Managing the Workload of the Proxy Season
42 Pages Posted: 5 Mar 2021 Last revised: 29 Nov 2022
Date Written: September 27, 2022
Abstract
About 52% of all shareholder meetings happen in the proxy season, a short period that lasts from the fourth week of April until the end of May. This concentration leads to an increased workload for ISS, the largest proxy advisor, during which time they must make recommendations on an average of 333 proposals each day, compared to 27 proposals outside it. We find that ISS makes fewer negative recommendations in this busy period and that they are of lower quality. The evidence is consistent with ISS managing its workload by both increasing the threshold that triggers further investigation of proposals and reducing the time its analysts spend on each proposal. These findings suggest that regulatory initiatives aimed at requiring greater transparency of the proxy recommendation process may increase the workload of proxy advisors and may exacerbate problems associated with lower quality recommendations during the busy proxy season.
Keywords: Proxy Advisors, ISS, Proxy Season, Proxy Voting
JEL Classification: G3
Suggested Citation: Suggested Citation