A federal judge has granted a preliminary injunction blocking an Indiana law that required proxy advisers to provide a written financial analysis when recommending votes against company management. The law, set to take effect July 1, was challenged by Institutional Shareholder Services (ISS) and Glass Lewis, two firms that recommend how investors can vote at corporate annual meetings.
Background
Republican politicians have long sympathized with business complaints about the firms’ views on areas like executive pay and environmental, social, or governance (ESG) topics. However, the recent court rulings suggest that efforts to restrict proxy advisers still face significant challenges.
The Indiana law would have required ISS and Glass Lewis to provide a written financial analysis of their thinking or disclose that no such analysis was conducted when recommending votes against company management. The firms argued that the law violates their rights, including their right to free speech.
U.S. District Judge Matthew Brookman agreed with the plaintiffs’ arguments, stating that the law amounts to prohibited viewpoint discrimination because it imposes burdens only when the proxy firms disagree with management.
Reaction
ISS praised the decision, calling it an unconstitutional exercise of power over the free market. Glass Lewis also welcomed the ruling, stating that it safeguards core First Amendment principles by rejecting speaker and viewpoint discrimination.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
