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A new change to Glass Lewis’s peer group methodology could impact some companies’ scores on the proxy advisory firm’s pay-for-performance screen this year.

As part of a company’s screen, Glass Lewis compares certain executive compensation plan features to those of its peers, in a group selected by the proxy advisor itself. Scores on the pay-for-performance screen factor into the firm’s voting recommendations on say-on-pay.

The proxy advisor is essentially moving from a single independent test to determine a peer group for the screen to one that uses eight operational metrics and other factors to create the grouping.

In the new analysis, Glass Lewis expects its peer group to overlap with boards’ self-disclosed peers by about 60% this year, whereas the overlap in 2019 sat at 70%.

As Deb Lifshey, managing director at Pearl Meyer, points out, although the proxy advisor’s peers and the company’s peers may differ, “that doesn’t automatically put them in a worse position. There are so many factors going into it.”

“Maybe Glass Lewis will pull peers that are better from a compensation standpoint. It could slide either way,” Lifshey adds.

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