One issue of increasing interest to policymakers is the outsize role that proxy advisory firms play in corporate governance and the challenges these firms pose to businesses that are already public or considering an IPO. While proxy advisory firms exist to provide institutional investors with analysis and vote recommendations for various proxy issues, past regulatory actions have helped the firms “control” a significant portion of the vote at public companies. As a result, many public companies—particularly small and mid-size issuers—are left to the mercy of decisions made by proxy advisory firms.

The proxy advice market is dominated by two firms—Institutional Shareholder Services (ISS) and Glass Lewis—which collectively control 97% of the industry. ISS and Glass Lewis have effectively become the standard setters for corporate governance in the United States, notwithstanding the fact these firms have a history of making errors, are rife with conflicts of interest, and provide little transparency as to how they develop vote recommendations.

This is the fifth year that Nasdaq and the U.S. Chamber of Commerce have conducted a survey to examine the experiences public companies had with proxy advisory firms during the most recent proxy season. The survey is intended to help inform current and future regulatory initiatives related to proxy advisory firms and their role within the U.S. proxy system.