Proxy advisers agree to new standards

Jul 24, 2019
Major firms sign up to revised principles and oversight committee

Leading proxy advisers have agreed to a series of updated principles and oversight from a new committee.

Glass Lewis CEO KT Rabin tells Corporate Secretary sister publication IR Magazine: ‘As a founding signatory to the Best Practice Principles [BPP] for Shareholder Voting Research and Analysis Group [BPP Group], launched in 2014, Glass Lewis is pleased to confirm that the revised BPP was updated on Monday, July 22.’

The BPP Group was set up to promote a better understanding of proxy advisers. Its committee comprises representatives from Glass Lewis, ISS, Minerva Analytics, PIRC and Proxinvest.

Rabin explains that the revised principles are the result of a two-year review process that took into account responses to a public consultation on the BPP, the new requirements for reporting as set out in the EU Shareholder Rights Directive, global stewardship principles and engagement with clients, regulatory bodies and other stakeholders.

A new BPP oversight committee will monitor whether companies are applying the principles, look at the public reporting of signatories and manage an open forum. The committee is made up of an independent chair and 11 members, consisting of both investor and issuer representatives, as well as independent members.

Under the updated principles, signatory proxy advisers must, among other things, disclose the extent to which listed companies have been asked to review or comment on recommendations.

‘We believe the independently reviewed BPP, with a new governance and oversight structure, sets a high industry benchmark for best practice for providers of shareholder voting analysis,’ Rabin says. ‘We are delighted that the revised BPP emphasizes the important role providers of shareholder voting research play in supporting their clients’ stewardship efforts, while retaining a focus on the needs of those institutional investor clients.

‘Under the guidance of Danielle Melis – the independent chair for the review of the BPP – we are confident the input of key stakeholders has been reflected in the revisions while recognizing that BPP signatories’ primary mission is to serve investors.’

Melis says in a statement: ‘I am confident that the review process has resulted in a thoroughly reviewed, globally applicable, updated set of principles and guidance. In particular, this includes new governance, monitoring and reporting structures in which stakeholders can recognize the ambition of the [BPP Group] to act in accordance with the highest standards and to be transparent about their activities and policies.’

Rabin adds that Glass Lewis will continue to update and improve its reporting under the BPP, as it has done since 2015, ‘to provide greater transparency to institutional investor clients, regulators and other key stakeholders on the issues that are of most importance to them. We believe the revised BPP, including an independent oversight mechanism, will ensure all signatories continue to improve the industry standard of reporting.’

 

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