‘Unbeknownst to many Americans, twoforeign-owned proxy advisors, ISS and Glass Lewis, play a significant role in shaping the policies and priorities of America’s largest companies through the shareholder voting process,’ wroteUS President Donald Trump on Thursday as – after weeks of rumor – he signed an executive ordertargeting the two firms. In it, Trump advises everyone from the SEC to the Federal Trade Commission, the Attorney General, the Secretary of Labor to put a regulatory spotlight on the big two.
The rhetoric leading up to the signing was fierce: SEC chairman Paul Atkins talked about the ‘weaponization of shareholder proposals,’ while Elon Musk famously described ISS and Glass Lewis as ‘corporate terrorists’.
However, each firm stresses its commitment to professional, ethical and independent standards and those in the governance world say a move to customization is already under way.
An evolutionbegun
Speaking to ISS and Glass Lewis, as well as governance professionals and investors, in the weeks leading up to Trump’s executive order, sets out the ways in which this shift is taking place.
A spokesperson for Glass Lewis pointed to the ‘clearly diverging investor approaches to fiduciary duty,’ for example – as a driving factor in the company’s recent decision toretire its benchmark policy over the next two years, in favor of customized frameworks.
Glass Lewis shared numbers with IR Impact that show a notable percentage – some 70 percent – of its clients already use a specific thematic approach or go the custom policy route as they look for ‘more choice and control in the proxy voting process,’ which the firm says it supports ‘wholeheartedly’. As it ‘modernizes’ its processes, Glass Lewis will, by 2027, replace its house policy entirely, offering custom voting as well as ‘multiple research perspectives,’ explains a spokesperson.
Numbers put forward by ISS show an even higher percentage of clients voting in some bespoke form: ‘90 percent of voted shares processed by ISS globally are tied to voting policies customized by the investor, instead of utilizing ISS’ Benchmark or Specialty policy options,’ it says. The firm also offers insight into its support of management and how often clients vote in line with its recommendations. ‘ISS Benchmark policy voting recommendations aligned with management approximately 96 percent of the time for S&P 500 companies during the 2025 proxy season,’ says the spokesperson, ‘while ISS recommended against roughly 12 percent of say-on-pay resolutions for the top 3,000 US companies in calendar 2024, just 1 percent failed to pass.’
‘Curtail or eliminate’
These figures have done little to quell a resurgence of the long-running debate about just how influential these firms are– or the impact that influence has on corporate America. Across government, the current SEC, the corporate and governance worlds and X (formerly twitter), there is support for the idea that ISS and Glass Lewis have too much power, that their recommendations are often contradictory or hard to understand and that the firms are ripe for reform.
Lucy Fato, general counsel and corporate secretary at Seaport Entertainment Group
Lucy Fato, general counsel and corporate secretary at Seaport Entertainment Group, has more than three decades of experience under her belt and doesn’t mince her words. ‘Both firms are opaque and extremely rigid in their approach and, as a result, the entire governance industry has suffered,’ she says. ‘I would be very pleased if the SEC, under Atkins, did something to curtail or eliminate proxy advisory firms – or at least eliminate their ability to have people subscribe and pay for consulting services because it has become a pay-to-play environment.’
She also sees a wider, knock-on effect from the formulaic outsourcing of voting decisions. ‘Most governance policies at large institutional investors, assuming they have their own policies and don’t default to ISS or Glass Lewis, have become check-the-box exercises and there is no longer the true engagement we used to see a decade-plus ago.’
The picture today is vastly different, says Fato, explaining that, pre-Covid, there were face-to-face opportunities to get in front of voting issues – whether related to a particular director nominee, shareholder proposal or say-on-pay. These conversations ‘often resulted in good and appropriate outcomes because the governance professionals were empowered to make decisions or had influence with voting committees.’ In her view, those kinds of engagements are no longer typical.
‘In the last few years in particular, most internal governance professionals no longer have the power to deviate from a pre-established policy – even if they agree that the policy doesn’t fit a particular circumstance,’ says Fato, adding that ‘this is true even with some of the largest and most influential financial institutions who used to approach proxy statements on a case-by-case basis.’
Misguided efforts
ISS and Glass Lewis might bear the brunt of the rhetoric, but the power wielded by large institutions – passive investors in particular – is also part of the conversation. Many feel there should be greater emphasis on the role and responsibility of the investor.
Douglas Chia, president at Soundboard Governance
As Douglas Chia, president at Soundboard Governance, points out, impartiality isn’t really the point of proxy voting advisory firms. ‘Companies do have frustrations with the proxy advisory firms: they are intransigent. They are seemingly arbitrary at times. They are not objective. They do take the side of the shareholder, but that is the idea – these people are not looking for objectivity. They have a very defined view of corporate governance, which is very shareholder centric.’
Within the debate about the role these firms play, Chia says the more ‘legitimate case’ is of anti-competitive practices at ISS. ‘ISS is not willing to give up the dual role it plays in making recommendations and also consulting companies on how to get a good recommendation,’ he says. ‘No matter how much they try to split up the two businesses, the two businesses are still under the same umbrella. So, there are some antitrust arguments here, in terms of barriers to entry, in terms of ISS being too big, too dominant. There are huge barriers to entry.’
While Chia might sympathize with some of the arguments against the advisors, he ultimately stresses that ‘efforts to shut these firms down are totally misguided.’ Instead, he argues that ‘regulators could do more both around looking at the proxy advisory firms and the investors in terms of how investors use these firms. They should not just outsource without any kind of thinking or oversight.’
Making voting sexy
One person trying to drum up greater interest in the voting process from the investor perspective is Kristin Hull, founder, chief investment officer and portfolio manager of Nia Impact Capital – a women-led, impact-driven asset manager that hit $500 mn in assets this year. And while companies complain when the proxy advisors recommend against them, Hull’s view is that ‘both Glass Lewis and ISS are more often with management than we believe warrants a smart vote for investors’.
From this perspective, Hull and her team seek to engage other investors on the ‘power of the proxy’. This is a challenge, she says. ‘In our busy world, with so many things going on, it is a heavy lift to make proxy voting important and sexy, to make it something to put on the agenda when an individual investor or institutional investor may not really see that the power of the vote is so strong. It’s similar to attitudes to political voting:Why does one vote matter? Why do my shares matter?’
Kristin Hull, founder, chief investment officer and portfolio manager of Nia Impact Capital
For Hull, proxy voting is only becoming more important in the current political climate. At the same time, she flags some of the same apathy issues highlighted by Fato.
Talking about why investors rely on external recommendations, Hull notes that ‘sometimes it’s a lack of resources, sometimes it’s justWe’ve already checked the box. We’ve hired Glass Lewis, or whomever, and this is what they say. [Some investors are] not even looking at what the issues are: it’s an autopilot filing because these services are outsourced.’
Other factors at play include investors not wanting to step out from the pack – especially when the pack is dominated by the likes of BlackRock, Vanguard and State Street that ‘can really sway the vote’. Hull even says some investors ‘are unaware of what is even being voted on – and that is a big issue.’
The shift has already started
Hull’s last point around understanding what’s being voted on has led to something of an awakening for some, says Bruce Goldfarb, president and CEO of Okapi Partners, as he talks about the nuance that often gets lost in this debate. ‘Problematic situations’ that some larger institutions – those providing other services to clients – have found themselves in have pushed a rethink. ‘Some very large financial services firms that provide a range of other services, including investment banking and asset management, may have conflicts,’ he explains. ‘Sometimes these firms used the proxy advisors to try to avoid conflicts, but the proxy advisory recommendations may not be palatable for all the constituents within the financial institution, especially if the recommendation is to vote against a company in a proxy fight that you might be representing on the investment banking side.
‘One way to address that issue is to alter the process you use to make voting decisions. That’s what happened in 2025 and we expect to see more of in 2026. The approach is:We are going to be less reliant, or not reliant at all, on proxy voting advisors. We’re going to bring this process in-house and we are largely going to vote for management.’
Bruce Goldfarb, president and CEO of Okapi Partners
The IR response to a no recommendation
More votes with management might be welcome news on the IR side, but that doesn’t mean companies don’t still have complaints against ISS and Glass Lewis.Research by the UK’s Quoted Companies Alliance(QCA) in 2024 found that more than half of the companies it surveyed had less than 48 hours to review and challenge research reports containing voting recommendations published about them by proxy advisers before they are circulated to shareholders. More than three-quarters that queried a voting recommendation found proxy advisers to be unresponsive. For those that tried to engage with proxy advisers outside the AGM season, more than half described them as unreceptive.
The QCA represents small-cap companies, but these complaints typically go across the board. One person with an extensive understanding of the inner workings of the proxy voting advisory world is Aaron Bertinetti, the CEO of investor engagement, Computershare North America, who spent 12 years at Glass Lewis – his last four as senior vice president, research and engagement.
Bertinetti is also a person who gotISS to change its recommendation on Jamie Dimon’s compensationduring his four-year stint heading up IR and ESG at JPMorgan Chase & Co.
So how did he do that and what advice can he share with others on the IR side? ‘If you’ve got a no recommendation, at that point you can’t rely on engaging with the proxy advisors,’ he says. ‘ISS generally won’t meet with you. Glass Lewis is less likely to meet with you than it was five years ago: they’re in the middle of proxy season, publishing 1,000s of reports – so frankly, they don’t have the bandwidth.’ Echoing Chia’s point, he adds: ‘They’re providing a product for their clients, which is the investors, not the companies.’
While Bertinetti points to all the tenets of good IR and outreach as a company’s main line of defense in the case of a no recommendation – that year-round engagement that builds the good will you lean on when you need support – there are other tools that an IRO can turn to as well.
Aaron Bertinetti, the CEO of investor engagement, Computershare North America
‘Once you’re at the no-recommendation point, you need to be speaking directly to your investors, hoping that you have built that goodwill. Another alternative you have issupplementary disclosures. My preferred and probably most successful – albeit aggressive – tactic when I was on the IR side, was using SEC filings. I would file letters and go through why a recommendation, such as from ISS, was incorrect on a pay issue at JPMorgan. I would go through that at length and make sure that was also directly distributed to all my shareholders, which did in fact lead to a change in recommendation.’
Part of the plumbing
As the investigation into the two proxy firms, initiated by Trump’s executive order, is still in its early stages, spokespersons for both firms told IR Impact late last week that they were still ‘reviewing’ the full details of the order. Glass Lewis adds that ‘we appreciate the clarity it offers in understanding what the administration expects of all firms that operate in the proxy advisory space,’ while ISS adds that ‘our clients are sophisticated institutional investors, who determine how they wish to vote by selecting from a range of voting policies that guide our work on their behalf, or by creating customized policies for advice tailored to their own particular needs. ISS does not dictate or set corporate governance standards.’
Whatever the outcome of the heightened scrutiny ISS and Glass Lewis now face, it is clear that the proxy voting advisory world is already changing, with an escalating push for customization on the investor side. Each firm stresses its commitment to professional, ethical and independent standards.
And, even as governance experts debate the need for reform, many argue that ISS and Glass Lewis have a role to play.
Goldfarb uses quant funds as an example of where proxy voting recommendations are needed. ‘If you are buying and selling equities rapidly based on a computer-driven model – meaning you may be a large owner of shares of a company on one day and not an owner at all the next day – you might want to rely on a specific policy, such as always support management, to make voting decisions. The alternative might be not to vote at all, but then you may be preventing a quorum from taking place at annual meetings – and that grinds the wheels of corporate democracy,’ he notes. Chia agrees. ‘These types of firms exist for a reason and there’s a lot more that they do than just issue recommendations,’ he says. ‘They are part of the whole plumbing system that allows investors to cast their votes.’