How Independent Proxy Advisors Like Broadwood Partners Can Drive Shareholder Value

The proxy advisory industry has become a cornerstone of modern corporate governance, with firms like Institutional Shareholder Services (ISS) and Glass Lewis dominating over 90% of the market, according to a House hearing testimony. These firms shape voting outcomes on executive compensation, board elections, and mergers, often through the practice of "robovoting," where institutional investors mechanically follow their recommendations, as argued in a Pinpoint Policy analysis. However, growing scrutiny of their opacity, conflicts of interest, and inconsistent alignment with shareholder value has opened the door for independent proxy advisors like Broadwood Partners to challenge the status quo. This article examines how such firms can drive shareholder value through tailored engagement, transparency, and strategic dissent, using the STAAR Surgical case as a pivotal example.

The Dominance of ISS and Glass Lewis: Influence and Criticisms

ISS and Glass Lewis have entrenched themselves as gatekeepers of corporate governance, with ISS alone advising on 40,000 shareholder meetings annually, according to a Corpgov overview. Their recommendations often dictate outcomes, as institutional investors with over $5 trillion in assets align their votes with these firms. Yet, this power comes at a cost. Studies show that companies frequently challenge their recommendations, citing inaccuracies, according to a Manhattan Institute study. For instance, Walt Disney and Norfolk Southern saw shareholder outcomes diverge from ISS/Glass Lewis endorsements. Critics argue that these firms promote standardized governance practices that ignore company-specific contexts, potentially stifling innovation and strategic flexibility, as noted in a Corpgov piece.

Broadwood Partners: A Case Study in Independent Advocacy

Broadwood Partners, a smaller but increasingly influential player, has demonstrated how independent proxy advisors can prioritize shareholder value through targeted interventions. In 2025, Broadwood opposed STAAR Surgical's proposed $28-per-share merger with Alcon, arguing it undervalued the company and was executed through a flawed process, as detailed in Broadwood's proxy statement. The firm highlighted STAAR's recent operational improvements, including cost reductions and product innovation, and alleged that management downgraded financial projections to justify the merger, detailed in a Broadwood presentation. Broadwood's 81-page analysis urged shareholders to vote against the deal, emphasizing that STAAR's intrinsic value was higher than the offer price, as reported in a Yahoo Finance article.

This contrasts sharply with the approach of ISS and Glass Lewis. While ISS did not publicly comment on the merger, Glass Lewis recommended shareholders vote against it, citing concerns about the process, in a Glass Lewis recommendation. However, STAAR's Board defended the merger as offering a 59% premium to the 90-day volume-weighted average price (VWAP) and a 51% premium to its August 4 closing price, in a STAAR press release. The divergence in perspectives underscores how independent advisors like Broadwood can challenge dominant narratives, fostering a more dynamic governance environment.

The Value Creation Imperative

The STAAR case illustrates how independent proxy advisors can drive value by:
1. Promoting Transparency: Broadwood's detailed critique forced STAAR to defend its merger rationale publicly, increasing accountability, as shown in a STAAR response.
2. Encouraging Competitive Bidding: By questioning the exclusivity of Alcon's offer, Broadwood highlighted the potential for higher bids, aligning with shareholder interests, as noted in the Broadwood presentation.
3. Mitigating Conflicts of Interest: Broadwood raised concerns about STAAR's Board ties to Alcon, a conflict that larger firms often overlook due to their standardized frameworks, detailed in an Ophthalmology Times report.

While the long-term impact of Broadwood's intervention remains to be seen, its approach contrasts with the "one-size-fits-all" recommendations of ISS and Glass Lewis. Smaller firms can tailor their analyses to specific company contexts, potentially avoiding the homogenization of governance practices.

Challenges and the Path Forward

Despite their potential, independent proxy advisors face hurdles. They lack the market share to influence voting outcomes as directly as ISS or Glass Lewis. Additionally, empirical evidence on their impact on investor returns is limited. However, the growing demand for transparency and accountability in corporate governance-spurred by congressional hearings and shareholder lawsuits-creates opportunities for independent firms to gain traction, as discussed in a Forbes article.

Conclusion

The proxy advisory landscape is evolving, with independent firms like Broadwood Partners emerging as catalysts for more nuanced, shareholder-centric governance. While ISS and Glass Lewis retain dominance, their flaws-ranging from opacity to conflicts of interest-highlight the need for alternatives. By prioritizing transparency, tailored analysis, and strategic dissent, independent advisors can drive value creation in ways that align more closely with long-term investor interests. As the STAAR Surgical case demonstrates, the future of corporate governance may lie not in the hands of a duopoly but in a pluralistic ecosystem where diverse voices challenge, refine, and ultimately strengthen shareholder value.