In response to the ongoing debate over H.R. 4015—a bill that was submitted to the U.S. Senate for consideration after approval by the House of Representatives on December 21, 2017— Glass Lewis would like to reaffirm its opposition to the proposed legislation. 

regulatory_mattersGlass Lewis believes H.R. 4015 reflects a lack of understanding of how proxy advisory firms develop their research and recommendations; communicate with subject companies and other stakeholders; and manage and disclose conflicts of interests – despite the fact that proxy advisory firms are clearly, comprehensively and consistently disclosing information regarding all these subjects, publicly. 

Glass Lewis is fully transparent about its policies and procedures for developing the methodologies it uses to analyze each company, which include, but are not limited to: (i) tailoring its approach to each country’s relevant regulations, practices and corporate governance codes; (ii) consulting with Glass Lewis’ Research Advisory Council (, an independent external group of prominent industry experts, to ensure Glass Lewis’ proxy voting policies are comprehensive, well‐reasoned and reflective of current global governance and regulatory practices and developments; (iii) engaging and maintaining an ongoing dialogue with a wide range of market participants, as well as actively participating in panels, working groups and industry conferences; and (iv) revising and enhancing its methodologies, at least annually, in response to regulatory developments, market practices and issuer trends, which are closely monitored and assessed throughout the year. Glass Lewis publishes copies of its unabridged guidelines for the analysis of U.S. companies, as well as the voting guidelines for other major countries on its company website ( 

Glass Lewis has a resource center on its website designed specifically for the issuer community ( via which public companies, their directors and advisors can, among other things: (i) arrange an engagement meeting with Glass Lewis outside of the solicitation period (which begins on the date the notice of meeting is released and ends on the date of the meeting); (ii) submit company filings or supplementary publicly-available information; (iii) suggest that a particular topic be discussed through a Proxy Talk, a recorded open forum intended to help company representatives, dissidents or shareholder proposal proponents engage with Glass Lewis’ clients and provide detail on specific issues; (iv) request a free copy of the company’s Issuer Data Report (IDR) — a fact-based report that includes the key data used by Glass Lewis to the company’s research report, so as to allow the issuer to notify Glass Lewis of any issues prior to Glass Lewis completing and publishing its analysis to its investor clients; (v) notify Glass Lewis of a purported factual error or omission in a research report; and (vi) purchase a copy of its own research report upon publication to Glass Lewis’ investor clients.

Glass Lewis avoids conflicts of interest to the maximum extent possible. For instance, Glass Lewis does not offer consulting services to corporate issuers or directors, proponents of shareholder proposals or dissident shareholders in control contests. Glass Lewis has robust policies and procedures to help manage all other potential conflicts of interest that may arise in the course of its business, including from its ownership structure, business partnerships, clients, employees and outside advisor relationships. In situations where a conflict is unavoidable, Glass Lewis provides specific, prominent disclosure of the potential conflict on the cover of the relevant research report, and a description of the exact nature of the conflict in the appendix of such report (

The rationale for H.R. 4015 is to provide for increased disclosure of research methodologies and conflicts of interests and to encourage increased interaction between issuers and proxy advisors.  However, as described herein, Glass Lewis already has policies in place that meet these objectives. Furthermore, if enacted, the proposed legislation would compel proxy advisory firms to share their proprietary research reports with the subject public companies prior to distributing those reports to their investor clients – thus granting the subject companies an unprecedented right of prior review. By requiring proxy advisory firms to do this: (i) investors would be denied access to independent research; (ii) significant constraints would be placed on the time investors have to properly consider the analysis in order to develop informed proxy voting decisions; and (iii) issuers could potentially determine an investor’s vote selections (even before the investor itself knew) given that investors publicly disclose their policies, which may be based on Glass Lewis’ analysis. All of this at the detriment of their beneficiaries. 

In the past several years, a number of regulatory bodies in the United States and elsewhere, including the Securities and Exchange Commission (SEC), Canadian Securities Administrators (CSA) and European Securities and Markets Authority (ESMA), have examined the role of proxy advisory firms and whether they should be subject to various forms of regulation. In every single case, these regulators have stated that binding or quasi-binding regulation of proxy advisory firms was not warranted. And, ESMA, in particular, recommended the creation of an industry code of conduct.

Based on such recommendation, a group of proxy advisors, including Glass Lewis, drafted and became signatories to the Best Practice Principles for Providers of Shareholder Voting Research and Analysis (BPP), an industry code of conduct which requires proxy advisory firms to become signatories and publicly disclose how they comply with the BPP, in relation to their business activities globally. If a signatory does not comply with one or more elements of the BPP, the signatory must provide a detailed explanation. Signatory statements of compliance to the BPP are publicly available at, as well as on the signatories’ own websites (

Most recently, in an effort to ensure that the BPP remains fully aligned with applicable regulation, a global consultation was launched in order to seek views from investors and companies on whether the BPP has been effective in ensuring the integrity and efficiency of the services provided by shareholder voting analysts and advisors.  The review was carried out by a Steering Group comprised of five representatives of the current BPP signatories, chaired by Chris Hodge, former Director of Corporate Governance at the Financial Reporting Council in the UK, and supported by a global Advisory Panel whose members have broad experience and knowledge of investors, companies and different national markets. 

Glass Lewis continues to be committed to ongoing engagement with investors, issuers, legislators, regulatory agencies and industry interest groups to discuss the role or proxy advisors and the impact H.R. 4015 would have on the market, if enacted. Glass Lewis strongly believes that the establishment and adherence to a global code of conduct, coupled with proper oversight by investors, has proven to be effective in ensuring the quality and integrity of proxy advisory research – without adding an undue burden on investors or inhibiting competition.

No matter the outcome, Glass Lewis will take whatever measures necessary to ensure that it complies with all applicable regulations and will continue to act – as it always has – in the best interests of its investor clients. 

Nichol Garzon is Glass Lewis’ SVP and General Counsel and oversees all legal and compliance matters for the company and its subsidiaries worldwide.