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Glass Lewis, one of the two large proxy advisory firms to institutional investors, announced earlier this month that it would no longer employ standardized “benchmark” voting policies…
United States
Corporate/Commercial Law
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Glass Lewis, one of the two large proxy advisory firms to
institutional investors, announced earlier this month that it would
no longer employ standardized “benchmark” voting
policies, but instead customize policies on a client-by-client
basis. It explained the shift by citing “[r]apid advances in
technology, especially AI, that are enabling highly customized
approaches to voting,” and “[d]iverging investor
priorities that are driving differences in approaches to fiduciary
duty, engagement strategies, and sustainability commitments across
regions, particularly between Europe and the U.S.” The proxy
advisor’s new approach may help to diffuse some of the
corporate criticism of “one size fits all” proxy advisor
voting policies, although in the last decade the industry has moved
in the direction of increased customization of standard voting
policies largely in response to such criticism. Glass Lewis’s
shift in approach also appears to respond to the current political
environment in the U.S. on sustainability and DEI, as well
differences between the U.S. and Europe on those subjects. Absent
further regulatory requirements imposed by the SEC, which are
reportedly under consideration, the change may also move Glass
Lewis’s voting recommendations with respect to individual
companies further beyond public view, as it is unclear whether the
proxy advisor will publish aggregated statistics or other
information on the recommendations it makes.
Depending on how the new policy is implemented, and their
clients’ responses to it, Glass Lewis’s policy could have a
significant impact in particular on voting recommendations on
executive compensation (say-on-pay).
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