San Francisco Partner Daniel Barenbaum and Associate Alex Vahdat recently published an article in the April 2026 issue of The NAPPA Report examining increased regulatory, legislative, and market scrutiny of proxy advisory firms.
The article discusses the evolving role of proxy advisors in institutional voting, recent developments affecting their regulatory treatment, and the implications for public pension funds and other institutional investors.
In particular, the article dives into four recurring areas of debate over proxy advisory firms—noting that “[w]here many institutional investors rely on proxy advisory services, the issue is clearly more nuanced than those articulated criticisms suggest.” Those areas are:
- market concentration, where ISS and Glass Lewis control a significant majority of the market;
- methodology and transparency, with critics questioning whether recommendations adequately account for company-specific circumstances;
- accuracy, with some corporate managers reporting errors in proxy reports, though studies suggest many investors independently review recommendations; and
- conflicts of interest, particularly where firms like ISS provide both voting recommendations to investors and consulting services to the companies being evaluated.
Ultimately, the authors note that proxy advisors “remain an integral part of the proxy voting ecosystem” for institutional investors, concluding: “Fiduciaries should continue to proactively reassess how they employ proxy advisors, ensure alignment between proxy voting practices, and document policies, strengthen oversight and documentation, and remain attentive to further regulatory development and market innovation.”
A copy of the article can be found here: http://www.bermantabacco.com/wp-content/uploads/2026/04/April-2026-The-Nappa-Report-Article-Excerpt.pdf
The full NAPPA Report is available to members at www.nappa.org. Established in 1987, NAPPA is a leading educational association dedicated exclusively to attorneys working directly for or serving public pension plans.