Shareholder voting on proxy contests and mergers & acquisitions (“M&A”) are of critical importance to investors. In these types of votes shareholders are being asked to participate, alongside the board of directors, in corporate decision making at the highest level and therefore require shareholders to be just as informed as the board. However, shareholders, including institutional investors who control approximately 80% of all public company voting in the U.S., usually do not have the time, information, resources, or the skills to make an informed vote. That is why they rely on proxy advisors, such as Institutional Shareholder Services (“ISS”), to provide them with voting recommendations.
To provide voting recommendations on proxy contests and M&A, the ISS has created a Special Situations Research Team (“Research Team”). Remarkably, the Research Team has only eight analysts providing voting recommendations on these matters. It is just not possible for these eight analysts, no matter how bright and enthusiastic, to provide voting recommendations that are informed and sufficiently precise. Here is why.
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