For-profit

Glass Lewis

Location:

San Francisco, CA

Formation:

2003

Owners:

Ontario Teachers’ Pension Plan Board

Alberta Investment Management Corporation

Glass Lewis is a for-profit proxy advisory firm specializing in advancing left-of-center environmental, social, and governance (ESG) policies through corporate-level advocacy. The firm is the second largest proxy advisory firm in the world and co-owned by one of the largest pension systems in Canada, the Ontario Teachers’ Pension Plan. Ontario Teachers’ Pension Plan is jointly administered by the Government of Ontario and the province’s teachers’ union federation, the Ontario Teachers’ Federation.

At the end of 2019 and the beginning of 2020, the Securities and Exchange Commission (SEC) unveiled major proposed regulations to the proxy advisory industry, targeted at Glass Lewis and its rival, Institutional Shareholder Services (ISS).

History

Glass Lewis offers shareholders in major companies formal advice on how to vote on various shareholder resolutions. [1] Founded in 2003 and headquartered in San Francisco, Glass Lewis is co-owned by the Ontario Teachers’ Pension Plan Board, the largest pension system in Canada which controlled $129.5 billion in assets as of 2012, and the Alberta Investment Management Corporation, another management company for Canadian government worker pension funds. [2] [3] [4]

Ontario Teachers’ acquired the company in 2007, though Glass Lewis operates independently of the Board. [5]  In 2013, the Ontario Teachers’ Pension Plan Board sold 20% of its ownership of Glass Lewis to the Alberta Investment Management Corporation (AIMCo). [6] AIMCo is one of the largest institutional investment managers in Canada, controlling over $70 billion in assets on behalf of 27 pension, endowment, and government funds in Alberta. [7]

According to the Mercatus Center, Glass Lewis maintains around 37% of the market share for all proxy advisory services worldwide, providing proxy research, an electronic proxy vote platform, share recall services, and class action settlement recovery services. [8] [9] As of 2020, over 1,200 investors around the world use Glass Lewis proxy research and the company’s Viewpoint proxy vote management system. [10] Glass Lewis also offers proxy voting recommendations based on business, legal, governance, and financial statement risk at over 25,000 shareholder meetings worldwide. [11]

Proxy Advisory Services

Glass Lewis is one of the largest proxy advisory firms in the world, focusing mostly on environmental, social, and governance (ESG) issues. In addition to offering shareholders individualized proxy research papers, Glass Lewis publicly releases an annual report on shareholder initiative policies, including general recommendations for resolutions on governance, executive compensation, and environmental and social issues. [12]

Corporate Governance

Glass Lewis has supported a range of left-of-center shareholder initiatives to impose stricter regulations on the operations of corporate boards. In 2020, Glass Lewis supported shareholder resolutions that would require that all board members serve for the same terms. [13] Glass Lewis has also supported resolutions against exclusive forum provisions, arguing that corporate boards should not have the right to choose their own legal venue for litigation. [14]

Glass Lewis has also supported resolutions proposing stricter regulations of board structure, including resolutions that mandate an independent chairman of the board, create majority rather than plurality vote requirements for board member elections, and require that dissident shareholders who succeed in passing their proposals be reimbursed for their expenses in advocating for the resolution. [15]

Glass Lewis advocates for executive compensation to be tied to company performance, while arguing that shareholders should not have any say in the exact details of top executive compensation packages. [16] Nonetheless, Glass Lewis advises shareholders to support resolutions that increase disclosure of executives’ and directors’ salaries, claiming that such disclosure will allow shareholders to better determine whether salaries are aligned with company performance. [17] Glass Lewis further advises shareholders to vote against resolutions designed to increase transparency beyond the legal requirements in markets in which “significant disclosure of executive compensation” is mandated by law. [18]

In line with other Glass Lewis policies on executive compensation, the firm advises that shareholders support resolutions designed to link executive pay to environmental and social criteria, within the boundaries of each industry’s regulations. [19]

Environmental Issues

Most of the firm’s environmentalist strategy is centered around the public relations implications of potential shareholder resolutions. [20] For example, Glass Lewis generally advises shareholders to vote against proposals designed to limit board discretion on animal testing or slaughter, but considers advising them to vote in favor of similar proposals if a company’s treatment of animals has been targeted by high-profile smear campaigns. [21]

Glass Lewis adopts a similar policy regarding resolutions aimed at increasing corporate reporting on climate change. [22] The firm advises shareholders to vote in favor of “reasonably crafted proposals” to increase disclosure of corporate strategies to address climate change if the company has suffered financial impact from climate-related disputes, if there is a strong link between climate change and its industry, or if it is competitively advantageous to disclose climate strategies. [23] The firm adopts a similar set of criteria for evaluating whether shareholders should support proposals requesting that companies disclose their plans for moving towards environmentalist energy sources. [24] Glass Lewis advises shareholders of companies in energy-intensive or extractive industries to vote in favor of increasing corporate climate change disclosure measures. [25]

Social Issues

Glass Lewis is wary of endorsing shareholder resolutions regarding social issues, including internet censorship, military contract policies, and tobacco production, frequently arguing that issues in such fields should be left to the discretion of company management and that shareholder proposals in such industries should only be evaluated on a case-by-case basis. [26]

Glass Lewis did, however, offer less equivocal advice on certain social issues. In 2020, Glass Lewis advised shareholders against voting for proposals that request companies restrain pharmaceutical prices in order to make drugs more affordable. [27]  The firm also advised shareholders to vote against proposals requesting that companies adopt an advisory vote on election expenditures, absent egregious behavior on the part of boards. [28]

In 2020, Glass Lewis advised shareholders to vote in favor of resolutions which request that companies provide disclosure on workforce diversity. [29] Moreover, the firm argued that shareholders should vote in favor of proposals which request that companies release reports detailing how they aim to promote workforce diversity. [30]

Glass Lewis is also concerned with gender equality in the workplace, evaluating shareholder proposals on a case-by-case basis. The firm may or may not endorse shareholder proposals requesting that companies disclose gender pay parity initiatives, depending on the industry, the company’s current disclosure and those of its peers, and any legal action against the company related to gender pay parity. [31] Glass Lewis also expressed potential support for advocacy proposals designed to push companies to adopt comprehensive equal employment and nondiscrimination policies. [32]

Proxy Reform and Firm Reaction

In October 2019, Glass Lewis executive chairman Kevin Cameron announced that the company would begin to focus on growing its operations abroad in the wake of proposed Securities and Exchange Commission (SEC) regulations. [33] The new regulations aimed to make proxy advisers potentially legally liable for distributing inaccurate information and clarified that investors have no obligation to vote their shares on resolutions, threatening the business model of proxy advisers like Glass Lewis. [34] Cameron announced that Glass Lewis would begin to focus on growth in Europe and Asia in wake of the new regulations. [35]

In January 2020, the SEC rolled out another wave of regulations aimed at increasing the transparency of proxy advisory firms, given that pension managers and investors vote in accordance with proxy recommendations nearly 100% of the time. [36] The first change would require advisory firms to send voting recommendations to issuers before sending them to clients, allowing the proposals to be reviewed for accuracy prior to their being distributed. [37] The proposed change comes in the wake of frequent accusations that proxy advising reports are often riddled with errors. [38] A second proposed change aimed to eliminate frivolous proposals by raising the threshold that shareholders must reach in order to force a proxy vote. [39]

The SEC proposals were specifically targeted at Glass Lewis and rival proxy advisory firm Institutional Shareholder Services (ISS), which control a substantial portion of the advisory market. [40]

People

Kevin Cameron is a Glass Lewis co-founder and the company’s current executive chairman. [41] Cameron took office in September 2019 after spending twelve years serving on various public company boards and on the Glass Lewis Research Advisory Council. [42]

Carrie Busch currently serves as president of Glass Lewis, after being appointed to the role in September 2019. [43] Busch previously ran the Glass Lewis research department and worked as a business analyst at Ionetix Corporation, a pharmaceutical and medical technology company. [44] [45]

References

  1. “Glass Lewis.” Center on Executive Compensation. Accessed February 3, 2020. https://execcomp.org/Issues/Issue/proxy-advisory-firms/glass-lewis. ^
  2. “Company Overview.” Glass Lewis, January 25, 2020. https://www.glasslewis.com/company-overview/. ^
  3. “Glass Lewis.” Center on Executive Compensation. Accessed February 3, 2020. https://execcomp.org/Issues/Issue/proxy-advisory-firms/glass-lewis. ^
  4. “Teachers’ Sells 20% Stake in Glass Lewis to AIMCo.” Ontario Teachers’ Pension Plan, August 28, 2013. https://www.otpp.com/news/article/-/article/697097. ^
  5. “Teachers’ Sells 20% Stake in Glass Lewis to AIMCo.” Ontario Teachers’ Pension Plan, August 28, 2013. https://www.otpp.com/news/article/-/article/697097. ^
  6. “Teachers’ Sells 20% Stake in Glass Lewis to AIMCo.” Ontario Teachers’ Pension Plan, August 28, 2013. https://www.otpp.com/news/article/-/article/697097. ^
  7. “Teachers’ Sells 20% Stake in Glass Lewis to AIMCo.” Ontario Teachers’ Pension Plan, August 28, 2013. https://www.otpp.com/news/article/-/article/697097. ^
  8. “Glass Lewis.” Center on Executive Compensation. Accessed February 3, 2020. https://execcomp.org/Issues/Issue/proxy-advisory-firms/glass-lewis. ^
  9. “Company Overview.” Glass Lewis, January 25, 2020. https://www.glasslewis.com/company-overview/. ^
  10. “Company Overview.” Glass Lewis, January 25, 2020. https://www.glasslewis.com/company-overview/. ^
  11. “Teachers’ Sells 20% Stake in Glass Lewis to AIMCo.” Ontario Teachers’ Pension Plan, August 28, 2013. https://www.otpp.com/news/article/-/article/697097. ^
  12. “2020 Proxy Paper Guidelines: Shareholder Initiatives.” Glass Lewis. 2019. https://www.glasslewis.com/wp-content/uploads/2016/11/Guidelines_Shareholder_Initiatives.pdf   ^
  13. “2020 Proxy Paper Guidelines: Shareholder Initiatives.” Glass Lewis. 2019. https://www.glasslewis.com/wp-content/uploads/2016/11/Guidelines_Shareholder_Initiatives.pdf   ^
  14. “2020 Proxy Paper Guidelines: Shareholder Initiatives.” Glass Lewis. 2019. https://www.glasslewis.com/wp-content/uploads/2016/11/Guidelines_Shareholder_Initiatives.pdf   ^
  15. “2020 Proxy Paper Guidelines: Shareholder Initiatives.” Glass Lewis. 2019. https://www.glasslewis.com/wp-content/uploads/2016/11/Guidelines_Shareholder_Initiatives.pdf  ^
  16. “2020 Proxy Paper Guidelines: Shareholder Initiatives.” Glass Lewis. 2019. https://www.glasslewis.com/wp-content/uploads/2016/11/Guidelines_Shareholder_Initiatives.pdf   ^
  17. “2020 Proxy Paper Guidelines: Shareholder Initiatives.” Glass Lewis. 2019. https://www.glasslewis.com/wp-content/uploads/2016/11/Guidelines_Shareholder_Initiatives.pdf   ^
  18. “2020 Proxy Paper Guidelines: Shareholder Initiatives.” Glass Lewis. 2019. https://www.glasslewis.com/wp-content/uploads/2016/11/Guidelines_Shareholder_Initiatives.pdf   ^
  19. “2020 Proxy Paper Guidelines: Shareholder Initiatives.” Glass Lewis. 2019. https://www.glasslewis.com/wp-content/uploads/2016/11/Guidelines_Shareholder_Initiatives.pdf   ^
  20. “2020 Proxy Paper Guidelines: Shareholder Initiatives.” Glass Lewis. 2019. https://www.glasslewis.com/wp-content/uploads/2016/11/Guidelines_Shareholder_Initiatives.pdf   ^
  21. “2020 Proxy Paper Guidelines: Shareholder Initiatives.” Glass Lewis. 2019. https://www.glasslewis.com/wp-content/uploads/2016/11/Guidelines_Shareholder_Initiatives.pdf   ^
  22. “2020 Proxy Paper Guidelines: Shareholder Initiatives.” Glass Lewis. 2019. https://www.glasslewis.com/wp-content/uploads/2016/11/Guidelines_Shareholder_Initiatives.pdf    ^
  23. “2020 Proxy Paper Guidelines: Shareholder Initiatives.” Glass Lewis. 2019. https://www.glasslewis.com/wp-content/uploads/2016/11/Guidelines_Shareholder_Initiatives.pdf   ^
  24. “2020 Proxy Paper Guidelines: Shareholder Initiatives.” Glass Lewis. 2019. https://www.glasslewis.com/wp-content/uploads/2016/11/Guidelines_Shareholder_Initiatives.pdf   ^
  25. “2020 Proxy Paper Guidelines: Shareholder Initiatives.” Glass Lewis. 2019. https://www.glasslewis.com/wp-content/uploads/2016/11/Guidelines_Shareholder_Initiatives.pdf   ^
  26. “2020 Proxy Paper Guidelines: Shareholder Initiatives.” Glass Lewis. 2019. https://www.glasslewis.com/wp-content/uploads/2016/11/Guidelines_Shareholder_Initiatives.pdf   ^
  27. “2020 Proxy Paper Guidelines: Shareholder Initiatives.” Glass Lewis. 2019. https://www.glasslewis.com/wp-content/uploads/2016/11/Guidelines_Shareholder_Initiatives.pdf   ^
  28. “2020 Proxy Paper Guidelines: Shareholder Initiatives.” Glass Lewis. 2019. https://www.glasslewis.com/wp-content/uploads/2016/11/Guidelines_Shareholder_Initiatives.pdf   ^
  29. “2020 Proxy Paper Guidelines: Shareholder Initiatives.” Glass Lewis. 2019. https://www.glasslewis.com/wp-content/uploads/2016/11/Guidelines_Shareholder_Initiatives.pdf   ^
  30. “2020 Proxy Paper Guidelines: Shareholder Initiatives.” Glass Lewis. 2019. https://www.glasslewis.com/wp-content/uploads/2016/11/Guidelines_Shareholder_Initiatives.pdf   ^
  31. “2020 Proxy Paper Guidelines: Shareholder Initiatives.” Glass Lewis. 2019. https://www.glasslewis.com/wp-content/uploads/2016/11/Guidelines_Shareholder_Initiatives.pdf   ^
  32. “2020 Proxy Paper Guidelines: Shareholder Initiatives.” Glass Lewis. 2019. https://www.glasslewis.com/wp-content/uploads/2016/11/Guidelines_Shareholder_Initiatives.pdf   ^
  33. Herbst-Bayliss, Svea, and Jessica DiNapoli. “New Glass Lewis Chief to Expand Abroad amid U.S. Regulatory Clamp-Down.” Reuters. Thomson Reuters, October 4, 2019. https://www.reuters.com/article/us-glasslewis-future/new-glass-lewis-chief-to-expand-abroad-amid-u-s-regulatory-clamp-down-idUSKBN1WJ1J4. ^
  34. Herbst-Bayliss, Svea, and Jessica DiNapoli. “New Glass Lewis Chief to Expand Abroad amid U.S. Regulatory Clamp-Down.” Reuters. Thomson Reuters, October 4, 2019. https://www.reuters.com/article/us-glasslewis-future/new-glass-lewis-chief-to-expand-abroad-amid-u-s-regulatory-clamp-down-idUSKBN1WJ1J4. ^
  35. Herbst-Bayliss, Svea, and Jessica DiNapoli. “New Glass Lewis Chief to Expand Abroad amid U.S. Regulatory Clamp-Down.” Reuters. Thomson Reuters, October 4, 2019. https://www.reuters.com/article/us-glasslewis-future/new-glass-lewis-chief-to-expand-abroad-amid-u-s-regulatory-clamp-down-idUSKBN1WJ1J4. ^
  36. Burnham, Christopher. “The SEC Is Right to Force More Transparency Into Proxy Voting.” Forbes, January 31, 2020. https://www.forbes.com/sites/christopherburnham/2020/01/31/the-sec-is-right-to-force-more-transparency-into-proxy-voting/#7d578fa33bde. ^
  37. Burnham, Christopher. “The SEC Is Right to Force More Transparency Into Proxy Voting.” Forbes, January 31, 2020. https://www.forbes.com/sites/christopherburnham/2020/01/31/the-sec-is-right-to-force-more-transparency-into-proxy-voting/#7d578fa33bde. ^
  38. Mooney, Attracta. “ISS Chief on His Battle with Corporate America and the SEC.” Financial Times, February 2, 2020. https://www.ft.com/content/a9c610a5-b6fd-44e9-946d-8e58fd3577c1. ^
  39. Burnham, Christopher. “The SEC Is Right to Force More Transparency Into Proxy Voting.” Forbes, January 31, 2020. https://www.forbes.com/sites/christopherburnham/2020/01/31/the-sec-is-right-to-force-more-transparency-into-proxy-voting/#7d578fa33bde. ^
  40. Mooney, Attracta. “ISS Chief on His Battle with Corporate America and the SEC.” Financial Times, February 2, 2020. https://www.ft.com/content/a9c610a5-b6fd-44e9-946d-8e58fd3577c1. ^
  41. “Leadership.” Glass Lewis, January 22, 2020. https://www.glasslewis.com/leadership-2/. ^
  42. Thompson, Jeff. “Glass Lewis CEO Katherine Rabin Resigns; Co-Founder Kevin Cameron Appointed Executive Chair.” Glass Lewis, September 13, 2019. https://www.glasslewis.com/glass-lewis-ceo-katherine-rabin-resigns-co-founder-kevin-cameron-appointed-executive-chair/. ^
  43. Thompson, Jeff. “Glass Lewis CEO Katherine Rabin Resigns; Co-Founder Kevin Cameron Appointed Executive Chair.” Glass Lewis, September 13, 2019. https://www.glasslewis.com/glass-lewis-ceo-katherine-rabin-resigns-co-founder-kevin-cameron-appointed-executive-chair/. ^
  44. Thompson, Jeff. “Glass Lewis CEO Katherine Rabin Resigns; Co-Founder Kevin Cameron Appointed Executive Chair.” Glass Lewis, September 13, 2019. https://www.glasslewis.com/glass-lewis-ceo-katherine-rabin-resigns-co-founder-kevin-cameron-appointed-executive-chair/. ^
  45. “Carrie Busch.” LinkedIn. Accessed February 2, 2020. https://www.linkedin.com/in/carrie-busch ^
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Glass Lewis


San Francisco, CA