Glass Lewis, a proxy advisor, recently unveiled its new Equity Compensation Model (“ECM”), which is reportedly intended to provide company issuers and investors with access to the process it uses to evaluate whether it will provide a favorable recommendation for shareholder approval of equity compensation plan proposals. Historically, Glass Lewis has been less than transparent regarding the actual criteria and methodology it uses to make its recommendations on equity plan proposals. Companies and investors will now be able to purchase on-demand access to the ECM, which will reportedly allow the user to test and review equity plans using Glass Lewis’ 11 key criteria components and scoring system for equity plan proposals. Institutional Shareholder Services (“ISS”), another proxy advisor, through ISS Corporate Services, provides similar access to ISS’s criteria and methodology on making its recommendations regarding equity plan proposals.
Companies that have institutional shareholders which subscribe to Glass Lewis advisory services will need to consider for themselves whether purchasing access to the ECM will provide them with an effective tool for assessing and forecasting Glass Lewis’ recommendations regarding their equity plan proposals and obviate the need for engaging compensation consultants for similar guidance.