January 20, 2011 

Office of Regulations and Interpretations 

Employee Benefits Security Administration 

Room N-5655 

U.S. Department of Labor 

200 Constitution Avenue NW 

Washington, DC 20210 

RE: RIN: 1210-AB32 

 Definition of the Term Fiduciary 

Dear Sir/Madam: 

Thank you for the opportunity to comment on the proposed rule changes to the definition 

of fiduciary under the Employee Retirement Income Security Act (ERISA) for entities 

providing investment advice to employee benefit plans or plan participants. 

We believe the integrity and impartiality of the advice provided to pension plans should 

be reinforced and commend the work of the Department of Labor (DOL) in reevaluating 

the nature of entities providing investment advice to pension plans. The investment 

advice retirement plans receive should be made solely with the best interests of the plan 

and plan participants in mind. We recognize that regulations should be reviewed 

periodically for continued relevance and applicability and agree that now is an 

appropriate time to revisit the definition of “fiduciary” with regard to retirement plans 

governed by ERISA. We believe the DOL’s reexamination of the role of service 

providers, and their status as fiduciaries, is timely given the continued shift in retirement 

plans from defined benefit plans to defined contribution plans. Further, we believe both 

the plans and their participants will benefit from such reevaluation. 

Glass Lewis is an independent governance services firm, which provides proxy research, 

analysis, voting recommendations and other services to institutional investors around the 

world. While, for the most part, our clients use our research to help form their proxy 

voting decisions, they also use our research when engaging with companies before and 

after shareholder meetings. Through our Web-based vote management system, 

ViewPoint, we also provide investor clients with the means to receive, reconcile and vote 

ballots according to their own voting guidelines and record-keep, audit, report and 

disclose their proxy votes. 
Glass Lewis produces research reports on public companies to assist our clients, e.g., 

public pension plans and investment managers, in fulfilling their fiduciary duty to vote 

proxies. Our recommendations are based solely on our own proxy voting policies and we 

provide only a single report for each company meeting. We do not tailor our 

recommendations or research to any client, client type or group of clients. 

As the second largest proxy research firm in the world, we are happy to share our 

perspective on the revision to the definition of fiduciary, specifically as it relates to proxy 

advisors. We believe proxy advisory firms play an important support role, helping 

institutional investors meet their fiduciary responsibility to vote thousands of securities. 

Glass Lewis is submitting this comment as an interested industry advisor, not on behalf 

of any or all of its clients. We have confined our comments to specific topics raised by 

the proposal, where we felt our input would be most relevant. 

We do not believe it is appropriate to include un-conflicted proxy research advisors like 

Glass Lewis in the revised definition of fiduciary, as described in the provided example 

of fiduciaries. There are certain indicia common to fiduciaries, such as providing 

investment advice with concomitant investment, management and voting authority, 

control and responsibility; however, none pertain to Glass Lewis. 

Nor do we do believe providing research, analysis and voting recommendations rises to 

the level of either (i) providing investment advice to pension plans or (ii) having 

discretionary authority over management of such plans or securities held therein, both 

standards used for determining fiduciary status under ERISA by DOL. Many of the 

requirements for fiduciaries are not pertinent to proxy advisors and therefore neither the 

exercise of complying with fiduciary obligations nor the status of being a fiduciary itself 

would have great utility to institutional investors, including pension plans. We do not 

believe Glass Lewis falls within the proposed definition of fiduciary as contemplated by 

Congress when it enacted ERISA. Further, in our view, research reports that discuss the 

issues presented for shareholder vote in proxy statements, and accompanying voting 

recommendations, generally would not meet the elements of “investment advice” spelled 

out in Section 202(a)(11) of the Investment Advisers Act of 1940. 

As the proposal notes, it is designed to identify fiduciaries based on evaluations of “their 

degree of authority, control, responsibility or influence and the expectations of the parties 

involved.” We believe, based on an evaluation of these factors, examined in more detail 

below, Glass Lewis should not be considered a fiduciary. 
Authority, Control and Responsibility

As a proxy research advisor, we do make proxy voting recommendations. However, since 

we are not beneficial owners, we do not have the authority or responsibility to make 

voting decisions. The power and responsibility to instruct votes resides with our 

institutional investor clients. 

To be sure, some clients rely on our expertise to reach their vote decisions on proxy 

proposals. However, while these clients may design a voting policy closely aligned with 

the Glass Lewis recommendation on one or more types of proposals, as fiduciaries they 

select and periodically review this approach only after close scrutiny of our guidelines 

and examples of specific recommendations, with the recognition that our 

recommendations on those issues tend to be very similar to the client’s policy. Similarly, 

when clients follow our recommendations on specific issues, generally because the client 

and Glass Lewis share the same philosophy on that issue (e.g., to disfavor anti-takeover 

provisions), they do so only following a close review of our policy guidelines by the 

client’s proxy committee, board of trustees and/or other relevant internal oversight 

personnel. 

Of course, every client – at all times – retains the authority to change any vote we 

recommend for them based on our analysis of the proposal vis a vis their proxy voting 

directions. Indeed, our voting system provides all voting clients, regardless of whether 

they adopt our recommendation as their approach, with the ability to review and change 

votes, which they do routinely. 

While institutional investors may use our research and recommendations in their 

decision-making processes, we are neither an investment research firm nor do we have 

the authority to make voting decisions on our clients’ behalf. Glass Lewis does not 

recommend that clients buy, sell or hold securities in connection with its voting 

recommendations or analyses of proxy issues (or otherwise). And, most importantly, 

none of the information contained in Glass Lewis’ research reports is personal or is 

tailored to the investment strategy of any specific client or group of clients. 

Our authority is limited to transmitting our clients’ voting instructions under narrow 

powers of attorney executed by our clients for the sole, express purpose of instructing our 

clients’ custodians (or the voting service engaged by the custodians) to accept our clients’ 

voting instructions from Glass Lewis, rather than directly from the client. Glass Lewis’ 

clients always retain the ultimate authority and responsibility to vote their shares. 

While some clients tend to follow our recommendations in some cases, they always retain 

ultimate authority to make the voting decision. Further, we do not have authority to make 
any management decisions with respect to retirement plans, including with respect to 

their asset allocation, investment choices or investment elections. 

We provide our institutional investor clients with the means to vote their shares through 

our Internet-based voting platform, Viewpoint, in accordance with their investment 

philosophy and designated voting policy. Indeed, the majority of Glass Lewis’ clients, 

based on both a pure numerical basis as well as on assets under management, have 

elected to vote according to one or more of their selected voting policies. Clients utilize 

data gathered by Glass Lewis for reaching their vote decisions; in most cases, they 

supplement what we provide with their own research and that of other research and data 

providers. 

We are not the beneficial holder of clients’ securities and therefore are not subject to any 

ownership obligations, such as regulatory filings, appurtenant to control of voting rights. 

We exert no control over plan assets and do not administer plans. Nor do we make any 

decisions relating to plan assets or act in any way like plan trustees. 

We make no evaluation of the value of any securities and even in the context of a merger 

evaluation, we only make a recommendation on whether to accept or reject the terms of 

the deal based on market reaction and the fairness of the process, not what the value 

should be. 

Our influence is limited to providing data, analysis and recommendations to our clients 

who are then empowered with that information to cast informed proxy votes. We do not 

exhibit any indications of control generally associated with being a fiduciary or as 

defined by the proposed rule. 

Client expectations

Clients hire us to help them interpret proxy matters and to provide a means for them to 

submit their votes based on their instructions. Our clients, for the most part public 

pensions and investment managers, hire us to provide data, research, analysis and voting 

recommendations as well as, for some clients, the means to vote their shares held in 

defined benefit plans, mutual funds and other investment vehicles. All clients receive the 

same Glass Lewis research report, in the same format and at the same time with the same 

recommendations. The reports are not customized to any client or client investment 

strategy and our fees are based on the number of reports, not in response to any voting 

decision or incident to any transaction. 
Conflicts

We believe the DOL should adopt rules to eliminate, reduce or require disclosure of 

conflicts to the greatest extent possible. Because conflicts can arise not just in providing 

services but even in the solicitation of them, the cleanest and most effective way to 

manage conflicts is to not have them. 

Recognizing this, we were founded with the core policy of not providing any consulting 

services to corporate issuers. As a result, Glass Lewis does not solicit nor provide 

consulting services or compensation-setting tools to the corporate issuers whose proxy 

proposals we analyze. We believe this is a business practice the DOL should consider 

mandating for proxy research providers to pension plans. 

Proxy providers, in general, employ one of two distinct business models. In the first 

model, followed by Glass Lewis, the provider serves only the investor community by 

providing proxy research, data, analysis, recommendations and voting services to 

institutional clients; these providers do not provide any services to corporate issuers, 

thereby avoiding conflicts. However in the second model, in addition to working for 

institutional clients, some providers of proxy advisory services also provide consulting 

services and sell compensation design tools to companies they analyze. We believe the 

DOL should, consistent with widely accepted fiduciary standards, prohibit research 

providers from providing and marketing such services to public companies if they are 

also providing proxy research, analysis and recommendations to institutional clients 

about those companies. 

Just as corporate issuers bear the burden to disclose potential conflicts, we believe the 

onus should be on the conflicted party to disclose any potential conflicts. Recognizing the 

necessity and benefits of transparency, since our founding we have provided specific 

disclosure on the front page of our reports regarding potential conflicts. For example, 

when an institutional shareholder client solicits votes via a shareholder proposal, contest, 

or a director “vote no” campaign, we disclose that on the front page of our report. We 

also specifically disclose when an investment manager subsidiary of a public company on 

which we are writing a report subscribes to our research. One proxy provider that follows 

the second model, described above, does not currently disclose in its reports the 

relationships it has with companies it analyzes, nor does it disclose in the report if a 

dissident shareholder in a proxy fight or a proponent of a shareholder proposal is a client. 

It requires shareholders to contact the provider for such information, a significant burden 

during the proxy season. 

Furthermore, where our parent, Ontario Teachers’ Pension Plan, has a significant, 

reportable stake in a company, has publicly announced its ownership in a company, or 
has an ownership stake or an interest in acquiring an ownership stake which has come to 

the attention of Glass Lewis through public disclosure or news reports, we disclose that 

on the front page of our report for that company. 

We also have robust policies in place to address personnel conflicts. If a member of either 

our Research Advisory Council or Strategic Committee is an executive or director of a 

public company, we disclose that specific relationship on the front page of our report on 

that company. In addition, where any employee’s relative is an executive or director of a 

public company, the relationship is disclosed and that employee plays no role in the 

analysis or recommendation of that company 

Regulation

We believe prudent regulation, appropriate to the unique role of proxy advisors, would be 

helpful in attaining the goals of the DOL to eliminate, reduce, and disclose conflicts, and 

to reaffirm the integrity of the advice provided to retirement plans. While we do not 

believe it is prudent to consider un-conflicted proxy advisers as fiduciaries, we do believe 

some oversight on the activities of proxy advisory firms may address the concerns 

regarding conflicts. 

The goal of S.E.C.-mandated disclosure to shareholders by companies of material issues, 

such as financial performance, is to provide investors with relevant information when 

making investment decisions; similarly, we believe advisors should specifically disclose 

information about their conflicts arising from selling consulting services to issuers, just as 

public companies must disclose potential conflicts from buying services from providers 

such as audit firms and compensation consultants. 

While we are not registered as an investment advisor, some proxy research providers, 

including one that engages in significant business with corporate issuers, is registered. 

We believe that registration and, therefore, treatment as a fiduciary, have not resolved 

those conflicts adequately. We therefore do not believe considering un-conflicted proxy 

advisors to be fiduciaries would resolve the concerns raised in the proposal regarding 

conflicts. Furthermore, we do not believe fiduciary status is universally relevant to the 

proxy advisory business, since proxy advisors do not provide investment advice, execute 

trades or manage any client money. 

We believe proxy advisors should be exempt from consideration as fiduciaries, similar to 

the treatment of nationally recognized credit rating agencies. However, if the DOL feels 

that it is appropriate to require further regulation for proxy advisors to address the stated 

goal of limiting potential conflicts, we believe an exception from such consideration 

should be made for advisors like Glass Lewis that do not consult for or sell compensation 
solutions to corporate issuers. One way would be to add un-conflicted advisors (i.e., those 

that do not provide consulting services to corporate issuers) to the limitation list of 

entities excluded from the definition of “fiduciary.” 

 

The exclusion of advisors that do not have conflicted business models will have the 

added benefit of not creating an additional hurdle for new entrants into the advisory 

space, since initial and ongoing compliance obligations associated with being a fiduciary 

are expensive and resource intensive. Further, the number of proxy research providers is 

relatively small and the largest provider has significant market share. Competition in 

recent years has greatly benefited shareholders, as it has resulted in better research and 

service from all providers. 

We would be happy to provide any additional information regarding this matter. Thank 

you for the opportunity to comment on the proposed redefinition of fiduciary. 

Sincerely, 

/s/ 

Katherine Rabin, Chief Executive Officer 

/s/ 

Robert McCormick, Chief Policy Officer