Late yesterday, Glass Lewis (GL) announced that a company now has the option of having its opinion or position included in GL’s proxy research reports without being edited by the proxy advisor. This new service ensures that a company’s position will be delivered directly to every GL investor client and included on or accessible from the front page of the report. The option to include a statement is offered at no extra cost, but only upon purchase of the relevant GL report and satisfying other eligibility requirements. Shareholder proponents may also use the service.
A company wishing to use the new service must submit a Report Feedback Statement (RFS) within the 7-day window immediately following the publication of the GL research report, and no later than 14 days before the applicable annual or special meeting. Once a report includes the company’s statement, GL states that it will be the only version of the research report available from the proxy advisor, with prior versions removed from distribution. Any clients that already downloaded an earlier version of the research report will receive an email with the updated version.
GL conducted a pilot of the RFS service for selected participants last year. GL’s recent move comes in the wake of a Securities and Exchange Commission (SEC) proposed rule that if adopted would exempt proxy advisors from the information and filing requirements of the federal proxy rules upon compliance with additional disclosure and procedural requirements. Among other requirements and subject to certain conditions, a proxy advisor would provide a company with the opportunity to preview the proxy advisor’s advice pertaining to that company prior to sharing the advice with the advisor’s investor clients. The proxy advisor would also have to give the company the option to have a hyperlink (or the equivalent) to the company’s response statement included in the proxy advisor’s voting recommendation report before the report would be distributed to clients, as we discussed in a prior client memorandum. Unlike GL’s RFS service, the investor would simultaneously receive both the proxy advisor’s initial advice and access to the company’s statement. Whereas with GL’s RFS service, the investor would receive the unedited statement with a re-issued GL research report, along with an indication whether GL changed its advice because of the company’s feedback. The SEC proposed the rule in November 2019 because of mounting pressure from many issuers expressing concern about the lack of complete and accurate information presented to investors prior to their voting. The SEC final rule has not been issued and the extent to which the final rule will mirror the proposed rule remains publicly unknown.
More details on the RFS service, including a FAQ, are posted on the proxy advisor’s website.