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Proxy Advisors Welcome FRC Analysis into Industry

21 June 2023 Articles

This article by Vibeka Mair, Senior Reporter at ESG Investor, highlights the research commissioned by the Financial Reporting Council (FRC) on proxy advisors and their impact on shareholder voting. Co-authored by Morrow Sodali and Durham University Business School, the study aims to dispel common myths surrounding the industry.

Proxy advisors, such as Institutional Shareholder Services (ISS) and Glass Lewis, have often faced criticism for their perceived influence over corporate proxy votes. However, this study reveals a more nuanced understanding of their influence. While voting recommendations from proxy advisors do carry some weight, the extent of their impact is not as extreme or consistent as previously believed. 

Chris Hodge, Special Advisor at Morrow Sodali and co-author of the study, discussed this aspect with Vibeka in an interview highlighting that "a vote of 20% or more against a resolution relating to director elections or remuneration occurred in only half of the cases where one or both of ISS or Glass Lewis had made such a recommendation in 2022, although this increased to 77% of cases when both did so." 

Morrow Sodali's contribution to the report underscores its commitment to providing insightful analysis in the field. The findings will be shared with the UK's Financial Conduct Authority and Capital Markets Industry Taskforce for ongoing consultations, and the FRC plans to review the regulatory framework governing effective stewardship, including the Stewardship Code.

Click here to read the full article.

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