Influence Ebbs for Proxy Advisers
Influence is waning from firms whose mission, in part, is to recommend how investors should vote in corporate elections, The Wall Street Journal reported last week. In one striking example, the roles of chairman and chief executive officer remained as one at J.P. Morgan Chase after a widely publicized contest, even though the two largest proxy advisers were in favor of splitting it.
Institutional Shareholder Services Inc. and Glass Lewis & Co. have long been key influencers when it comes to recommending votes, but with nearly 30 percent more proxy contests in May than last year, issuers have become a lot savvier about engaging investors before entering proxy season.
And rightly so.
The WSJ citing ISS said investors were able to secure board seats 73 percent of the time this season, compared with 56 percent last year. Nevertheless, issuers that are showing their muscle are starting to win, as was the case with J.P. Morgan.
It’s always easy to come up with a “should-a, could-a” list following proxy season. But one prevailing concept should stick with issuers year round: a well-devised investor communications and engagement plan helps ensure that management’s side of the story gets heard. And if such a plan is implemented long enough in advance, investors will take the time to listen and come to their own conclusions long before the ballots are cast.
— Evan Pondel, epondel@pondel.com
Related articles:
- Jaime Dimon retains chairman and CEO roles (cbsnews.com)
