Proxy advisor Glass Lewis has announced that starting in 2027, it will no longer offer a standard proxy report and set of voting recommendations.
Why it matters: One of the biggest complaints about proxy advisors is their adherence to a one-size-fits-all methodology of analyzing company pay plans and recommending votes. This change will have a substantial impact on proxy voting, both positive and negative.
Glass Lewis announced two major changes:
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The proxy advisor will guide all clients to create a custom voting framework so they can vote according to their own policies.
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More importantly, the firm will move away from a singular report/vote recommendation to a spectrum of perspectives, such as management-focused or governance-focused.
Between the lines: ISS and Glass Lewis have been under significant pressure from policymakers over their business model, inherent conflicts of interest, and focus on ESG. This change is likely an effort to preserve objectivity and avoid the threat of regulation while keeping the basic business model intact.
Bottom line: The proxy advisory business is not what it once was. We predict similar changes from ISS in the future if Glass Lewis’s gambit is successful to stave off political pressure and oversight.
