Jamie Dimon: “undue influence” from proxy advisors | EUROtoday

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“Although asset managers and institutional investors have a fiduciary responsibility to make their own decisions, it is increasingly clear that voting advisors exert undue influence,” writes Jamie Dimon, the world's largest banker, chairman and CEO by JP Morgan. In quick, who decides how you can vote in firms managed by asset managers and pension funds to which savers entrust their financial savings? Formally the funds however basically – says Dimon within the letter to buyers – two consultants on voting issues. «One is known as Institutional Shareholder Services (ISS) and the second is known as Glass Lewis. These voting consultants started by offering reams of knowledge from firms to assist their institutional investor shoppers vote on proxy issues (govt compensation info, inventory returns, director particulars, insurance policies, and so forth). However, Dimon explains, they quickly additionally started offering recommendation on how shareholders ought to vote on proxy issues. And, certainly, institutional buyers sometimes solid their vote on an ISS or Glass Lewis platform, which regularly features a clear assertion of the advisory service's place.”

Automatic decisions

The result is that «while some asset managers vote completely independently of this information, the majority do not»; vote by trusting the indications of proxy advisors on information that “many firms declare is commonly unbalanced and inaccurate”. A problem. Because if it is clear that it is “too troublesome and too costly to assessment the big variety of delegations and delegation proposals” – a consideration in Dimon's opinion “on the identical time lazy and incorrect” -, it is equally true that if a decision is brought to the attention the members must take care of the members. A problem that is not at all American. The issue was raised in Italy by Francesco Gaetano Caltagirone in the Senate in the cost of the works for the approval of the Capital Bill. According to the Roman entrepreneur at the center of the proxy fight in 2022 for the appointment of the Generali board of directors, also decided by the intervention in favor of the List of the outgoing board of directors of ISS and Glass Lewis, the proxy advisor system «ends up putting in the hands of some consultancy organizations the future of fundamental Italian companies”.