Executive Summary
- What’s new: An executive order calls on the SEC, FTC, the attorney general and Department of Labor to investigate and take action to curb the influence of proxy advisory firms. It also suggests additional scrutiny of registered investment advisers and other plan fiduciaries regarding their proxy voting practices.
- Why it matters: Glass Lewis and ISS voting recommendations are now likely to hinge more on individual factors and may therefore become less predictable, while registered investment advisers and other plan fiduciaries may need to reassess their voting policies. That, in turn, could make the outcome of proxy votes less predictable.
- What to do next: Public companies will need to monitor the government’s, proxy advisors’ and registered investment advisers’ responses to the order. The potential changes in response to the order make it more important than ever for companies to consider enhancing their disclosures and shareholder outreach in order to ensure successful proxy voting outcomes.
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On December 11, 2025, the White House issued an executive order intending to limit the perceived influence of two proxy advisory firms — Institutional Shareholder Services Inc. (ISS) and Glass Lewis & Co., LLC (Glass Lewis) — in shaping the policies and priorities of America’s largest public companies through the shareholder voting process.
The executive order directs, among other things:
- The Securities and Exchange Commission (SEC) to:
- Review and, if appropriate, rescind or revise all rules and regulations relating to proxy advisory firms and shareholder proposals that implicate “diversity, equity, and inclusion” (DEI) and “environmental, social, and governance” (ESG) priorities that are inconsistent with the purpose of the executive order.
- Enforce anti-fraud provisions in securities laws against proxy advisory firms with respect to their voting recommendations.
- Consider requiring proxy advisory firms to register as investment advisers.
- Consider requiring proxy advisory firms to provide increased transparency on conflicts of interest.
- Examine whether proxy advisory firms serve as vehicles for investment advisers to coordinate their voting decisions with respect to a company’s securities, and through such coordination, form a “group” under the Securities Act of 1934, as amended.
- Assess whether ISS and Glass Lewis subscribers who are registered investment advisers have breached their fiduciary duties by engaging proxy advisory firms to advise on non-pecuniary factors in investing, including factors such as DEI and ESG, and subsequently following their recommendations.
- The Federal Trade Commission, in consultation with the attorney general, to determine whether proxy advisory firms are engaged in unfair methods of competition or unfair or deceptive acts or practices in violation of federal antitrust law.
- The secretary of labor to strengthen ERISA fiduciary rules and increase fiduciaries’ transparency regarding their use of proxy advisory firms, to ensure that proxy advisory firms and plan managers act solely in the financial interests of plan participants.
In anticipation of this executive order, Glass Lewis had already announced it would stop offering its standard benchmark proxy voting guidelines in 2027, transitioning clients to differentiated, client-specific voting frameworks reflecting individual investment philosophies and stewardship priorities. See our October 20, 2025, client alert, “Glass Lewis To End Benchmark Proxy Voting Policy: What Companies Should Know.” Glass Lewis also announced on November 25, 2025, that it would register with the SEC as an investment adviser, following the approach taken by ISS.
ISS updated its 2026 benchmark proxy voting policies, which included a shift from a general “for” recommendation to a “case-by-case” evaluation process for shareholder proposals on diversity, political contributions, human rights and climate change. See our December 3, 2025, client alert “ISS Announces Benchmark Policy Updates for the 2026 Proxy Season.”
In light of the executive order, ISS and Glass Lewis may need to consider further changes to their policies and become more deliberate in their voting recommendations.
Implications and Practical Considerations for Public Companies
It is not clear if the SEC will propose rules, make them available for public comment and subsequently adopt any rules or regulations in time to impact the 2026 proxy season. In any event, public companies should continue to monitor these developments, as the rules adopted in response to this executive order could materially impact the annual meeting and proxy voting landscape. In particular, shareholder votes may become more unpredictable. Voting outcomes may depend on multiple, and sometimes overlapping, proxy voting guidelines and internal stewardship divisions. As such, public companies may need to consider how to enhance their disclosure and shareholder outreach to achieve favorable proxy voting outcomes.
This memorandum is provided by Skadden, Arps, Slate, Meagher & Flom LLP and its affiliates for educational and informational purposes only and is not intended and should not be construed as legal advice. This memorandum is considered advertising under applicable state laws.