November 15, 2018 / 11:51 PM / a month ago

Top U.S. proxy advisers split on advance looks for corporations

BOSTON, Nov 15 (Reuters) - Top U.S. proxy advisers outlined different processes for sharing their influential research and voting recommendations with stock issuers at a hearing in Washington on Thursday, highlighting one of the charged issues facing regulators as they weigh new rules for corporate elections.

Gary Retelny, chief executive of the largest U.S. proxy adviser, Institutional Shareholder Services, said his firm distributes drafts of its of research to S&P 500 companies and other large global firms before publishing to its own clients, and offers free copies to all stock issuers eventually.

In contrast Katherine Rabin, CEO of rival proxy adviser Glass, Lewis & Co, said it does not provide the full reports to companies ahead of time and charges for them, although it does share early the underlying data driving its opinions and analysis.

Rabin said Glass Lewis tries to share the data well before annual meetings to give executives time to speak to investors on how to vote. "If you're doing it too late I think that companies are sort of scrambling," she said at the hearing, which was webcast.

The differing approaches could prove important to regulators considering calls from industry groups to impose new rules on the advisers and on other parts of the process used to decide questions at corporate annual meetings.

Among other reforms, the U.S. Chamber of Commerce has suggested proxy advisers should show public companies drafts of their research reports to let them check for inaccuracies "or other concerns."

Officials made no decisions on Thursday, though late in the day Republican U.S. Securities and Exchange Commission member Elad Roisman alluded to the idea of giving executives more time to respond when he said having a "rebuttal period" for companies "sort of makes sense to me."

But Roisman also said he gained a new appreciation for the help proxy advisers provide to large and small asset managers who cast votes at thousands of companies per year.

Executives from several investment organizations including State Street Corp, the Ohio Public Employees Retirement System and investment adviser R.M. Davis Private Wealth Management spoke in support of the proxy advisers and worried new rules could raise their costs and in turn diminish shareholder engagement.

On an earlier panel, speakers came to a rare agreement that companies and investors could benefit if the names of shareholder proponents were included in corporate proxy statements. (Reporting by Ross Kerber in Boston Editing by Tom Brown)

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