Understanding Proxy Advisors

As annual meetings approach, issuers and investors find themselves needing to work with RiskMetrics, Glass Lewis, PROXYGovernance, and other proxy advisors. Who are these firms and why are they so important? How can they make or break a campaign for board of directors positions or shareowner proposals? The Activist Investor provides a brief review and a useful checklist on how to present your case, whether your represent an issuer or an investor.

The process resembles meetings with debt rating agencies or equity analysts, with some nuances related to the matters at hand. Corporations and investors alike cultivate relationships with analysts at each of the three firms, who usually specialize in one or another industry sector. In contested matters, such as a competitive director election or controversial shareholder proposals, corporate executives and portfolio managers will meet (separately, of course) with those analysts, making the case for their side of the story.