Feedback on proxy adviser reports – a solution to a vexing problem?
13/05/2019
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What to do when an issuer disagrees with a proxy adviser report and vote recommendations once a report has been issued has always been a vexed issue.  ASIC’s review into proxy adviser services heard from disgruntled issuers and their representatives that proxy advisers should submit their reports to the issuer for review. Local proxy advisers pushed back, given the significant costs associated with additional resourcing necessary to push research out earlier to issuers for factual review, plus other arguments associated with independence (see HERE, HERE, and HERE) .

In response to vigorous political blowback against proxy advisers in the US (see HERE regarding a bi-partisan Bill before the US congress), Glass Lewis is trialling a new service in the US which could alleviate some of issuer angst if introduced here.

The service is called the ‘Report Feedback Statement’ and is designed as a platform for issuers where there is an alternative view or difference of fact or opinion to the Glass Lewis analysis and recommendations.  The feedback will be shared with the Glass Lewis subscribers (3,000+), that is, the same audience that receives the proxy advice. Apparently, it will be unfiltered, and allow issuers to provide counter arguments to Glass Lewis’ point of view. The US is charging a fee on top of their usual report subscription fee to use the service.

CGI Glass Lewis in Australia is considering a pilot of the service for 30 June 2019 reporting companies, probably on a “first come, first served” basis, providing the service meets ASIC and securities law licensing requirements. Issuers may also need to ensure whatever they distribute on this platform also meets legal requirements. Costs for providing the service are unknown at this stage.

This service in Australia would be well received, given the much shorter Australian AGM season, and difficulty of engaging with proxy advisers and issuers after a report, even with a “no” recommendation, has been issued. Companies that received a bad rap last year, and anticipate the same this year, may want to get in for the pilot sooner rather than later.

More details of the service is available from the Glass Lewis website HERE .

© Guerdon Associates 2019
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