Proxy advisory firm Glass Lewis announced to institutional clients and select third parties on August 16, 2019 significant new information around their move to a single provider for compensation data. Further to its June 2019 announcement that CGLytics will serve as its global provider of compensation datasets and analytics, Glass Lewis has clarified that it will no longer use Equilar's peer groups or compensation data. Rather, CGLytics will be Glass Lewis's exclusive provider of compensation data globally. This change is likely to lead to important alterations in Glass Lewis's pay-for-performance model and analysis going forward.

In announcing the move, Glass Lewis noted that it has historically worked with multiple providers to deliver regional solutions leading, in Glass Lewis's view, to a "fragmented system" that lacked the necessary consistency "across … global investments and stewardship needs."

Specifically, effective January 1, 2020 Glass Lewis will:

  • Utilize CGLytics as the sole provider of compensation data and analytical tools globally
  • Provide model access exclusively through Glass Lewis and CGLytics
  • No longer use Equilar's peer groups
  • No longer use Equilar data in any of their products
  • Be the exclusive access point to Glass Lewis research reports and vote recommendations

Glass Lewis expects to finalize its peer review methodology in the fourth quarter. Our understanding is that peer data is already available via CGLytics but will be further refined through early 2020 as additional data is added, including companies' own disclosed peers, as well as peers of peers. 

In addition to changing its compensation data provider, Glass Lewis is considering changes, pending feedback from its investor clients and issuers, on a number of aspects of its compensation methodology, including:

  • Scoring - Whether the A-F grades are the preferred way to communicate pay-for-performance outcomes
  • Peers - The most appropriate methodology for assessing peer groups
  • Metrics - The most appropriate performance vesting metrics from both investor and company perspectives
  • Valuation - The most appropriate methodology for valuing incentives from an investor perspective


What Should Companies Do:

Issuers should take note of this development and consider key areas where it may affect Glass Lewis' proxy voting recommendations on compensation-related items.

As one of the two major proxy advisors, any changes to the inputs and methodology Glass Lewis uses to assess pay-for-performance can have a meaningful impact on recommendations and thus on support levels for say-on-pay and other compensation-related proposals. In addition to understanding these changes, issuers will be well-served to know (1) how many of their institutional investors subscribe to and/or vote along Glass Lewis recommendations, and (2) what percentage of shares outstanding that represents in voting authority. Glass Lewis is focusing on client and institutional feedback initially but has confirmed to us directly that corporate issuers can expect more information from Glass Lewis in the fourth quarter of 2019, as well as the opportunity to participate in a feedback process relating to the potential changes. Issuers should begin considering whether providing feedback to Glass Lewis on these matters, directly or through their solicitor, is warranted. We understand from Glass Lewis that it will be interested particularly in understanding issuers' industry-specific nuances that may impact peer group composition or performance metrics, among other compensation matters. Georgeson will continue to monitor these changes and provide updates, as necessary.

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