Since the SEC issued the 2010 Concept release on the U.S. proxy system, Glass Lewis has been actively engaged with regulators, investors, issuers and other stakeholders across the globe regarding the role of proxy advisors.
In responses to three subsequent consultations, issued in 2012 by the European Securities and Markets Authority (“ESMA”), Canadian Securities Administrators (“CSA”) and the Corporations and Markets Advisory Committee of Australia (“CAMAC”), Glass Lewis has consistently expressed the view that a market-based solution, in particular a code of best practices developed by proxy advisors, is the appropriate means to address the relevant issues raised in these consultations – namely conflict management, transparency of policies and methodologies and engagement.
The Principles were developed by the independent Best Practice Principles Group (BPPG), made up of the charter signatories, including Glass Lewis, based on recommendations from ESMA, which were outlined in its 2013 Final Report regarding the role of the proxy advisory industry. While ESMA found “no clear evidence of market failure in relation to how proxy advisors interact with investors and issuers,” it determined that the industry would benefit from increased disclosure and transparency. ESMA recommended the establishment of a code of conduct that would foster better understanding among all stakeholders of the role of proxy analysts and what can rightfully be expected from them.
The high-level principles cover three main areas:
- Service Quality
- Conflicts of Interest Management
- Market Communications
Each principle is supported by related guidance and background information that demonstrates how to apply the principles. The principles are intended to complement applicable legislation, regulation and other soft-law instruments.
Providing Feedback to Glass Lewis.
We welcome your comments and thoughts on the Best Practice Principles or our Statement of Compliance. Please email Glass Lewis at BPPFeedback@glasslewis.com with your feedback.
Best Practice Principles Group Website.
The Best Practice Principles Group (BPPG) website provides details on the principles, an overview of how they were developed and lists members and signatories. Visit the BPPG website.
July 22, 2019 – The Best Practice Principles Group commits to new governance & oversight structure in independently reviewed updated 2019 principles. Read the announcement.
February 10, 2015 – The Best Practice Principles Group announces the launch of mechanisms for collecting feedback and monitoring the implementation of the Principles. Read the announcement.
March 5, 2014 – The industry-developed Best Practice Principles for Voting Research & Analysis are announced. Read the announcement.