Director FAQs and Essentials

The Role of Proxy Advisory Firms FAQ

By NACD Staff


Shareholder Engagement Proxy Advisors Shareholder Activism

Proxy advisory firms are hired primarily by institutional investors to provide research about corporate issuers and to make proxy voting recommendations. Proxy advisory firms do not own shares in public companies, but they assist investors in making voting decisions and provide services to facilitate the voting process.

The proxy advisory firm industry has grown substantially over the last three decades, and their increasing influence over corporate-governance matters and shareholder votes has become highly controversial. This Director FAQ explains the growth of the proxy advisory firm industry, the main players in the market, their voting policies, and how issuers can engage proxy advisors regarding their voting recommendations.

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