–Earlier this week, Texas attorney general Ken Paxton launched an investigation into Glass Lewis and ISS ‘for potentially misleading institutional investors and public companies by issuing voting recommendations that advance radical political agendas rather than sound financial principles’.
Paxton also says that the investigation will determine whether allegations that the firms violated Texas consumer-protection laws, including rules on disclosing material facts, are valid.
‘The two giants routinely issue proxy voting recommendations in conflict with the best financial interests of their fiduciaries. For example, Glass Lewis and ISS instruct their proxies to generally vote for public companies making management decisions to implement DEI, gender-based hiring quotas and aggressive climate activist policies,’ writes Paxton in a press release.
This follows the passing Senate Bill 2337 signed by Texas’ governor Greg Abbott which regulates how proxy advisory firms provide advice on ESG and DEI issues. It requires that if advice involves non-financial factors, firms must provide prominent disclosures and carry out financial analysis to justify the non-financial parts.
–As reported by Reuters (paywall), Exxon Mobil has announced plans to introduce a program allowing retail shareholders to automatically vote in line with the board’s recommendations in annual meetings, aiming to counter activist shareholder campaigns.
The SEC has signaled it will not object to the proposal, provided Exxon sends annual reminders to participating investors. Retail investors own a large proportion of Exxon’s shareholding – nearly 40 percent – but voting turnout among them is low.
The company says the plan will level the playing field against activists who exploit low engagement to push political or ideological agendas. Critics, including climate‑focused activist groups, argue that auto‑voting suppresses dissent and undermines shareholder influence. Investors will be able to opt into the program via their brokers and may override the automatic votes if they wish.
–In an interview with the Financial Times (paywall), SEC chair Paul Atkins has promised to notify businesses of technical violations before ‘kicking down their door’ as he abandons the aggressive enforcement approach taken during former President Joe Biden’s administration.
Atkins says the agency is focused on perusing ‘crooks,’ adding: ‘If you lie, cheat or steal your investors and steal their money like [disgraced former financier] Bernie Madoff, we’ll leave you naked, homeless and without wheels’.
But he added there were ‘other gradations of that where you have to give people notice’.
‘You can’t just suddenly come and bash down their door and say “uh-uh we caught you, you’re doing something and it’s a technical violation”,’ he said.
–Activist hedge fund Elliott Management has disclosed a stake of over $2 bn in Workday, sending the company’s shares up nearly 9 percent, according to Reuters.
The fund praised Workday’s CEO and CFO, citing strong recent performance and signaling confidence in its management team. Elliott said its ongoing engagement with the firm convinced it that Workday’s multi‑year strategy is well positioned to deliver long‑term value for shareholders.
Alongside the announcement, Workday confirmed it would buy back $5 bn of stock through 2027, demonstrating faith in its growth trajectory. The move comes amid rising competition in the cloud‑based HR software space, where integrating artificial intelligence is increasingly important.
Analysts noted Elliott’s backing could increase pressure on the company to hit its free cash flow targets by fiscal 2028.
–BlackRock and Vanguard have drastically reduced meetings with executives from companies in their portfolios this year – cuts of around 28 percent for BlackRock and 44 percent for Vanguard – after new SEC guidance issued in February under Chair Mark Uyeda.
As reported by Reuters, the guidance makes it riskier for asset managers to press companies on governance or policy issues like climate change or board structure, since doing so might trigger stricter disclosure rules or reclassify them from passive investors to active ones.
As a result, managers are engaging in more ‘listen‑only’ meetings and hesitant to signal how they will vote, leaving corporate leaders with less insight into investor thinking ahead of shareholder votes. The change is seen as chilling investor‑company dialogue and tightening the influence of ESG issues.
–As reported by the Financial Times, the SEC voted three to one along party lines to overturn its long‑standing policy that barred companies going public from including mandatory arbitration clauses in their charters or bylaws.
Under the new policy, companies seeking IPOs may require shareholders to resolve disputes, such as alleged fraud or misrepresentations, via arbitration instead of through class‑action lawsuits in court.
Critics, including the lone dissenting SEC commissioner, warned the change could weaken investor protections, reduce public accountability and limit collective legal recourse, particularly for small investors.
Supporters say the shift increases flexibility for issuers, reduces legal risk and makes IPOs more attractive.