White House weighs curbs on proxy advisers, index-fund voting power
Info via a Wall Street Journal (gated) report:
The White House is considering an executive order that could limit the influence of proxy-advisory firms and curb how major index-fund managers vote, marking a potential overhaul of the U.S. corporate governance system.
According to people familiar with the discussions, Trump administration officials are weighing measures that would restrict firms such as Institutional Shareholder Services (ISS) and Glass Lewis, whose recommendations help shape investor votes on issues from executive pay to environmental policy. One draft proposal could ban firms from making recommendations on companies that have paid them for consulting work, while another could bar them from issuing shareholder guidance altogether.
The White House is also exploring limits on how index-fund giants — including BlackRock, Vanguard, and State Street — exercise their voting power. Together, these firms control about 30% of shares in many large U.S. companies on behalf of clients. One option under discussion would require them to mirror client preferences in their voting rather than decide independently.
The proposals follow public criticism from high-profile CEOs, including Elon Musk and Jamie Dimon, who argue that proxy advisers hold outsized sway over corporate decisions. Musk has branded them “corporate terrorists” after ISS and Glass Lewis recommended voting against his $1 trillion Tesla pay package, which shareholders nevertheless approved last week.
The White House cautioned that no decisions have been finalised, calling the reports speculative. ISS responded that it operates transparently and is already regulated by the Securities and Exchange Commission, while Glass Lewis declined to comment.
If enacted, the measures would mark the most significant challenge yet to the proxy-advisory and index-fund voting model, a cornerstone of modern shareholder engagement.
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Any move to limit proxy advisers and index-fund voting would reshape U.S. corporate governance, reducing the influence of major asset managers and potentially shifting power back to individual shareholders and company boards.
This article was written by Eamonn Sheridan at investinglive.com.