Proxy advisory firm Glass Lewis announced last week that beginning in 2027 it would end its practice of providing “house view” recommendations for shareholder voting decisions, in favor of allowing investors to select from several customized or thematic frameworks.

This policy change will have a tactical influence on how certain investors reach voting decisions and how companies solicit votes in proxy fights. Affected votes will primarily be investors who automatically vote according to Glass Lewis recommendations. How those investors will assess data from thousands of annual meetings and make voting decisions remains an open question.

Our View: Glass Lewis’ decision signals yet another evolution in how issuers and investors engage with each other in a year that has already seen numerous material changes. New 13D/G guidance, an innovative institutionalized and automated retail voting program, bifurcation of active and passive stewardship teams at large institutions and the possible end of requiring quarterly reporting all combine into the dawn of a new era in shareholder engagement. This requires issuers to engage differently with their investors.

Management teams and Boards should consider the following implications for shareholder engagement and investor communications:

• Double down on investor relations. It is more important than ever for management teams to deeply understand their company’s shareholders — their interests, their questions, their views on company strategy, actions they want the company to take. Added unpredictability raises the stakes for IR. Well-prepared teams will be those that elevate IR considerations to the beginning of strategic discussions.
• Build a vote history of top shareholders. Track how your top 25 shareholders are voting on key issues such as executive compensation, director elections and M&A. Absent new developments, past voting decisions may help predict future voting outcomes.
•  Expect media scrutiny on voting speculation. Reporters covering activist shareholders and proxy fights will devote considerable time and energy to break news about how investors have voted during contested situations. Expect this will be especially true in upcoming proxy seasons until the market has additional data points on how certain investors make voting decisions absent Glass Lewis recommendations.
• In an AI world, owned content is king. Work to turn the possible information void left by Glass Lewis’ new policy into an opportunity. Use your investor website more productively as an interactive content hub for shareholders. Build a direct-to-shareholder information campaign and clearly articulate your near-term performance highlights, governance priorities and long-term value creation strategy. This strategy has a dual benefit of providing a backstop if inaccurate information begins replicating into AI large language models. Additionally, implement mechanisms for investors to communicate their preferences to the company.
• The proxy statement is central. Amid changes in how issuers engage with investors, the proxy statement continues to be the most effective tool to communicate with shareholders. Ensure the proxy does the heavy lifting regarding director qualifications, priority messages and enterprise narrative. Given that investors are increasingly utilizing AI to scrape and summarize corporate disclosures, companies will have to work harder to ensure their positions are perceived and understood correctly.
• Monitor developments for lessons learned. Closely watch how this policy change plays out in investor voting during proxy contests. Look for trends and voting habits, and emerging sources of information to learn how investors who previously relied on Glass Lewis recommendations act. Take note and adapt accordingly. Near-term unpredictability could very well lead to longer-term opportunity as companies have additional channels to tailor messaging and engagement to shareholders.