This week, Glass Lewis revealed a system for public companies and shareholder proposal proponents to provide feedback on "differences of opinion" with Glass Lewis’s analyses in its proxy reports which is then transmitted to the more than 3,000 clients of the proxy advisory firm. The “Report Feedback Statement Service” will be a pilot program for 2019 and will only permit 12 companies per week during March, April, and May to make use of the service. According to the website, “[t]he purpose of the Report Feedback Statement service is to allow subscribers to more fully and directly express their views on any differences of opinion they may have with Glass Lewis’ research.” Interestingly, Glass Lewis asks that companies refrain from mentioning the views of other proxy advisory firms or providing any comparative analysis of Glass Lewis’s and another proxy advisory firm’s analysis.
While companies are not required to subscribe to any Glass Lewis service in order to be eligible for submission to the program, companies are required to purchase the Glass Lewis proxy report for their company as well as a “distribution fee” for each feedback statement submitted. This raises some of the same conflicts for which ISS is criticized. A host of other rules and requirements are available in an FAQ and etiquette guide available on Glass Lewis’s website. Perhaps most relevant is that any feedback statement be submitted within four business days of Glass Lewis issuing a proxy paper. The proxy advisor notes that each investor will receive notice of the report, which will be noted on the front of an appended proxy paper and an email sent to clients that have already viewed the proxy paper.
The timing of Glass Lewis’s announcement is interesting given the intense regulatory focus on proxy advisory firms currently at the SEC. Several commentators, including the Center, have urged the SEC to require a set process for companies to provide feedback to reports which his subsequently provided to the clients of proxy advisory firms. The adoption of process for greater direct issuer feedback by Glass Lewis, in addition to potentially fostering a greater information exchange, may be an attempt to discourage additional regulatory interventions.