Jim Jordan Questions Proxy Advisors: ISS & Glass Lewis Market Control

Dominance of Proxy Advisors

• 🎯 Institutional investors and pension funds hold over 80% of publicly traded equity shares.
• 💡 Most shareholder votes are cast via proxy voting, with advice from proxy advisors.
• 🔑 The two largest proxy advisors, ISS and Glass Lewis, control 97% of the market.

Influence and Recommendations

• 📊 Proxy advisors' recommendations are followed 95% of the time, with shares often automatically cast based on their advice.
• 📈 These advisors provide recommendations on all shareholder matters, including company governance and executive pay.
• ⚠️ In 2023, ISS recommended in favor of over 80% of ESG shareholder proposals, indicating a general left-leaning bias.

Conflict of Interest Concerns

• 🧩 The duopoly of ISS and Glass Lewis also offers consulting services to companies.
• 💰 Companies that receive negative recommendations from the proxy advisory side may be solicited by the consulting side for services to avoid future negative recommendations.
• ⚠️ This creates a concerning pattern where companies might feel pressured to pay for consulting to avoid negative proxy advice, likened to paying "protection money" or a "shakedown."
• 🧐 The structure is described as potentially rigged, with limited competition and a significant concentration of power.