Why Proxy advisers are losing their power

(s) of shareholders used to be dull affairs. A company’s owners would gather to elect board members or, after the global financial crisis of 2007-09 exposed the gulf between fat-cat bosses and their workers, cast (mostly non-binding) votes on executive compensation. In the past few years, though, they have turned into corporate confessionals, with nothing short of a company’s soul at stake. Motions are proliferating on decarbonisation and diversity targets, political donations, workers’ rights and much else besides. A record 592 environmental and social proposals were filed in America ahead of this year’s season, which spans May and June. In the 20 years from Amazon’s initial public offering in 1997, the e-empire’s shareholders voted on 22 resolutions brought by fellow investors. At the latest on May 25th they were asked to weigh in on 14. How can the harried fund manager keep track? Enter proxy-advisory firms, hired by investors to sift through the resolutions and make recommendations on which boxes to cross. There may be no monopoly in the market for ideas, but when it comes to proxy advice the market is a cosy duopoly. Institutional Shareholder Services () and Glass Lewis meet more than 90% of the demand for such counsel in America.