board of Directors ............................................................................................................................................................................9 Board Skills .................................................................................................................................................................................................................9 Board Diversity ....................................................................................................................................................................................................... 10 Board-Level Risk Management Oversight ................................................................................................................................................... 10 Environmental and Social Risk Oversight .................................................................................................................................................... 10 Board Committees .............................................................................................................................................................................. 11 Audit Committee Performance ..........................................................................................................................................................................11 Standards for Assessing the Audit Committee ...........................................................................................................................................11 Remuneration Committee Performance ........................................................................................................................................................12 Standards for Assessing the Remuneration Committee .........................................................................................................................12 Nominating Committee Performance.............................................................................................................................................................13 Election Procedures .......................................................................................................................................................................... 13 Classified/Staggered Boards and Term Limits ............................................................................................................................................13 Election of Directors as a Slate ........................................................................................................................................................................ 14 Ratification of the Co-Option of Board Members .................................................................................................................................... 14 Board Evaluation and Refreshment ................................................................................................................................................................ 14 Lack of Adequate Director Disclosure ...........................................................................................................................................................15 I TRANSPARENCY AND INTEGRITY IN FINANCIAL REPORTING ................................................... 16 Accounts and Reports/Consolidated Accounts and Reports .......................................................................................... 16 Non-Financial Reporting ......................................................................................................................................................................................16 Allocation of Profits/Dividends .................................................................................................................................................... 17 Capital Repayments ..............................................................................................................................................................................................17 Bonus Share Issues/ Dividends-in-Kind .........................................................................................................................................................17 Allocations to Reserves/Transfer of Reserves.............................................................................................................................................17 Appointment of Auditor and Authority to Set Fees ............................................................................................................ 17 THE LINK BETWEEN PAY AND PERFORMANCE ................................................................................ 19 Vote on Executive Remuneration (“Say-on-Pay”) ................................................................................................................. 19 Say-on-Pay Voting Recommendations .....................................................................................................................................20 Changes to Remuneration Policy .....................................................................................................................................................................21 Short-Term Incentives ...........................................................................................................................................................................................21 Long-Term Incentives ...........................................................................................................................................................................................22 Remuneration Policy Relative to Peers .........................................................................................................................................................23 Remuneration Policy Relative to Ownership Structure ..........................................................................................................................23 Executive Remuneration at Financial Institutions .....................................................................................................................................23 Authorities to Increase Variable Remuneration .........................................................................................................................................24 Equity-Based Remuneration Plan Proposals 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