Glass Lewis’ Report Feedback Service: Direct, Unfiltered Commentary from Issuers and Shareholder Proponents

Posted by Katherine Rabin, Glass, Lewis & Co., on Sunday, March 31, 2019

Glass Lewis has long been an advocate of bringing transparency, accuracy and efficiency to the proxy voting process. Following the expansion of our direct engagement program and Issuer Data Report (“IDR”) service, the Report Feedback Statement (“RFS”) service is an important next step in facilitating informed dialogue among all stakeholders.

Providing corporate governance services to institutional investors is Glass Lewis’ core business and sole focus. Indeed, Glass Lewis does not offer consulting services to corporate issuers, directors, dissident shareholders or shareholder proposal proponents. That said, we recognize that there are legitimate questions about the opportunities available for issuers and shareholder proponents to raise concerns if they disagree with a proxy advisory firm’s recommendations.

In many cases, those disagreements relate to the accuracy, completeness and timeliness of the information underlying voting recommendations. In order to ensure the data Glass Lewis uses in the formulation of its proxy research reports is complete and factually correct, Glass Lewis has a resource center on its website via which public companies and shareholder proponents can, among other things: (i) submit company filings or supplementary publicly-available information; (ii) participate in Glass Lewis’ IDR program, providing an opportunity to review underlying data prior to Glass Lewis completing and publishing its analysis to its investor clients; and (iii) report a purported factual error or omission in a research report, prompting a review process and notifications to Glass Lewis clients of any corrections.

However even when the facts are not in dispute, differences of opinion can still arise. The Report Feedback Statement service provides a unique opportunity for public companies and shareholder proposal proponents—the subjects of Glass Lewis research—to express their differences of opinion with Glass Lewis’ analysis, and then have those comments delivered through a unique, focused channel to 3,000+ individuals who subscribe to Glass Lewis’ research and voting services.

Corporate issuers and shareholder proposal proponents alike are eligible to participate in this service by providing a statement directly to Glass Lewis’ research and engagement team, which will in turn distribute both the Report Feedback Statement and Glass Lewis’ response to the statement to Glass Lewis’ investor clients. A disclosure note will also be added to the first page of the relevant Glass Lewis Proxy Paper® report, notifying investor clients that a Report Feedback Statement and Glass Lewis’ response are available in the applications. Any clients that have already downloaded the Proxy Paper report will receive an email with the Report Feedback Statement and Glass Lewis’ response.

Glass Lewis’ clients will benefit by conveniently receiving unfiltered commentary on our analysis from the company or shareholder proponents who submitted the proposals they are examining. That real-time perspective will provide an additional dimension for their consideration and will be easily accessible, with reasonable time to review, even within the peak of proxy season.

In conjunction with our IDR program and broader engagement efforts, we believe the RFS service will serve to promote dialogue and mutual understanding, and to improve the proxy voting process for all stakeholders. In the same spirit that we invite issuers and shareholder proponents to provide feedback on our Proxy Paper analysis through RFS, we welcome feedback on the RFS service itself, or any other aspect of our approach to governance and engagement, at info@glasslewis.com. We strongly encourage any interested parties to join the conversation.

How RFS Works

The 2019 proxy season (March through May) will serve as a pilot for the RFS service, which will be provided for a limited number of annual general meetings at U.S.-listed issuers. It is not available for special meetings, including proxy contests, consents, mergers and acquisitions. The goal will be to broaden participation after the 2019 proxy season, including introducing the service across several markets globally.

Interested parties can sign up to participate in the RFS service and read a complete FAQ here.

To ensure that Glass Lewis’ clients are able to assess RFS feedback in a timely manner, there are several factors that impact the ability to subscribe to the Report Feedback Statement service.

• All RFS subscribers must also participate in the free Issuer Data Report service, which requires issuers to sign up at least 30 days in advance of their annual general meeting date.

• Once Glass Lewis’ Proxy Paper is available, RFS subscribers need to address any factual errors or omissions within two (2) business days of the initial publication and deliver their feedback statement within four (4) business days.

This aggressive timeline is achievable since subscribers are required to participate in the IDR service, so most issues should be resolved in advance of the initial publication of the Proxy Paper report. Nonetheless, the more items a potential subscriber does earlier in the process, the better the odds of being able to participate.

While we look forward to expanding the RFS in future, for the 2019 pilot program availability is limited to 12 companies and/or shareholder proponents per week. The cap is calculated based on the receipt date (actual or reserved) of a subscriber’s feedback statement.

Because each stakeholder in the proxy voting process has put considerable thought into their work and their approach on a given vote, we expect that all subscribers respect these efforts by exercising the appropriate level of decorum and civility when putting together their Report Feedback Statement; please refer to the RFS Etiquette Guide for further information.

Subscribers should limit their statements to their views on Glass Lewis’ research, and should refrain from, directly or indirectly, commenting on the views, analysis and vote recommendations of other proxy advisors, and from providing a comparative analysis between the research published by Glass Lewis and the research published by another proxy advisor.

Each statement must be signed by an executive at the organization, authorized to issue external statements on behalf of such organization, and feature contact information to enable investors to follow up with the organization.

Issuers and shareholder proponents are permitted to submit one Report Feedback Statement per annual general meeting. However, if the company makes an additional public filing that results in a material revision to Glass Lewis’ research report, issuers will be permitted, at Glass Lewis’ discretion, to submit one additional Report Feedback Statement, within two (2) business days following the publication of the revised Glass Lewis research report.

In order to facilitate processing and distribution, there is a distribution fee associated with participation in the RFS service, and subscribers must also purchase a copy of the relevant Proxy Paper on which they wish to provide feedback. However, the RFS service is not intended to charge issuers or shareholder proponents for resolving factual errors or omissions. To be clear, Glass Lewis does not charge any fees for resolving these types of issues, and there are no time restrictions on reporting a factual error.

Glass Lewis will always address any factual errors or omissions in a timely fashion through its standard correction process. Therefore, subscribers should always report these items to Glass Lewis as soon as they are discovered within a Proxy Paper report. Once a valid error or omission is reported, Glass Lewis will update the relevant report and republish it to clients with a note describing the changes.