A party line vote in the House of Representatives approved H.R. 4015, [1] titled, with typical Capitol Hill oxymoronic newspeak the “Corporate Governance Reform and Transparency Act of 2017.” said in a statement that while proxy-advisory firms play an important role in advising clients. This bill is not just stupid and completely contrary to its stated purpose of promoting competition; it is probably unconstitutional.

The proxy advisory firms, led by ISS (which I helped to found in 1986 as its first general counsel, ran for one year and then left in 1990) and Glass-Lewis, analyze public company proxy issues like executive compensation and board effectiveness and make recommendations to their clients, large institutional investors like mutual funds and pension funds, suggesting votes for or against the proposals on the proxy card from corporate management and sometimes from other investors. I have observed this industry from the beginning, but left it 28 years ago. Since then, I have been a proponent and dissident who has failed to gain the support of the ISS analysts more often than I have been successful, and I have had the opportunity to develop some objectivity.

(more…)