by Gary Larkin for The Conference Board – Governance Center Blog, March 22nd, 2011.
As the proxy season gets into full swing, the issue of the amount of power and influence held by proxy advisory firms – specifically ISS and Glass Lewis – is front and center thanks to the so-called Proxy Plumbing concept release issued by the SEC last year.
While it has been no secret that many public company board members have a personal aversion to many of the proxy advisory firms, those same firms have been put on the defensive as many of the public comments to the concept release have been disclosed. Many letter writers are calling for strict regulation of third parties that have no economic interest in a company either giving advice to powerful institutional investors or voting shares for those investors.
One reason for the perceived power of those firms is that new SEC regulations that call for better disclosure of how big institutional investors and mutual funds vote their shares. And since many of those investors (i.e. CalPERS, CalSTRS, TIAA-CREF) hold so many shares of so many different companies, it is almost impossible for them to keep track of every share voted let alone how to vote on corporate governance issues or shareholder resolutions. (continue reading… )