JPMorgan Chase (NYSE:JPM) has announced its decision to abandon reliance on third-party proxy advisory firms, opting instead for an in-house artificial intelligence solution. This development, detailed in an internal company memorandum and highlighted by The Wall Street Journal, underscores a growing dissatisfaction with the proxy advisory sector amid regulatory scrutiny.Proxy advisors, such as Institutional Shareholder Services (ISS) and Glass Lewis, have long played a pivotal role in guiding institutional ...

Core Viewpoint - JPMorgan Chase's asset-management division has decided to end its relationship with proxy advisory firms and will now manage shareholder voting internally using AI technology, amidst increasing regulatory scrutiny in the proxy advisory sector [1][3]. Group 1: Company Actions - The asset-management unit will utilize an internally developed AI platform named Proxy IQ to manage and analyze voting at over 3,000 annual meetings of US companies [2]. - JPMorgan is the first major investment firm to completely eliminate the use of external proxy advisers, opting to rely solely on its internal stewardship team and technology for voting decisions [3]. Group 2: Industry Context - Proxy advisory firms like Institutional Shareholder Services (ISS) and Glass Lewis assist investment institutions with proxy voting complexities [4]. - Recent regulatory developments have prompted ISS to clarify that it does not set corporate governance standards, allowing clients to retain full discretion over their decisions [5]. - Glass Lewis has announced plans to cease offering widely distributed benchmark recommendations by 2027, shifting focus to tailored advice for individual clients [5].

In a break that shapes the architecture of shareholder power, JPMorgan Asset Management, which manages more than $7 trillion in client assets — severed all ties this week with proxy advisory giants ISS and Glass Lewis. It will now rely solely on an internal, AI-driven voting platform called Proxy IQ — the first such move by a major asset manager. It comes days after President Trump issued an executive order directing federal agencies to investigate proxy advisers, citing concerns that their influence on ...

Core Viewpoint - A new White House order aims to increase oversight of proxy advisory firms, reflecting a broader Republican effort to diminish investor influence and enhance the authority of CEOs and corporate governance [1][2]. Group 1: Impact on Proxy Advisory Firms - The order targets major proxy advisers like Institutional Shareholder Services and Glass, Lewis & Co, which play a crucial role in guiding institutional investors on corporate voting [2]. - The directive suggests that proxy firms may prioritize politically motivated agendas over shareholder returns, particularly concerning environmental and social issues [3][5]. Group 2: Shareholder Influence and Corporate Governance - The order could potentially limit shareholder power by complicating the process for investors to exert pressure on companies through proxy campaigns [6]. - Shareholder proposals, which often advocate for measures like CEO pay limits and board director voting, may be at risk if the SEC revises or rescinds existing rules [5][6]. Group 3: Perspectives on ESG Issues - There is a divide among shareholders regarding the relevance of environmental and social governance (ESG) issues to financial performance, with some arguing that strong ESG policies can enhance long-term company value [7]. - The order reflects a belief that issues like diversity and environmental concerns do not correlate with financial outcomes, contrary to the views of many investors and proxy advisers [7].

Core Viewpoint - The executive order signed by U.S. President Donald Trump aims to increase oversight of the proxy advisory industry, specifically targeting firms like Institutional Shareholder Services (ISS) and Glass Lewis for their influence on corporate governance and potential violations of rules related to environmental and social issues [1][2]. Group 1: Executive Order Details - The order directs the U.S. Securities and Exchange Commission (SEC) and other agencies to review the practices of top proxy advisers regarding their treatment of environmental and social issues [1]. - Agencies such as the Federal Trade Commission and the Labor Department are instructed to consider new regulations in response to the order [1]. Group 2: Industry Response and Background - ISS has stated it will review the executive order and consider steps to mitigate any potential adverse impacts on its clients, emphasizing its commitment to operate ethically and independently [4]. - The order is part of a broader conservative effort to limit the influence of proxy advisory firms, which have been criticized by Republican politicians and business leaders for their significant role in corporate governance decisions [2][3]. Group 3: Historical Context - Previous Republican attempts to restrict proxy advisory firms have faced challenges, including court disputes and pushback from asset managers who value the firms for simplifying complex voting decisions [3]. - The order does not address previous expectations from trade groups regarding restrictions on proxy voting by large funds, indicating a shift in focus [3]. Group 4: Ownership Concerns - The foreign ownership of ISS by Germany's Deutsche Boerse and Glass Lewis by Canadian private equity firm Peloton Capital has been highlighted as a concern, aligning with past Republican criticisms [6].

Group 1 - The Federal Trade Commission is investigating whether proxy advisory firms ISS and Glass Lewis have violated antitrust laws regarding their influence on shareholder votes [2] - Sealed Air's shares are experiencing a surge in pre-market trading due to reports of discussions with buyout firm Clayton Dublier and Rice about taking the company private [3] - Prior to the pre-market increase, Sealed Air shares had already risen approximately 10% year-to-date [3] Group 2 - BYU is launching new AI processors and supercomputing products, emphasizing their capability to provide domestically controlled computing power [2]