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  • 7/7/2025
At a House Judiciary Committee hearing last week, Rep. Jim Jordan (R-OH) questioned witnesses about proxy voting by investors.

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00:00It's back and I'll recognize the chairman of the full committee, Mr. Jordan, for five minutes.
00:04Thank you, Mr. Chairman. Mr. Crane, what percentage of publicly traded equity shares are held by
00:09institutional investors and pension funds? It's a very large percentage. I forget the exact number.
00:14It's north of 80, I believe. 80%? And because of that, most shareholder votes are cast through
00:20proxy voting because the shareholder can. Is that right? That's exactly correct. Okay. And proxy
00:24advisors advise or recommend to the institutional investors and the pension funds how they're
00:31supposed to vote. Is that right? That's correct. And is their advice followed? Pardon?
00:37Is their advice followed? Is the proxy advisor's advice typically followed by the institutional
00:42investors and the pension funds? It's absolutely followed. And in many cases,
00:44their shares are automatically cast by the proxy firms in line with those recommendations.
00:49So the institutional investors and pension funds are doing exactly what the proxy advisors
00:53that tell them. That's exactly correct. Yes, sir. Okay. And who are the two largest again,
00:58who we've been talking about? ISS and Glass-Lewis. ISS and Glass-Lewis. And how much of the market
01:02do they control? 97%. 97% of the market, 80% of the shareholders, the equity shares are with
01:13institutional and pension investors. And their advice is followed 95% of the time.
01:18That's essentially correct. Wow, that's pretty big. That's pretty big. How much,
01:22how much money are we talking about? Trillions of dollars of equities across the market.
01:28Trillions? 5 trillion? 20 trillion? 30 trillion? How much are we talking?
01:31I don't know the size of the market, but it's a large number of the equity markets in the United
01:35States. My understanding is it's at least 20 trillion dollars.
01:40Sounds right to me. And the other side says, nothing to look at here.
01:44Nothing to look at here. Really? That seems like there's a lot to look at there. And that's why we're
01:49having this hearing. Now, what kind of advice? So their advice is followed 95% of the time,
01:5370% of the market, over 20 trillion dollars. What kind of advice are they given?
01:59It's advice on everything that comes before shareholders. It's how the company is run,
02:03how the executives are paid, the shareholder proposals that have been discussed, everything
02:06that comes before the shareholder base for a vote. What kind of advice are they given in a political
02:10context? We know that ISS, for example, recommended in favor of more than 80% of ESG shareholder
02:17proposals in 2023. Pro-ESG? Pro-DEI? As a general rule, yes. Not 100% of the time, but yes, as a general
02:25rule. Vast majority of the time? I would say yes. Okay. So kind of leaning to the left, right? I think
02:31that's probably a fair characterization. Their advice is followed 95% of the time. They have 90% of the
02:35market. 70% are they're given advice to, and it's always, almost always, left-wing. I think that's a
02:44fair characterization, yes. Is that how you see it, Mr. Egan? I have no reason for disagreeing with that.
02:51What about you, Mr. Griffin? I think that while it varies by year, and we've seen sort of swings
02:58with somewhat mirroring the political election cycle. Is that an accurate picture? Is that an
03:03actual framework? Okay. Now, but that's not the end of it, is it? Because it's even worse, because
03:11this duopoly not only offers proxy advisor services, but consulting services as well.
03:18That's exactly right. Okay. So you can go consult with them before they give you the recommendations
03:24that are always followed, and if you don't consult with them, they might give you recommendations that
03:28in many ways harm the company and therefore harm the shareholders. Is that right, Mr. Crane?
03:32It is, and we've seen that when companies get negative recommendations from the advice side,
03:37they'll immediately get a solicitation from the consulting side saying, hey, wouldn't you really
03:40like to have us help you out next year to avoid those negative recommendations from our friends
03:44down the hallway? Yeah. Pretty concerning fact pattern. Will you pay the protection money? Will
03:50you pay the shakedown? Exactly. Holy cow, such a deal. Such a deal. And Ms. Minow was part of it all
03:58when she worked at ISS. Is that right? I'm not. The question wasn't for you. It's for Mr. Crane.
04:02I understand that, but he doesn't know the answer, and I do. Well, I wasn't asking you a question.
04:07It is wrong. I did not allow consulting services when I was at ISS. You might be able to do the
04:10consulting services and the recommendations. I did not allow ISS to do consulting when I was president.
04:15Does ISS do consulting now? ISS does do consulting now. Well, shazam, there you have it. There you have it.
04:21My question, the way it works is the members get asked the questions and to the people they want to
04:25give the answers. My question was to Mr. Crane. I appreciate you jumping in, Ms. Minow, and telling
04:29us that ISS does now offer consulting services in addition to the proxy advisor thing, which is the
04:34problem, which is, well, not the full problem, but certainly part of the problem. Is that right,
04:39Mr. Crane? I would agree with that. Yes, sir. And then you can even go even maybe one step further
04:44and say on the platform, no competitions allowed, which I sort of get. I sort of get Ms. Minow's argument
04:49on the Amazon issue. I sort of get, but it's almost like they got this thing rigged from
04:53start to finish and it's two companies. And the other side says nothing to look at here.
05:01Well, I think that's kind of ridiculous. And I appreciate the chairman and his work on this
05:05important issue. With that, I yield back. Chairman yields back.

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