Yesterday, Glass Lewis issued a major announcement about what it calls “substantial enhancements to its business model.” Glass Lewis points out that these enhancements are made possible by technological advancements, in particular AI and smart technology that enables customization of its proxy voting advice. The announcement notes:

Over the next two years, Glass Lewis plans to make two significant changes to the way it applies proxy voting policies and delivers its highly-regarded proxy research and voting recommendations.

First, Glass Lewis will help all clients move beyond standard policies, guiding them in creating voting frameworks that reflect their individual investment philosophies and stewardship priorities. A majority of the firm’s clients already use their own custom policy guidelines or a specific thematic policy. The goal is to enable all clients to vote according to their own policies.

Second, Glass Lewis will move away from singularly-focused research and vote recommendations based on its house policy and shift to providing multiple perspectives that reflect the varied viewpoints of clients. While still under development, the spectrum of perspectives could range from one that leans toward management and others that reflect more governance fundamentals. Beginning in 2027, clients will be able to access any or all of these perspectives to inform their proxy voting decisions.

“Technology has advanced enough now to allow us to apply smart technologies and AI in particular to complex proxy voting processes,” said Mann. “With these tools, Glass Lewis is modernizing proxy voting practices, removing the perception of influence, and transforming proxy voting into a more strategic and client-driven experience.” 

The abandonment of benchmark voting policies in favor of more bespoke voting advice could potentially complicate the proxy voting and engagement environment, as companies try to determine how investors will vote on specific proposals and director elections. At the same time, the technology-enabled move to more tailored voting advice could ultimately result in more moderate (and less extreme) voting policy outcomes. In any event, the move by Glass Lewis is big news for the proxy advisory business, as well as for companies and investors.

– Dave Lynn