Shareholder Primacy Proxy Advisors and Activism
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Dec 3, 2025 Ann and Mike delve into the evolving landscape of proxy advisors amidst legal pressures. They discuss how ISS and Glass Lewis are adapting their business models and the implications for shareholder activism. Insights include the shift from blanket recommendations to customized policies and the growing importance of analytics. The conflict between companies and proxy advisors over executive compensation comes to light, alongside the anticipated resilience of these firms in catering to loyal clients. Other topics encompass regulatory scrutiny and the impact on activism in corporate governance.
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Proxy Advisors Pivot To Research And Custom Policies
- ISS and Glass Lewis are shifting from blanket recommendations toward offering research, analytics, and custom voting policies for clients.
- This reflects legal and political pressure plus client demand for tailored voting rules rather than one-size-fits-all guidance.
Three Core Functions Centralize Voting Power
- Proxy advisors provide three core services: research/analytics, voting recommendations, and mechanical vote processing for clients.
- Those services aggregate investor preferences and effectively centralize disparate fiduciary decisions across many funds.
Create Custom Voting Policies
- If you are an institutional investor, build a custom voting policy rather than relying blindly on benchmark recommendations.
- Use proxy advisors' analytics to craft and regularly update a policy that reflects your fiduciary priorities.