Glass Lewis' New Service Allows Companies to Respond to Proxy Advice

Strategic Insights -

Glass Lewis & Co., a leading provider of proxy advisory services, has introduced a new program that enables companies to respond to its recommendations in a bid to shape investor decisions. The move comes as the Securities and Exchange Commission (SEC) proposes a rule requiring proxy advisers to submit their reports to companies for review before they are finalized. The SEC's proposal has been met with opposition from proxy advisory firms, which argue that the new requirement would undermine their independence and effectiveness.

The Glass Lewis program allows companies to submit responses to the proxy advisory firm's recommendations, which are then published unedited at the end of the report. The firm also replaces any permanent versions of the document with the updated report, including on its voting platform. About 250 companies in North America had signed up for the program as of April 22, just three weeks after its launch. The service has been met with a positive response from companies, who see it as a way to provide feedback to proxy advisory firms and shape investor decisions.

The SEC's proposal has been driven by concerns about the growing influence of proxy advisory firms, which provide guidance to investors on how to vote on corporate board elections, executive pay packages, and management or shareholder proposals on issues such as climate change, human rights, and board diversity. Business lobbyists have called for regulation of proxy advisory firms, saying they have outsize power in U.S. corporate governance, including over the outcome of proposals related to Environmental, Social, and Governance (ESG) issues.

Key Takeaways:

  • Glass Lewis has introduced a new program that allows companies to respond to its proxy advisory recommendations.
  • The program enables companies to submit responses, which are then published unedited at the end of the report.
  • About 250 companies in North America had signed up for the program as of April 22, just three weeks after its launch.
  • The service has a price range of $1,000 to $6,000 globally, scaled by company size.
  • The SEC's proposal has been met with opposition from proxy advisory firms, which argue that the new requirement would undermine their independence and effectiveness.
  • The SEC's proposal is part of a broader effort to regulate proxy advisory firms and ensure that they are transparent and accountable.

Statistics:

  • 250 companies in North America had signed up for the Glass Lewis program as of April 22.
  • The price of a Glass Lewis report ranges from $1,000 to $6,000 globally, scaled by company size.
  • 3 weeks: the time it took for 250 companies to sign up for the Glass Lewis program after its launch.
  • 1-3 months: the timeframe for companies to review and respond to proxy advisory firm recommendations.
  • 2020: the year the SEC proposed a rule requiring proxy advisers to submit their reports to companies for review before they are finalized.

Sources:

  • CQ News, 2020: "Glass Lewis Launches Service Allowing Companies to Respond to Proxy Recommendations"
  • The Financial Times, 2020: "SEC Abandons Mandate for Proxy Advisers to Submit Reports to Companies"
  • Congressional Quarterly Inc., 2020: "Glass Lewis' New Service Allows Companies to Respond to Proxy Advice"