Proxy voting advisers increasingly lean with management in board fights

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The two leading proxy advisers have become less likely to support dissident director candidates in US proxy fights over the past five years, according to data from Insightia.

So far this year (as of 15 August), Institutional Shareholder Services (ISS) and Glass Lewis have sided with management in 73 per cent and 64 per cent of contests, respectively. In 2016, when activism was already a well-established feature of corporate life, ISS backed management only 50 per cent of the time and Glass Lewis 46 per cent of the time.

When these advisers do endorse dissidents, they are becoming less willing to support entire slates. ISS backed all dissident candidates in one-third of 2016 proxy contests, and Glass Lewis one-fifth. For both advisers, this number is down to 9 per cent in 2021.
Insightia’s analysis was based on 98 US proxy contests out of 145 recorded since 2016, limited to meetings where data for both advisers was available. An analysis of 120 Glass Lewis recommendations over the same period confirms the trend. The figures for ISS are based on Insightia’s proprietary “synthetic” model, which uses investor voting to accurately derive ISS recommendations. Glass Lewis recommendations were provided by the adviser directly.

The change is thought to be the result not of advisers changing their approach, but perhaps to the smaller number of proxy fights going to a vote, proactive board refreshment by targeted companies, and larger activists increasingly settling early in a fight.

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