The Advisors' Blog

– Liz Dunshee

On January 1st, CGLytics officially will become Glass Lewis’s exclusive global partner for its “pay-for-performance” modeling and grading system. As part of that, Glass Lewis will be using a “significantly different” peer group methodology this year – which will impact its pay-for-performance model and its say-on-pay recommendations. Check out this Glass Lewis blog for responses to FAQs on the impact of the proxy advisor’s new (to the US) partnership with CGLytics. Here’s an excerpt:

1. Will these new peers change Glass Lewis’ recommendations on Say on Pay proposals? For individual companies, yes. The changes to the Glass Lewis peer methodology will change individual outcomes, which will influence our recommendations in positive or negative directions for some companies.

At a market-wide level, there will be no material change to the distribution of grades awarded or the number of against recommendations as a result of the new peer methodology because our Pay-for-Performance Model distributes grades evenly. Glass Lewis expects to support the same level of Say on Pay proposals it has in recent years.

2. Are there any other material changes to Glass Lewis’ Pay-for-Performance Model? No. The rest of the model continues to operate as it has. Changes in score outcomes will be driven by the changes in the peer methodology, which is difficult to simulate or replicate to ensure its integrity.

3. Will there be any future changes to Glass Lewis’ Pay-for-Performance model? There will be no other changes for the 2020 proxy season. We will continue to assess the rigor and independence of our models going forward, as we do with all our policies, with continued research and extensive engagement with our clients and the public companies that they own.

The blog also emphasizes that CGLytics is the only authorized distributor of Glass Lewis’s compensation models, peers, etc. Glass Lewis research & recommendations will be exclusively available via Glass Lewis’s website.