President Trump’s Executive Order on Proxy Advisors: The Potential Pros and Cons for Companies

On December 11, 2025, President Trump signed an executive order aimed at reducing the influence of proxy advisors (specifically ISS and Glass Lewis) by directing the SEC, FTC and Department of Labor to conduct sweeping reviews of the rules governing the industry.

The administration argues that proxy advisor policies, particularly those related to ESG and DE&I issues (left undefined in the order), advance non-financial goals that conflict with investor fiduciary duties. The order builds on a series of federal and state actions intended to curb the influence of proxy advisors and large asset managers, dismantle stakeholder capitalism and reinforce that “ESG” issues are not financially material. These actions include revised SEC 13G/D guidance, congressional hearings, the SEC’s withdrawal from the shareholder-proposal no-action process, scrutiny from several state attorneys general and Texas SB 2337.

Proxy advisors have already begun to respond to pressure, with ISS introducing a recommendation-free research option for its investor clients and Glass Lewis planning to eliminate its house policy beginning in 2027. Even so, the executive order could spur far more significant changes; its scope and multi-agency approach make it one of the strongest challenges to proxy advisors to date. The order sets no timeline, and legal challenges are likely. While some impact may be felt in the upcoming proxy season, the most significant effects will likely unfold over a longer horizon. Below, we offer our analysis of the executive order, including pros and cons for corporations as they navigate the 2026 proxy season and beyond.

Implications for the 2026 Proxy Season

Pro: Clearer voting policy guidance from proxy advisors

The order’s focus on transparency may drive proxy advisors to issue more detailed policy and FAQ documents, providing greater insight into their policy rationale and connecting policy to the long-term financial interests of shareholders, particularly with respect to ESG and DE&I issues. Such insight could give companies a clearer path for avoiding an unfavorable voting recommendation.

Con: Delayed reports due to additional reviews, disrupting investor engagement

Heightened penalties for inaccuracies will likely increase proxy advisors’ attention to quality control and fact-checking. This could delay report delivery, shrinking the window for companies to respond to criticism and engage with investors, many of whom prefer to engage after proxy advisor reports are published.

Pro: Voting recommendations more closely aligned with financial impact

The order’s emphasis that ESG and DE&I issues are not financially material may push proxy advisors away from calls for ESG-related disclosures. Immediate financial factors, such as the cost of complying with proponent demands, could take on greater weight, potentially resulting in support for fewer shareholder proposals. At the same time, proxy advisors may increasingly frame DE&I and ESG recommendations in terms of traditional definitions of risk management and long-term shareholder value.

Con: Potential price increases for corporations

The order will likely result in significant additional expenses for proxy advisors, including legal fees, enhanced monetary penalties for errors and, in the longer term, ERISA fiduciary burdens. Proxy advisors may need to change their pricing structures to meet these financial demands. As a result, ISS may abandon its longstanding practice of providing larger companies with a free copy of their research report, and Glass Lewis could charge higher fees for corporate access to reports and its Report Feedback Service.

Pro: Reduction or elimination of precatory shareholder proposals would reduce corporate workload

The order builds on the SEC’s prior announcement that allows companies to unilaterally choose which proposals should be left off the ballot by directing the SEC to further examine the shareholder proposal process, potentially eliminating shareholder proposals altogether.

Con: More aggressive shareholder proponent tactics

Without shareholder proposals as a tool for communication and engagement, proponents may increasingly rely on vote-no campaigns against directors or management. Binding proposals could also become more common, as could proposals submitted at the annual meeting itself.

Longer-term Impacts

Pro: Diminished ISS and Glass Lewis influence

ISS and Glass Lewis have long shaped proxy voting outcomes, but their influence is increasingly at risk. The order introduces potential penalties for investors who follow their recommendations and raises questions about their solicitation exemption, both of which threaten the core of their business model. Meanwhile, the FTC’s antitrust review opens the door for new competitors, related service providers and AI-driven platforms to offer proxy data, analytics and vote automation, as well as new solutions to better engage retail investors, a small but consistently management-friendly group.

Con: Less predictable voting outcomes

Proxy advisor recommendations have traditionally served as a useful barometer for investor sentiment. Investor policies alone are often inconsistent or unclear, making it harder for companies to anticipate voting behavior. This challenge is compounded by investors’ growing reluctance to engage candidly after the revised 13D/G guidance.

Pro: The end of one-size-fits-all proxy advisor policies

Proxy advisors are already adjusting their offerings, with ISS’ recommendation-free report option and Glass Lewis’s intention to move investor clients toward fully customized or thematic policies. The executive order is likely to accelerate this shift away from benchmark policies by increasing concerns that reliance on standard recommendations could raise risks of “acting in concert” or fiduciary concerns.

Con: Investor replacement tools for proxy advisors may also be flawed, opaque and slow to mature

Proxy advisors provide data and analysis as a one-stop shop for proxy voting. With potentially punitive consequences for following their policies, some investors may try to replace these services with internal analysis or AI. Building these capabilities would require significant investment in talent, technology and ongoing research, which many investors may struggle to support at scale. Such a shift would likely reduce efficiency and consistency in the near term. In parallel, overreliance on AI or other automated tools could produce less nuanced analysis, increasing the likelihood of formulaic or inaccurate voting outcomes.

Pro: Transparency into proprietary models could eliminate proxy advisor consulting arms, cutting corporate costs

Both proxy advisors have consulting services that help corporations model the proprietary tests and analyses that drive recommendations, a practice that has long drawn criticism for potential conflicts of interest. Should the order require these models to be public for transparency purposes, companies would no longer need to pay for these services to understand how their pay and governance programs will be evaluated. This could drive these consulting arms out of business and reduce corporate costs.

Con: Shuttering proxy consulting arms could exacerbate the black box effect if models are not released

If proxy advisors are required to close their consulting businesses due to conflicts of interest but are not required to release their underlying models, companies could be left with even less visibility into how recommendations are determined. This would make it harder for issuers to anticipate or address potential concerns.

Conclusion: Next Steps for Companies

As regulatory reviews progress and legal challenges unfold, companies should anticipate a period of uncertainty. The checklist below outlines five steps to help them prepare:

1. Continued engagement with top investors: Maintain regular dialogue with your largest shareholders to understand their evolving policies, stewardship priorities and any shifts toward internal analysis or AI-driven voting.
2. Expand outreach to smaller and mid-sized investors: These investors have often relied heavily on proxy advisor recommendations and may need more direct communication as voting becomes more fragmented.
3. Strengthen strategies for engaging retail investors: Consider retail-focused outreach, education and communication tools, particularly as new platforms and regulatory shifts may increase the influence of this traditionally management-friendly group.
4. Tailor proxy statements for a less engaged and more diverse audience: Given limited investor bandwidth, ensure disclosures are accessible, with clear executive summaries, straightforward explanations and transparent rationale for key decisions.
5. Prepare for multiple voting scenarios and evolving policies: Monitor regulatory developments, anticipate shifts in proxy advisor behavior and build flexibility into governance and engagement plans to navigate both near-term uncertainty and longer-term structural changes.

Taken together, the executive order has the potential to fundamentally alter the proxy advisor industry, with implications that will extend well beyond the 2026 proxy season. While some elements may ease corporate burdens and increase transparency, a potentially fragmented voting environment creates new challenges for issuers. Thoughtful planning, open dialogue with investors and flexibility will be essential as corporations navigate both the near-term consequences and the lasting impacts of the order.

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