Glass Lewis Announces Methodology Overhaul

In an unusually early move, proxy advisory firm Glass Lewis previewed significant updates to its quantitative pay-for-performance (P4P) model, set to take effect for 2026 shareholder meetings, and aligning its practices to be more similar to ISS. A Cooley alert summarizes the key changes:

Out with the Letter Grades:

• Perhaps the most striking shift is Glass Lewis’s decision to retire its A–F letter grade system for U.S. and Canadian companies, replacing it with a numerical scorecard ranging from 0 to 100, paired with an associated concern level.

A Longer Lens on Performance:

• The firm is expanding the pay for performance evaluation period from three to five years and hinted that new evaluation tools are forthcoming.
• This update also aligns Glass Lewis more closely with investor sentiment, which has increasingly called for a longer-term perspective on executive pay outcomes.

Expansion into Europe, the UK, and Australia:

• The announcement also confirmed that Glass Lewis is broadening its geographic scope. For the first time, its P4P model will include companies listed on major exchanges in the UK, Europe, and Australia.

While the announcement included a teaser video and a glimpse of a chart showing the relationship between short-term incentive payouts and total shareholder return (TSR) rankings over five years, very little else has been revealed.

More to Come:

• The timing of the announcement is notable. Glass Lewis typically releases policy updates later in the year, but the early disclosure may reflect the magnitude of the planned changes—and a desire to get ahead of investor questions.
• According to the firm, the overhaul is being driven by institutional investor feedback, calling for more robust, consistent, and longer-term assessments of pay alignment. This move may also be an effort by Glass Lewis to reassert its influence as advisory firms have been under fire (see first story).

What Should Companies Do? 

There’s no immediate action required until further guidance is provided. But boards, HR teams, and compensation committees should stay closely attuned to developments.