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16 June 2023 • Articles

The TImes

Proxy voting advice ‘often ignored by shareholders’

In this article, Patrick Hosking, Financial Editor of The Times, provides insights into key takeaways from a study conducted for the Financial Reporting Council by Morrow Sodali, in collaboration with Durham University Business School. The study sheds light on the profound influence and impact of proxy voting advisors and ESG rating agencies on actions and reporting by FTSE 350 companies, as well as their effect on investors.

The article hones in on the report's finding revealing that proxy voting advice provided by firms like Glass Lewis, ISS, and Ivis is not as influential in triggering shareholder revolts as board directors perceive. Proxy advisors have been criticized for their inflexible approach and lack of engagement with boards before making recommendations. However, the report finds that shareholders often disregard the advice from proxy advisors, and the advisors themselves frequently have divergent views. Revolts against board recommendations occurred in less than half of the cases where ISS or Glass Lewis recommended a vote against, but the figure rose to 77% when both advisors suggested a vote against. The study also found discrepancies between the recommendations of ISS and Glass Lewis, with conflicting positions observed in two-thirds of cases. The most influential proxy agency is ISS, used by 78% of investors surveyed, followed by Glass Lewis (16%) and Ivis (13%). The report further reveals that recommendations to vote against UK boards were relatively rare, except in the case of executive pay resolutions. The study concludes that frustrations exist among all stakeholders due to the compressed timeframe for voting and differing opinions on the role of proxy agencies.

Click here to read the article in full (subscription required).

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