Proxy firm developments 2014

It has been an eventful year for some of the proxy advisers. This article summarises some of these developments.


ACSI strategic review


ACSI began a strategic review in second half of 2014. What’s it to be – advocate, proxy adviser, investment manager, researcher, administrator, industry association, or something else entirely, or all of these things? Will it confine itself to servicing the needs of industry superannuation funds, or will pressure for more independent boards blur the distinction against other funds, and open new doors to new clients?


Alas, we will not know until next year.


Personnel changes


Prior to the main proxy season Dan Smith left ISS to join CGI Glass Lewis as Director of Research. Dan was an ISS “veteran” and led the operations that resulted in proxy advice reports. Senior research analysts Komal Jalan and Aldi Djajaputra left prior to the main proxy season. Bridget Murphy, who was CGI Glass Lewis’ Director of Research Operations, took on a global Glass Lewis role, still based in Sydney, as Director of Engagement. Aaron Bertinetti, as General Manager, has overall accountability for the Australian operations.


Ulysses Chioatto, who headed up proxy adviser services (one of the three parts of the ISS business in Australia), left ISS around August to provide intermediary governance services to institutions and corporates, and to take up an academic position at the University of Technology Sydney. Since then, Michael Chandler, the most experienced analyst remaining in Australia, has also left the firm. However, ISS provided experienced additional resources from the UK and USA to ensure proxy advice was delivered and maintained during the proxy season. However, as we saw with the departure of Dean Paatsch, Martin Lawrence, Simon Connel and Marty Chung to start up Ownership Matters (see HERE), ISS clients are very “sticky” (with the exception of ACSI, Ownership Matters’ foundation client), mainly due to its global reach and the economics of its voting platform.


After the departure of Marty Chung late last year, Ownership Matters has recently seen the departure of Kristen Le Mesurier early this year, although she seems to have been replaced with the appointment of Peter Wuchatsch


Products and services


ISS – Quickscore


Coincidently with its acquisition by private equity, ISS has rolled out corporate governance products and services to geographies outside of North America. One of its main products is Quickscore, which rates a company’s governance. This includes ratings of ASX 200 companies. Directors may have noticed that their company’s Quickscore rating appears prominently on the ISS proxy advisory report. The data underlying the system is collected by ISS analysts and used for several purposes, including remuneration report voting and director elections. However, companies wanting to improve their rating will need to get under the hood and purchase Quickscore services from ISS. It is this and related corporate services that generate most of ISS’ global revenues and profits. However, provision of these corporate services has resulted in several government enquiries in Europe and the US that highlighted the conflicts of interest between its corporate and proxy advisory services. ISS maintains Chinese walls to manage the potential for conflicts of interest with its Australian governance services to companies currently sold from their Singapore office. However, with corporate services as ISS’ primary money maker, we expect that we will hear and see more active selling to Australian issuers in 2015.


Glass Lewis – watch this space


Potentially the greatest industry disrupter comes from Glass Lewis, which announced the acquisition of Meetyl, a technology company that has developed a global investor and company “engagement” platform. It is sort of a dating site for investors and corporates across the globe. The potential of the new technology is stupendous, and could add billions to Glass Lewis’ economic value, while totally disrupting the broker (and other capital markets’) intermediary industries.


Guerdon Associates expects that more information about the platform, which is already live, will be provided to Australian investors and corporates in 2015. See HERE for more detail.

© Guerdon Associates 2024
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