Press Releases

Today, the Subcommittee on Capital Markets, led by Chair Ann Wagner (MO-02), held a hearing entitled, "Exposing the Proxy Advisory Cartel: How ISS & Glass Lewis Influence Markets." This hearing examined the role and influence of proxy advisory firms, with a focus on Institutional Shareholder Service (ISS) and Glass Lewis, in shaping corporate governance and shareholder voting outcomes.

Watch the hearing online HERE.  

On the duopoly of the proxy advisory market:

• “Two firms—ISS and Glass Lewis—control 97 percent of the proxy advisory market. That concentration alone would warrant scrutiny. But more troubling is how their influence goes far beyond research—they now routinely dictate outcomes of shareholder votes,” said Subcommittee Chair Ann Wagner.

• "Today, ISS and Glass Lewis shape the outcomes of shareholder votes across the market, especially as large index funds often vote in lockstep with their recommendations. That’s not just advice; it’s de facto control," said Chairman French Hill (AR-02).

• "We have a huge opportunity today to talk about a duopoly that most Americans have never heard of- ISS and Glass Lewis- but two companies have a huge impact on their lives or ability to save for retirement and their own financial security," said Rep. Bryan Steil (WI-01).

Witnesses echoed their support for the work of the Committee.

Charles Crain, Managing Vice President, Policy, National Association of Manufacturers, stated,  "Proxy firms have substantive beliefs and normative agendas about how public companies should be run. In other words, they are not disinterested third parties; rather, they seek to guide corporate behavior to align with their own interests. Further, proxy firms do not have a fiduciary duty to the underlying investors in America’s public companies—teachers, firefighters, and manufacturing workers saving for a secure retirement—so they are free to exert their outsized influence as they see fit. They do so by recommending that institutional investors vote in accordance with their pre-set, one-size-fits-all voting guidelines."

Elizabeth Ising, Partner, Gibson Dunn, stated, "The consulting services offered by proxy advisory firms call into question the quality, objectivity and reliability of their proxy voting recommendations. Specifically, the two major proxy advisory firms both sell advisory services to public companies on the very same matters on which they make voting recommendations. For example, ISS markets consulting services to companies to assist them in enhancing ISS’s own rating of their governance practices and in preparing matters to be submitted for shareholder approval, such as equity compensation plans."

Paul Rose, Dean, School of Law, Case Western Reserve University, stated, "Today, two firms—Institutional Shareholder Services (ISS) and Glass Lewis—dominate over 90% of the proxy advisory market. Their recommendations can swing vote outcomes and shape the governance of publicly traded companies, yet these firms operate without fiduciary obligations, limited transparency, and minimal accountability. Importantly, this market dominance is not a natural result of investor demand. It is a byproduct of regulatory design."

Paul Washington, President & CEO, Society for Corporate Governance, stated, "The proxy advisory market essentially consists of two firms—Institutional Shareholder Services, or ISS, and Glass Lewis. Proxy advisory firms play an important role in capital markets by advising investors how they should vote at companies’ annual and special shareholder meetings. This involves preparing recommendations for institutional investors in companies about how they should vote with respect to, for example, particular board members, equity plans, company “say-on-pay” proposals, significant corporate transactions, and shareholder proposals. The proxy advisory firms’ recommendations have a significant impact on shareholder votes. ...In addition to providing voting recommendations to investors, the proxy advisory firms also own and control the software platforms that send votes by investors to the tabulators for a shareholder meeting. In some cases, the proxy advisory firms, and not the investors, actually decide how to vote and submit the ballot for their clients."