Blog Posts Tagged With Glass Lewis

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Glass Lewis Will Not Incorporate Pay Ratio Data into Say-On-Pay Analysis in 2018

As year-end companies begin preparing to disclose pay ratio information in their 2018 proxy statements, Glass Lewis announced that it does not intend to make the ratio a part of the proxy advisor’s assessment of how investors should vote on say-on-pay “at this time” because it is not material for the analysis of the structures that companies use to pay their NEOs and the disclosures of those pay decisions.  The information will be included in the Glass Lewis reports as a data point since shareholders may consider it useful insight into a company’s practices.

The firm notes the two sides of the argument on the importance of the pay ratio.  Continue Reading

Glass Lewis Policy Updates for 2017

Glass Lewis has updated its governance policies for how it evaluates boards and makes recommendations beginning with the 2017 proxy season.

OverboardingIn last year’s update, Glass Lewis deferred until this season its new overboarding policy. Beginning in 2017, Glass Lewis will generally recommend voting against an executive officer of any public company who serves on a total of more than two public company boards, and any other director who serves on a total of more than five public company boards. Note that unlike ISS, the policy applies to all executives, not just a CEO.

In applying the policy, Glass Lewis will consider relevant factors, including the size and location of the other companies where the director serves on the board, the director’s board duties, whether the director serves on the board of any large privately-held companies, the director’s tenure on the boards, and the director’s attendance record at all companies. Continue Reading

Glass Lewis CEO Responds to Proposed Legislation Governing Proxy Advisors

The prepared statement on the Proxy Advisory Firm Reform Act by the CEO of Glass Lewis, KT Rabin, before the Subcommittee on Capital Markets and Government Sponsored Enterprises, explains why it refuses to share drafts with issuers or talk to companies during the solicitation period, unlike its biggest competitor, and debates the level of influence the firm has on voting outcomes. We previously summarized the bill here.

Glass Lewis is a portfolio company of the Ontario Teachers’ Pension Plan Board and Alberta Investment Management Corp. and has over 350 employees located in San Francisco; New York; Limerick, Ireland; Sydney, Australia; and Karlsruhe, Germany. Continue Reading

Proposed Legislation on Oversight of Proxy Advisory Firms

The Proxy Advisory Firm Reform Act, introduced by  Congressman Sean Duffy (R-Wisconsin), is on the agenda for a hearing on Tuesday by the House Financial Services Committee.

Under the proposed legislation, proxy advisory firms must register with the SEC and provide information that would be made public about their procedures for advising their clients, including whether and how they consider the size of a company when making decisions. Not surprisingly because it is a constant source of criticism, the application must describe any potential or actual conflicts of interest. This includes whether they engage in consulting services and the amount of those revenues, as well as a list of their 20 largest clients and how they prevent such clients from having “undue influence.”

The registration could be denied if the SEC believes a firm does not have adequate financial or management resources to consistently deliver services “with accuracy and integrity” and to materially comply with their own procedures. Continue Reading

Companies Can Sign Up for Glass Lewis Data Verification Process

Until January 31 or whenever a specified limit is reached, NYSE and Nasdaq listed issuers can sign up for Glass Lewis’ data verification program, known as the Issuer Data Report (IDR) service, here. The service is available to companies with annual meetings between March 1 and June 30.

IDR is designed to enable public companies to access for free a data-only version of the Glass Lewis proxy report before Glass Lewis completes its analysis and proxy voting recommendations. It is important to note that this is different from the ISS process that allows S&P 500 companies to obtain draft copies of the ISS proxy reports. Continue Reading

Window Period Opens for Updating ISS and Glass Lewis About Changes to Peer Group Selection

Beginning today, ISS is accepting updates to companies’ self-selected compensation benchmarking peers, if those companies have annual meetings scheduled between February 1, 2016 and September 15, 2016. Submissions are due by 8:00 p.m. EST on Friday, December 11, 2015.

Companies that have made changes to their peer group since the 2015 proxy statement should be aware that ISS uses the disclosed peers as an input into its own peer group selection process. No submissions are needed if there were not any changes to the information in the 2015 proxy statement.

The process requires filling out an online form, as explained here, but also confirming the submission by sending ISS an electronic copy on company letterhead along with your name, email address and company name, to peerfeedback@issgovernance.com. Continue Reading

Glass Lewis Announces Policy Changes for 2016

Glass Lewis updated its voting guidelines that apply to the 2016 proxy season. There are limited revisions from the prior policies, which include:

Overboarding. Beginning in 2017, Glass Lewis will recommend voting against a director (a) who is the executive officer of a public company and sits on more than two public company boards or (b) who serves on more than five public company boards. In 2016, Glass Lewis will note a concern for these directors, thus providing a transition period before putting the full policy into effect.

Exclusive forum provisions (for IPO companies only). Instead of recommending against the chairman of the nominating and governance committee, for IPO companies that have adopted exclusive forum Glass Lewis will evaluate the provision alongside other bylaw terms, such as supermajority vote requirements and a classified board. Continue Reading

ISS Issues FAQs on Proxy Access Proposals

In its long-awaited FAQs, ISS indicates that it will generally recommend in favor of management and shareholder proposals for proxy access which allow for nominations to be made by shareholders owning not more than 3% of the voting power for 3 years, with “minimal” or no limits on the number of shareholders permitted to form a nominating group, and allowing nominations for up to 25% of the board. ISS will also review the reasonableness of any other restrictions and may recommend against proposals that are more restrictive than these guidelines.

ISS is tracking 96 shareholder proposals on proxy access. For companies that present both a board and a shareholder proxy access proposal in their proxy statement, ISS will review each proposal separately. Continue Reading

Glass Lewis Summarizes its Approach to Proxy Access Proposals

According to Glass Lewis, approximately 100 companies will face proxy access shareholder proposals in 2015. In a blog post, Glass Lewis announced that it will continue to review each shareholder proposal, along with the company’s response, on a case-by-case basis. They believe that proxy access rights will be “rarely invoked and even more rarely successful.” 

An alternative management proposal in lieu of, or in addition to, the shareholder proposal, will also be reviewed on a case-by-case basis. If a company makes its own proposal, Glass Lewis will evaluate whether the company’s proposal “varies materially” from the shareholder proposal in terms of minimum ownership threshold, minimum holding period and maximum number of nominees, to determine whether the company’s response is reasonable, and whether the company’s version is “significantly higher/longer” than what was proposed by the shareholder. Continue Reading

SEC Announces Its Examination Office will Review Proxy Advisory Firm Recommendations and Disclosure

The SEC announced its Office of Compliance Inspections and Examinations’ (OCIE) priorities for 2015, which focus on three areas: protecting retail investors, especially those saving for or in retirement; assessing market-wide risks; and using data analytics to identify signs of potential illegal activity. OCIE’s focus is on issues involving investment advisers, broker-dealers and transfer agents.

In a bit of a surprise, there is also a reference under “Other” initiatives to examining proxy advisory firms and the investors that use their voting recommendations, as follows: “We will examine select proxy advisory service firms, including how they make recommendations on proxy voting and how they disclose and mitigate potential conflicts of interest. Continue Reading

ISS and Glass Lewis Policy Updates for 2015 Proxy Season

In preparation for the 2015 proxy season, companies should be aware of the updates to the policies that govern how the two influential proxy advisory firms, ISS and Glass Lewis, will be advising shareholders on significant ballot items, including governance, compensation and environmental and social matters. Davis Polk’s memo on the these changes is here. Continue Reading

Will Congress Act to Rein in Proxy Advisory Firms?

Congressman Patrick McHenry (R-NC) indicated that Congress will step in if the SEC fails to act to curb investors’ reliance on proxy advisory firms, in his keynote speech at a panel discussion hosted by the American Enterprise Institute. He stated that the issue of proxy advisory firms is of significant interest to himself and his colleagues, Representative Jeb Hensarling (R-Texas), House Financial Services Chairman, and Representative Scott Garrett (R-NJ), Chairman of the Subcommittee on Capital Markets and Government Sponsored Enterprises.

According to news reports, both Congressman McHenry and former SEC Commissioner Harvey Pitt, who organized the discussion, blamed two SEC no-action letters that we previously explained for allowing investment advisers to depend on proxy advisory firms in making their voting decisions. Continue Reading

SEC Announces Agenda and Panelists for Roundtable on Proxy Advisory Services

The SEC has announced its agenda and panelists for the roundtable on proxy advisory services to be held on December 5 at 9:30 a.m. EST. The event will be webcast live as well as archived.

The roundtable will be divided into two sessions, with the first session focused on the current use of proxy advisory services, including the factors that may have contributed to their use, the purposes and effects of using the services, and competition in the marketplace for such services.  In the second session, participants will discuss issues identified in the Commission’s proxy plumbing concept release, including potential conflicts of interest that may exist for proxy advisory firms and users of their services, and the transparency and accuracy of recommendations by proxy advisory firms. Continue Reading

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