In late October, Glass Lewis announced the results from its annual policy survey. You might be wondering, “does this still matter, since Glass Lewis is moving away from its house policy?” The answer is “yes,” for a few reasons:

1. That move isn’t happening until 2027.

2. Even after the “house policy” disappears, Glass Lewis is still going to provide research and perspectives to clients – it’s just that everything will be more customized, which is already happening at a certain level. Glass Lewis says results from the policy survey inform its case-by-case analysis of company circumstances in the research and filters that it provides to its global client base.

3. The policy gives insight into investors’ current views on several hot topics – including reincorporation, board and workforce diversity, bylaws restricting shareholder proposals and derivative suits, disclosure of executives’ personal security costs and other executive compensation info, response to “anti-ESG” sentiment, and more.

Here are a few key takeaways:

– 85 percent of investors and 76 percent of non-investors say they do not base governance votes solely on financial performance.

– With Texas and Nevada amending their laws to attract more companies, 50 percent of investors are focusing more on shareholder rights when assessing reincorporation.

– 44 percent of U.S. investors view the CEO-to-median-employee pay ratio as “not important”, compared to just 8 percent of non-U.S. investors.

– U.S. based investors are far more likely to ignore diversity factors in their evaluation of boards (42%) compared to investors from other regions (6%).

When it comes to providing research & recommendations that take into account non-financial factors, that’s a pretty important question (and response) for the proxy advisors. John blogged recently that Texas AG Ken Paxton announced an investigation of ISS & Glass Lewis – another shot across the bow after a court temporarily blocked SB 2337 while challenges to that bill proceed to trial early next year.

On that note, here’s more color on how investors and non-investors are evaluating reincorporation, based on survey responses:

Over the past year, many U.S. states have amended their corporate laws to attract or retain companies. Changes include establishing specialized business courts, providing increased protection for directors, officers, and controlling shareholders, reducing litigation risk, and providing greater clarity on the standards for director independence and/or disinterestedness.

In response to this shifting landscape, half of investors reported that they are putting more emphasis on shareholder rights and protections (compared to just one-third of non-investors. Conversely, compared to investors, non-investors were over twice as likely to have become more favorable to company-friendly laws and statutes, litigation risk, and protecting directors, officers and controlling shareholders.

Glass Lewis typically publishes its policy updates in November or December. Stay tuned!

– Liz Dunshee