Question

What are the benefits and costs of institutional investors relying on ISS for their voting decisions?

Answer 1

ISS is a proxy advisory firm. A proxy advisory firm as it name suggests acts as a proxy at shareholder meetings of quoted companies on behalf of its shareholder clients which in major cases are the institutional investors such as mutual funds, pension funds, endowment funds, commercial banks, hedge funds and insurance companies. The clients pay a certain agreed upon fees to ISS to seek their advise for voting decisions. In addition to advise, the ISS also votes on the numerous back to back meetings through representatives thus saving the time and associated costs of appearing in the meetings which might be held in various cities. The ISS advises on the basis of research conducted by it on the quoted companies;the criterias will mostly include annual performance, trend analysis of past performance, amount of debt capital held, dividend policy etc. It gets paid on the quality of research.