Closing a lightning-fast deal, Ontario Teachers’ Pension Plan’s (OTPP) private-equity unit acquired proxy adviser Glass Lewis for $46 million from troubled
Xinhua Finance in October.
The move gives OTTP an unpre-
cedented platform to cultivate its vision of model proxy analysis and advice. Plus, it is a golden lifeline for San Francisco-based Glass Lewis, which suddenly boasts resources, renewed credibility, rocketing internal morale, and freedom from Xinhua’s scandals and conflicts of interest. In May, Lynn Turner, former chief accountant at the Securities and Exchange Commission, and Jonathan Weil, a former Wall Street Journal reporter, left Glass Lewis when questions were raised about its China owner’s corporate governance practices. Glass Lewis is the world’s second biggest proxy adviser next to RiskMetrics, which cooled on buying its rival while focusing on its own initial public offering.
Last year OTPP tested ideas to start a conflict-free proxy adviser from scratch. CEO Claude Lamoureux had dropped market leader RiskMetrics, formerly ISS, over concerns that the vendor harbored conflicts of interest. Now, as Glass Lewis’s new owner, OTPP intends to install best-in-class standards in disclosure and product quality. Lamoureux isn’t just a believer in corporate governance. He sees the strategy as a long-term moneymaker.
Glass Lewis CEO K.T. Rabin’s number one priority is to design airtight conflict-of-interest standards. These could include disclosure whenever it is advising on companies where OTPP has stakes and engagement. For its part, RiskMetrics adopted vanguard standards for its IPO.
A global C$106 billion fund, OTTP’s reputation as a governance pacesetter lends Glass Lewis new appeal among activist pension plans. Equally, though, the acquisition could unnerve some mutual and corporate fund clients anxious that Glass Lewis might turn tougher on corporations. —From Global Proxy Watch,
Edited by Stephen Davis
Sidebar: Who Owns the World's Proxy Voting Services?
Such enterprises wield mounting power to sway outcomes at corporate annual meetings across the globe. But few outsiders know just what interests lie behind the curtain at such ventures. Here is a look at select firms:
Center For Good Corporate Governance (Korea) Proxy coverage of Korean corporates. Not-for-profit started with seed money from activist Jang Hasung and
others. Now subscriber funded.
Dutch Sustainability Research (Netherlands) Proxy advice on Dutch corporates. Started by two banks—Triodos and Mees Pierson—and pension fund PGGM.
Egan-Jones Proxy Services (US) World-wide proxy advice. Wholly owned by
credit rater Egan-Jones which, in turn, is held by management.
Governance For Owners (UK) Worldwide engagement services, including voting. Pension funds Railpen and CalPERS own key stakes, along with management and outside board members.
Governance Visions (Japan) Analysis of Japanese proxies. Majority owned by CEO Kuny Kobayaschi. Venture capital firms hold minority stakes.
Hermes EOS (UK) Worldwide engagement services, including voting. Wholly owned by fund manager Hermes, which, in turn, is owned by the BT Pension Scheme.
IVOX (France, Germany) Proxy analysis of European firms. A unified private shareholder owns a majority stake.
PIRC (UK) Worldwide proxy advice. Executives Alan MacDougall and Janice Hayward own a majority of the shares.
Proxy Governance (US) Worldwide proxy advice. Wholly owned subsidiary of Foliofn which is owned by founder Steve Wallman, venture capital firms, and others.
Regnan (Australia) Engagement services at Australian corporates. Owned by 10 funds, mostly domestic pension schemes.
RiskMetrics (US) Worldwide proxy advice. Readying an IPO. Current top three owners: General Atlantic (28 percent), Spectrum Equity (28 percent), and CEO Ethan Berman (15 percent).
—Stephen Davis
