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Managing the Workload of the Proxy Season

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Abstract

About 52 percent of all shareholder meetings happen in the proxy season, a period that lasts from the fourth week of April until the end of May. This concentration leads to an increased workload for Institutional Shareholder Services (ISS), the largest proxy advisor, during which time it must make recommendations on an average of 303 proposals each day, compared with 28 proposals outside the proxy season. We find that ISS makes fewer negative recommendations in this busy period and that the recommendations 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 the clustering of annual meetings in the proxy season may hinder the informativeness of proxy recommendations.

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