Why Proxy Advice Might Be Slanted

In the last two decades, the proxy advice market has consolidated into two companies that some believe control as much as 97 percent of that market, leaving little diversity in available advice. The companies, ISS and Glass Lewis, are opaque about the bases for their recommendations, and critics accuse them of offering simplistic one-size-fits-all solutions that do not increase shareholder value. [1] Complicating matters, investors don’t always agree on what sort of advice they want, especially when it comes to social issues: Traditional funds and socially responsible investors (SRI) disagree about whether firms should sacrifice profit for social goals. … Read more

Unions and Shareholder Proposals

Invigorating the shareholder proposal process is a top priority for corporate governance reformers. But the possibility that self-interested shareholders could use proposals to harass or pressure managers to accommodate their interests is a cause for concern. Union shareholders attract more critical comments than any other group: as pension fund managers they have an incentive to press for higher investment returns, but as worker representatives they also want wage and compensation policies that benefit current members. While some observers have argued that – for statutory and strategic reasons – unions will not use the proposal process for private purposes, there is … Read more