ISS Endorsement of Carronade Nominees: Catalyst for Cannae Governance Reform

Institutional Shareholder Services endorsed all four director nominees proposed by Carronade Capital for Cannae Holdings' 2025 annual meeting. ISS cited the existing board's lack of independence from founder Bill Foley, chronic corporate governance failures, and poor financial performance, including a 30% decline in net asset value (NAV) per share and negative total shareholder returns (TSR)according to the SEC filing. The rating agency criticized Cannae's current nominees for deep, long-standing ties to Foley, arguing this undermined effective oversight and contributed to the company's underperformanceas reported by Nasdaq. ISS recommended shareholders vote "FOR" Carronade's independent slate and "WITHHOLD" on Cannae's nominees to restore board independence and address governance issues, particularly those exacerbated by past strategic missteps like SPAC investments.

The endorsement underscores significant shareholder dissatisfaction with Cannae's current leadership and strategy. Poor performance is evident in the substantial 30% NAV drop and negative TSR, metrics that signal direct financial harm to investors. Compounding these issues, the board's composition, with three of Cannae's nominees having "long-standing ties" to Foley, created a conflict-ridden environment where independent oversight was lacking, allowing governance problems to persist unchecked. While Carronade's push aims to replace this structure, the root causes - governance failures and direct CEO entanglement - remain the primary targets of ISS's critique. The outcome could reshape oversight, but the deep-rooted ties and tangible performance decline highlight the scale of the challenge ahead.

Governance Risks and Implementation Challenges

The endorsement faces implementation challenges given the entrenched power structure. ISS's backing of Carronade's entire board slate hinges on addressing deep-seated governance issues, particularly the pervasive influence of founder Bill Foley. Evidence shows three of the four current nominees have long-standing ties to Foley, creating a 75% concentration of CEO-aligned directors that complicates oversight independenceas detailed in the SEC filing. This concentration has contributed to significant financial underperformance, including a 30% decline in net asset value per share over recent years.

Further complicating change, Cannae's history of strategic missteps creates additional friction. Attempts to restructure under Nevada law and pursue SPAC strategies have failed, undermining board credibility and shareholder confidence. These unresolved strategic deviations suggest governance inertia, making the transition to Carronade's proposed independent slate logistically difficult and potentially contentious.

The broader activist landscape amplifies these risks. While ISS support provides momentum, activist campaigns often secure board seats through negotiated agreements rather than contested votes, reflecting a 16% year-over-year rise in such outcomesaccording to Harvard Law research. This trend reduces the certainty of Carronade's full slate being seated, as the current board may leverage ongoing disputes or regulatory hurdles to delay or dilute changes. Unresolved conflicts between Carronade and management could prolong governance uncertainty, hindering strategic clarity and deterring investor confidence during a period of stagnation.

Proxy Advisory Shifts: ISS Realigns with 2025 Governance Priorities

The proxy advisory landscape has evolved significantly, with ISS adjusting its governance recommendations amid shifting regulatory and market pressures. A key change effective February 2025 sees ISS remove gender and racial diversity metrics from its formal director election recommendationsas announced by Debevoise. This marks a clear departure from previous guidelines that explicitly weighted diverse representation in board composition assessments. While ISS maintains its focus on core governance pillars like board independence and oversight effectiveness, the exclusion of diversity benchmarks reduces direct pressure on companies like Cannae Holdings to prioritize demographic representation in director nominations solely to secure ISS endorsement.

This policy recalibration aligns with broader anti-DEI trends observed in the U.S. market environment. However, ISS retains significant influence, evidenced by its historically high 92% alignment rate with corporate management positions in voting recommendations since 2017according to ISS governance data. Its advice remains heavily weighted towards director qualifications and board oversight mechanisms, which will continue to dominate proxy contests. For Cannae shareholders facing the 2025 director elections, ISS's guidance now emphasizes evaluating nominees based on traditional governance standards rather than diversity quotas, though institutional clients using customized policies could still apply diversity criteria individually.

The shift represents a tactical response to current political and regulatory headwinds rather than a fundamental change in ISS's governance philosophy. Critics argue diluting explicit diversity metrics weakens progress on inclusion, while supporters view it as pragmatic alignment with evolving stakeholder expectations. For all companies, the 92% management alignment rate underscores ISS's enduring sway over shareholder votes. Investors should therefore monitor whether ISS's continued emphasis on oversight quality and independence becomes the primary differentiator in proxy contests like Cannae's upcoming director election, as diversity considerations recede from the formal recommendation framework.

Governance Overhaul Could Unlock Financial Opportunities, But Vote Outcome Matters

Governance overhaul could unlock significant financial opportunities for Cannae Holdings, but progress hinges on activist-driven board reforms ahead of the June 2025 proxy vote. Institutional Shareholder Services (ISS) has thrown its weight behind Carronade Capital's four director nominees, criticizing Cannae's existing board for lacking independence and enabling persistent governance failures. The endorsement cites chronic underperformance and a 30% NAV decline, urging shareholders to back Carronade's independent slate while withholding support for current nominees tied closely to founder Bill Foleyas reported in the Nasdaq press release. This push reflects broader governance priorities emerging in the 2025 proxy season, where ISS and other stakeholders are increasingly focused on accountability, board diversity, and resolving corporate stagnationaccording to ISS's 2025 governance review.

A successful board transition could drive NAV recovery by restoring strategic discipline and oversight. Carronade's nominees pledge to address past missteps-including failed SPAC investments-and refocus on core operations, potentially stabilizing shareholder value. Improved oversight might also catalyze valuation upside, as current pricing doesn't reflect the firm's asset base or growth potential amid governance taintas detailed in the SEC filing. However, risks linger: the vote outcome remains uncertain, and even with new leadership, reversing underperformance may take time. Shareholders should watch for concrete plans post-election, as activism alone can't guarantee turnaround without viable execution.

The June 2025 proxy vote acts as a critical inflection point. If Carronade's slate secures majority support, it could signal market confidence in governance-led recovery. But if the current board retains control, Cannae may face continued scrutiny-and valuation pressure-as governance issues remain unresolved. Investors should monitor post-vote corporate actions, as gradual improvements in transparency and strategy may take months to translate into tangible financial results.