Proxy Firms Are Under the Microscope. How Should Boards Adapt?

Advisory firms such as ISS and Glass Lewis have helped shape the outcomes of shareholder votes for years. But their power may soon diminish.

For years, proxy advisory firms, such as Institutional Shareholder Services (ISS) and Glass, Lewis & Co., have wielded significant influence in corporate America by disseminating information to investors and issuing recommendations about how to vote on management and shareholder proposals. 

That power now hangs in the balance, however, as proxy advisory firms face pushback from political leaders and Wall Street heavyweights alike.

In early January, for instance, The Wall Street Journal reported that JPMorgan Chase & Co. would sever ties with proxy firms and instead utilize ...