Proxy advisors have been giving advice to their shareholder clients for many years. This includes advice regarding, among other things, proposals put before annual shareholders’ meetings by management and by shareholders themselves. Beginning with the 2011 proxy season (as a result of the Dodd-Frank legislation in 2010) proxy advisors added say-on-pay votes to their portfolio of advice to shareholders. Shareholders (primarily institutional shareholders), for a fee, can receive a proxy advisor’s recommendation on whether to vote “for” or “against” a say-on-pay resolution (among other resolutions, as just noted), together with a report that includes explanation of the bases for the proxy advisor’s recommendations.

The two largest proxy advisors are Institutional Shareholders Services, Inc. (ISS) (founded in 1985) and Glass, Lewis & Co. LLC (founded in 2003). Together, these two proxy advisors represent over 90 percent of the proxy advisory business in the United States.

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