Institutional Shareholder Services: The Uninvited Guest at the Equity Table
5 Pages Posted: 15 Sep 2010 Last revised: 3 Sep 2013
Date Written: May 17, 2010
In recent years, Institutional Shareholder Services (was RiskMetrics Governance Services (RMG)) has played an influential role in the proxy voting process. According to some estimates, a recommendation by ISS can sway a proxy vote by 15 to 20 percent. Several companies are highly critical of ISS and the methodology it uses to inform its recommendations - particularly as they relate to equity-based compensation plans. ISS believes that its methodology is both rigorous and objective. We take a closer look and highlight some key issues and reasons for concern.
Topics, Issues and Controversies in Corporate Governance and Leadership: The Closer Look series is a collection of short case studies through which we explore topics, issues, and controversies in corporate governance. In each study, we take a targeted look at a specific issue that is relevant to the current debate on governance and explain why it is so important. Larcker and Tayan are co-authors of the book Corporate Governance Matters, and A Real Look at Real World Corporate Governance.
Keywords: corporate governance, proxy voting, proxy access, corporate governance ratings
JEL Classification: G30, G34
Suggested Citation: Suggested Citation