JPMorgan Chase’s break with ISS and Glass Lewis is a watershed for corporate governance—and a tailwind for conservative shareholder activism. For years NLPC has argued that the proxy advisor duopoly exerts outsized sway over investor vote outcomes. They almost always lined up against NLPC’s shareholder proposals, with very few exceptions (e.g., Glass Lewis on our Microsoft AI-risk proposal).
From the company’s perspective, JPMorgan Chairman/CEO Jamie Dimon (pictured above) has called the two proxy advisory firms “incompetent” and has said they “should be gone and dead and done with.”
Now JPMorgan says it doesn’t need them, as the Wall Street Journal reports:
JPMorgan Chase’s asset-management unit is cutting all ties with proxy-advisory firms effective immediately, amping up the pressure on an industry that recently has come into the Trump administration’s crosshairs.
The unit, among the world’s largest investment firms with more than $7 trillion in client assets, has to vote shares in thousands of companies. This coming proxy season, it will start using an internal artificial-intelligence-powered platform it is calling Proxy IQ to assist on U.S. company votes, according to a memo seen by The Wall Street Journal.
The bank will use the platform to manage the votes and the AI also will analyze data from more than 3,000 annual company meetings and provide recommendations to the portfolio managers, the memo said, replacing the typical roles of proxy advisers.
JPMorgan thinks it is the first large investment firm to entirely stop using external proxy advisers, which provide much of the industry’s plumbing, the memo said. It previously had said it would stop using advisers for vote recommendations, relying on its in-house stewardship team instead.
The firms, such as Glass Lewis and Institutional Shareholder Services, offer research, advice, and voting infrastructure to investment firms that need to cast thousands of shareholder votes each year.
Their voting recommendations have long drawn the ire of corporate CEOs and other critics who claim they hold undue influence on shareholder votes and have business models that create conflicts of interest. In December, an executive order from the Trump administration called for securities and antitrust regulators to probe proxy advisers.
That shift strips automatic deference from firms whose recommendations have long steered trillions towards ESG priorities. NLPC has documented how rarely these advisers back our filings and how their models have pushed politics into boardrooms; their influence is now ebbing.
If more institutions follow JPMorgan’s lead, proposals will rise or fall on their merits, instead of the whims of these left-wing middlemen, which is a healthy development for investors and a long-overdue opening for reform-minded activism.
