March 29, 2019
Possibly in response to the increasing potential for regulatory action on proxy advisory firms, Glass Lewis has unveiled a system for public companies and shareholder proposal sponsors to provide feedback on "differences of opinion" with Glass Lewis’s analyses in its proxy reports, which would then be transmitted to the more than 3,000 clients of the proxy advisory firm.
The “Report Feedback Statement Service” will be a pilot program for 2019 and will "allow [companies] to more fully and directly express their views on any differences of opinion they may have with Glass Lewis’ research.” Interestingly, Glass Lewis asks that companies refrain from mentioning the views of other proxy advisory firms or providing any comparative analysis of Glass Lewis’s and another proxy advisory firm’s analysis. Twelve companies per week can participate in the program during March, April, and May.
Companies are required to purchase the proxy report to participate in the program and pay a "distribution fee." A host of other rules and requirements are available in an FAQ and etiquette guide available on Glass Lewis’s website. Perhaps most relevant is that any feedback statement must be submitted within four business days of Glass Lewis issuing a "Proxy Paper," which contains its analysis and voting recommendations. The proxy advisor notes that each investor will receive notice of the feedback statement, which will be highlighted on the front of the appended proxy paper, and an email will be sent to clients that viewed the proxy paper prior to the addition.
Timing is interesting given the SEC's current intense regulatory focus on proxy advisory firms. Several commentators, including our Center On Executive Compensation, have urged the SEC to require a set process for companies to provide feedback to proxy advisory firms on their reports which is subsequently provided to the clients of proxy advisory firms. The adoption of a process for greater direct issuer feedback by Glass Lewis, in addition to potentially fostering greater information to investors, may be an attempt to discourage additional regulatory interventions.