ISS' Guerra Joins Strategic Governance Advisors: A New Chapter in Proxy Advisory Industry

The proxy advisory industry is set to witness a significant shift with the announcement that ISS' former U.S. head, Carlos M. Guerra, is joining Strategic Governance Advisors (SGA). Guerra's move comes as a surprise, given his long tenure at ISS, one of the two dominant proxy advisory firms alongside Glass Lewis. This article explores the potential implications of Guerra's departure and the dynamics it may bring to the proxy advisory industry.

Guerra's departure from ISS and his decision to join SGA could have several implications for the proxy advisory industry's dynamics and competition. First, SGA, a smaller proxy advisory firm, could gain a competitive edge by attracting clients who are dissatisfied with ISS or Glass Lewis. Guerra's experience and expertise in the industry could help SGA differentiate itself and attract more clients, increasing competition in the market. This increased competition could lead to more diverse voting recommendations and potentially better outcomes for companies and their shareholders.

Second, Guerra's departure could lead to a shift in market share, with SGA potentially gaining clients and assets under management at the expense of ISS. This shift could be significant, given the high concentration of the proxy advisory industry, with ISS and Glass Lewis controlling a substantial portion of the market. However, it is essential to note that the trend towards subscriptions to multiple proxy advisors has been increasing, which could mitigate the impact of Guerra's departure on ISS' market share.

Third, Guerra's influence on ISS' voting recommendations was significant. His departure could lead to changes in ISS' voting policies and recommendations, potentially impacting the voting behavior of institutional investors. This could have implications for corporate governance and shareholder activism. However, it is also possible that ISS will maintain its voting recommendations' consistency to avoid disrupting its client base.

Fourth, Guerra's move to SGA could draw additional attention to the proxy advisory industry and potentially lead to further regulatory changes. The industry has faced regulatory scrutiny in recent years, with the SEC reversing and reinstating certain rules related to proxy advisors. Guerra's departure could further highlight the need for transparency and accountability in the proxy advisory industry.

In conclusion, ISS' Guerra joining Strategic Governance Advisors could have significant implications for the proxy advisory industry's dynamics and competition, including increased competition, shifts in market share, changes in voting recommendations, regulatory scrutiny, and talent attraction and retention. As the industry continues to evolve, it is essential to monitor these developments and their potential impact on corporate governance and shareholder activism.