Proxy Research | Proxy Paper| Glass Lewis Report
Local market expertise, on a global scale
Glass Lewis was founded on the principle that each company should be evaluated based on its own unique facts and circumstances, including performance, size, maturity, governance structure, and responsiveness to shareholders.
Our regional analyst teams – experts in local market laws, regulations, and best practices – collaborate with subject matter experts (financial transactions, ESG, and compensation) and apply bounded judgment as they assess each issue on the ballot in order to make a recommendation that serves the best interests of shareholders.
Transparency and client focus
Glass Lewis believes in transparency and putting clients first. We are dedicated to providing you with the tools and insights you need to drive value from your governance initiatives. Read our Conflict of Interest Statement to learn how we manage and disclose any potential conflicts.
Engaged perspective
Glass Lewis engages extensively with regulatory bodies, industry groups, and individual companies to inform our policies and analysis. In addition, our research and engagement teams produce content beyond the Proxy Paper research reports to broaden your understanding of key issues and keep noteworthy topics on your radar throughout the year.
Our engagement efforts are focused on areas that benefit all shareholders.
Informative analysis of increasingly complex issues
Mergers & Acquisitions/Contests: Our M&A experts have analyzed thousands of proposed mergers and proxy contests, assessing transaction processes and structures to ensure the best outcome for shareholders.
Boards of Directors: We examine the actions of the board to ensure the directors have acted in a manner that protects and grows shareholder value. Our reports provide extensive data about the directors, including our assessment of their experience and independence.
Executive Compensation: We perform both quantitative and qualitative reviews to understand the context of equity value creation compared to each company’s peer group.
Shareholder Proposals: Our dedicated ESG Research Group provides sophisticated, nuanced analysis of shareholder proposals and is a valuable resource for clients throughout the year, not just proxy season. The balanced analysis lays out company and proponent positions to give a complete perspective.
Valuable data and insights through our strategic partnerships
NEW! – Sustainability Performance Ratings: As the world continues to focus on ESG issues, it’s more important than ever that investors have all the resources and data available. In partnership with Arabesque, all Glass Lewis Proxy Papers will include an additional ESG report entirely populated by the Arabesque S-Ray ESG rating methodology. These valuable insights profile the actual company’s performance on key sustainability issues.
ESG Insights: We feature data and ratings from our partners Sustainalytics in our standard Proxy Paper research reports. Our goal is to provide summary data and insights that can be efficiently used by clients as part of their process to integrate ESG factors across their investment chain, including effectively aligning proxy voting and engagement practices with ESG risk management considerations.
NEW! – Cyber Risk Security Ratings: We’ve partnered with BitSight, the standard in security ratings, to include cybersecurity information – comprised of BitSight Security Ratings, data, and insights – with Glass Lewis’ Proxy Paper research reports. Information on 20, 000+ companies will be included to help investors better understand how cybersecurity issues may affect their investments.
*Note: Our partner data and insights are included with our Proxy Paper research reports to provide additional benefit to our clients to assist in their assessments on ESG and cybersecurity risks and opportunities. This data is not used in the Glass Lewis research and recommendation process.
Proxy firm – Wikipedia
A proxy firm (also a proxy advisor, proxy adviser, proxy voting agency, vote service provider or shareholder voting research provider) provides services to shareholders (in most cases an institutional investor of some type) to vote their shares at shareholder meetings of, usually, quoted companies.
The typical services provided include agenda translation, provision of vote management software, voting policy development, company research, and vote administration including vote execution. According to their websites, not all firms provide voting recommendations and those that do may simply execute client voting instructions.
The votes executed are called “Proxy Votes” because the shareholder usually does not attend the meeting and instead sends instructions – a proxy appointment – for a third party, usually the chairman of the meeting to vote shares in accordance with the instructions given on the voting card.
Industry Regulation[edit]
On July 22, 2020 the SEC voted to effectively begin regulation of proxy firms by changing the terms of the solicitation exemption. After these regulations become effective proxy firms will be required to provide corporate issuers with a copy of all voting recommendation reports upon publication. [1]
These regulations follow years of complaints by issuers and their associations about some proxy firms using effective control over a substantial part of the annual meeting vote to force issuers to purchase expensive consulting services should those same publicly traded companies wish proposals on executive compensation and similar issues to receive a positive vote.
Global industry[edit]
Firms in the industry include:
Egan-Jones Proxy Services, part of Egan-Jones Ratings Company (USA)[2]
Glass, Lewis & Co (USA)
Institutional Shareholder Services (USA) [3]
Minerva Analytics Ltd
Institutional Investor Advisory Services India Limited (IiAS) (IN)
Stakeholders Empowerment Services (SES) (India)
GIR Inc. (Canada) [4]
Controversial role[edit]
The role of proxy firms has come under considerable scrutiny in recent years, most notably from the corporate lobby in the United States. [5][6]
In 2013, the US Securities and Exchange Commission fined ISS $300, 000 for revealing non-public information in respect of clients proxy votes. [7]
In May 2018, the Rock Center for Corporate Governance at Stanford University published an overview of the Proxy Advisor industry authored by J. Copland, D. Larcker and B. Tayan. [8] Some of the most concerning key findings of this report include:
1- Number one player, ISS, and number two, Glass, Lewis & Co, together would have 97% market share of the industry.
2- Limited transparency on the process these firms use to amend their proxy voting guidelines, although ISS at least gives some insight into its process.
3- Neither of these two largest players discloses any of its past or current recommendations publicly, making it impossible to verify the historical validity of their voting recommendations.
4- While evidence suggests that ISS recommendations are more influential on ultimate investor voting decisions than those from Glass, Lewis & Co, both have an impact, which can range from shifting 5%-30% of shareholder votes.
5- Most of the academic research suggests that the proxy advisor recommendations do not add shareholder value, and that they in fact result in negative outcomes for shareholders.
6- These firms have no fiduciary duty to anyone and therefore it is very difficult to hold them accountable for their work.
7- These firms can succumb to conflicts of interest, which are often not disclosed.
8- These firms may have resource constraints, which could negatively impact the quality of their recommendations.
The researchers conclude that the industry exhibits signs of market failure, in that despite their demonstrated poor track record and questionable practices, the market has not been able to gradually eliminate them and they have in fact thrived.
Conflicts of interest[edit]
A potential conflict of interest identified by the Government Accountability Office is that some owners of proxy firms do business with both issuers and investors. [9] Analysis of executive remuneration, or executive pay, is a notable feature of the work of shareholder voting research. [10]
Some policymakers believe that increasing competition in the industry may improve service quality. For example, in 2010 a Securities & Exchange Commission consultation document asked whether certain issues in the proxy advisory industry, including conflicts of interest, are affected by limited competition. [11]
In April 2019, Glass, Lewis & Co controversially did not recuse itself from issuing voting recommendations in a proxy contest at Knight Therapeutics, a Canadian company. In advance of the May 7th, 2019 vote, Glass, Lewis & Co sided with the slate of nominees which included Kevin Cameron, a co-founder and past senior executive at Glass, Lewis & Co itself. This precedent could encourage future activist shareholders to include past proxy advisor senior executives in their nominee slates to unfairly obtain favorable recommendations. [12]
Code of conduct[edit]
Following a number of regulatory reviews by securities regulators, including the Canadian Securities Administrators[13] and the European Securities and Markets Authority (ESMA)[14] a number of firms have published a Code of Conduct: the Best Practice Principles for Shareholder Voting Research. [15] The Code was developed with an independent chairman, Dr Dirk Zetsche, Propter Homines Chair for Banking and Securities law at the Institute for Financial Services of the University of Liechtenstein and Director of the Center for Business & Corporate Law at Heinrich Heine University in Duesseldorf/Germany. [16]
See also[edit]
Proxy statement
References[edit]
^ ” | SEC Adopts Rule Amendments to Provide Investors Using Proxy Voting Advice More Transparent, Accurate and Complete Information”.. Retrieved 2020-07-25.
^ Harris, Roy (2007-05-30). “Proxy Firms Fire Back at Critics”.
^ J. de la Merced, Michael. “Vestar to Buy I. S. S., an Influential Shareholder Adviser”. New York Times. Retrieved 14 June 2014.
^ “SHARE, Groupe Investissement Responsable launching Canadian proxy voting company”. Benefits Canada. 15 September 2021. Retrieved 1 September 2021.
^ Alistair Barr & Jonathan Burton (2007-06-11). “Controversy ignites competition among proxy firms”. Marketwatch.
^ Dent, George W. (2014-01-01). “A Defense of Proxy Advisors”. Rochester, NY: Social Science Research Network. SSRN 2451240.
^ ” | SEC Charges Institutional Shareholder Services in Breach of Clients’ Confidential Proxy Voting Information”.. Retrieved 2016-10-17.
^ “The Big Thumb on the Scale: An Overview of the Proxy Advisory Industry”.
^ “The influence of proxy advisory firms on executive remuneration”. Guerdon Associates. 2007-01-10. Archived from the original on 2008-07-21. Retrieved 2008-02-09.
^ Zac Bissonnette (2008-01-15). “Proxy firm questions Tyson chief’s pay”.
^ “Proxy Plumbing Concept Release” (PDF).
^ “Knight Therapeutics April 27, 2019 Press Release”.
^ “Canadian Securities Administrators Publish Guidance for Proxy Advisory Firms”.
^ “ESMA LIBRARY”.. Retrieved 2016-10-17.
^ “Best Practice Principles for Shareholder Voting Research”. 2014.
^ “Best Practice Principles for Proxy Advisors and Chairman’s Report”. Retrieved 2016-10-17.
Governance Advisory Services | ISS
The industry standard in governance research & advisory.
ISS offers an unparalleled choice of policy and research solutions, with unsurpassed local market coverage
Governance Advisory Services can be used with our turnkey Proxy Voting Services to ensure complete control of the voting decision.
For over 30 years, ISS has been the leading provider of governance research to institutional investors.
With more than three decades of experience and coverage of approximately 42, 000 meetings across 115 countries each year, ISS delivers leading corporate governance solutions that enhance the interaction between shareholders and companies, in order to help shareholders manage risk and drive value.
ISS’ benchmark policy is developed through an inclusive process that takes advantage of ISS’ expertise and the input of the broader governance community. Our commitment to continuous product innovation allows investors to benefit through enhanced research content, improved timeliness and unsurpassed quality.
GOVERNANCE SOLUTIONS AT YOUR SERVICE
COMMITMENT TO QUALITY & SERVICE
ISS’ proxy analyses provide comprehensive data on board membership, executive compensation, financial performance and ownership to give context for agenda items. ISS applies sophisticated models to evaluate say-on-pay proposals and assess pay-for-performance alignment, and evaluate equity-based pay plans and increases in authorized shares.
Our engagement with appropriate company officials, top institutional holders and other parties helps to inform our analysis and vote recommendations. And every report undergoes a stringent internal review process, with ongoing audits to ensure quality and timeliness.
GLOBAL REACH, LOCAL EXPERTISE
As your corporate governance partner, ISS brings a global infrastructure to meet your needs for proxy voting compliance, with the ability to factor in local market best practices in governance and its impact on financial performance. High-touch support from our dedicated account management team, custom policy team, and client helpdesk ensures your success.
UNPARALLELED CHOICE, UNSURPASSED COVERAGE
ISS understands that investors’ needs vary based on investment philosophies, portfolios and types of clients they serve. That’s why we offer a wide variety of governance policies and proxy voting solutions. ISS’ comprehensive global coverage expands approximately 44, 000 meetings and 200, 000+ agenda items each year across more than 115 established and emerging markets.
GOVERNANCE SCORES & DATA
Governance scores and data designed to help institutional investors identify governance risk within portfolio companies. QualityScore provides investors with the tools and insight they need to assess governance attributes categorized under four pillars: Board Structure, Shareholder Rights, Compensation/Remuneration, and Audit & Risk Oversight.
GOVERNANCE EXCHANGE
Clients also receive access to Governance Exchange, an innovative, secure and robust online community focused on corporate governance.
Frequently Asked Questions about proxy research
What is proxy research?
A proxy firm (also a proxy advisor, proxy adviser, proxy voting agency, vote service provider or shareholder voting research provider) provides services to shareholders (in most cases an institutional investor of some type) to vote their shares at shareholder meetings of, usually, quoted companies.
What is an ISS proxy analysis?
ISS’ proxy analyses provide comprehensive data on board membership, executive compensation, financial performance and ownership to give context for agenda items. … Our engagement with appropriate company officials, top institutional holders and other parties helps to inform our analysis and vote recommendations.
What is a proxy voting agency?
Proxy advisors offer research, advice or voting recommendation services. These services are provided on a professional and commercial basis to shareholders in publicly listed companies.Dec 18, 2019