Name: The New Proxy Playbook: Practical Board Oversight After the 2026 Regulatory Shift
Uploaded: 2026-03-16T18:16:10.488Z
Duration: 55 min 52 s
Description: The New Proxy Playbook: Practical Board Oversight After the 2026 Regulatory Shift

Transcript for "The New Proxy Playbook: Practical Board Oversight After the 2026 Regulatory Shift": Welcome, everyone. I'm Foli Pontillo, vice president of our investor relations intelligence business that sits within our corporate solutions division here at Nasdaq. Today's discussion focuses on the practical implications of evolving executive and regulatory actions surrounding proxy advisory firms. Our goal is to present a balanced, multistakeholder discussion about how the proxy advisory landscape is evolving legally, operationally, and strategically for investors, issuers, and boards. Let's start by grounding ourselves in the context behind these shifts. There's been this mix of executive actions and regulatory activity that has many reassessing how proxy advisors fit into the voting ecosystem, particularly in light of JPMorgan's Asset Management division, having announced they will rely solely on ProxyIQ to aggregate and analyze data from more than 3,000 annual company meetings and eliminating third party data collection and voting recommendations. Some aspects are shifting, some are very much the same, and some areas remain uncertain. Major institutions are now publicly challenging the long standing proxy advisor model. We saw the Trump administration's December executive order calling for more oversight. And now, of course, as I mentioned, JPMorgan's move to eliminate all reliance on proxy advisors, an industry first. With that, I'd now like to welcome our panelists: Martha Carter, Vice Chairman and Head of Governance Advisory at Teneo Laura Stein, Executive Vice President, Corporate and Legal Affairs General Counsel and Corporate Secretary at Mondelēz International and Sara von Althann, partner at Sidley Austin. So kick to kick off today's discussion, I'm gonna hand it over to you, Sara. I'd love to hear from you from a legal and regulatory standpoint. How significant is this moment? And we can have other panelists chime in as well. Thank you, Foli. So taking a step back, I think we need to examine the interplay of these factors together. There are legal and governmental actions that are taking place that are shifting and that is in process. I'll speak more to that in a moment. But in response to that, there are also industry changes that are taking place. There are changes amongst shareholder group. The proxy advisers themselves responding, and, of course, public companies are responding to those changes. So I think the way that this evolves is going to be sort of a multi stakeholder process with the different stakeholders assessing as we go and determining what would be the most effective way forward to support the interest that they're responsive to. So taking this back to December, it's fully mentioned. President Trump issued an executive order, which called out ISS and Glass Lewis specifically because they dominate the proxy adviser market, and they have over 90% together. And the rest of this executive order is that they have too much influence. The order directed the SEC to review and as appropriate rescind or revise all rules and regulations related to proxy advisors that and ESG priority, as well as rules related to shareholder roles that are in policies in the order. It required the SEC to enforce anti fraud provisions and security laws against proxy advisors with respect to their voting recommendations. Consider requiring proxy advisors to register as investment advisors. Consider requiring the advisers to provide increased transparency on conflict of interest, etcetera. It also directed the FTC and the Department of Labor to look into related matters. So, you know, very much pots fired. I think the current business model of ISS and Glass Lewis would become perhaps not totally impractical, but radically different if they had to adopt all of these changes, if they had to, you know, register in these different ways, if they are subject to antitrust enforcement. So I think the sort of goal here is that a lot of stakeholders have looked at the marketplace and determined that maybe these two entities have too much power among them. Mhmm. Chairman Atkins of the SEC had flagged this earlier than the December 2025 executive order remarks when he flagged proxy voting, proxy advisers, and activism as major areas He said explicitly, the topic of proxy voting, proxy advisers, and shareholder activism is is extremely important to me because not only does it have profound implications for corporate governance, but in the context of funds, it also implicates the fundamental fiduciary duty that advisers owe clients to act in their best interest. So how significant is the moment we're at right now? I I think this is a major inflection point. There. have not been very regulatory changes that have come across yet. I think, you know, most of you who are working at public companies or at, institutional investors know that black voters are still out there this year. Companies are still interested in their policies and how they influence voters. Historically, ISS has influenced about 15 to 25% of the vote at the average public company, and Glass Lewis another five to 10%. So depending on what vote is required for corporate action, that can be pretty significant. So I think, you know, we've all seen circumstances. There's maybe a a higher not the kind of standard majority threshold, but, if there's higher vote threshold required for a particular corporate action, understanding how ISS and Glass Lewis are going to react to it can be very significant and, in some ways, can shape the contours of what a company actually proposed to its shareholders in a way that some they regard as appropriate. So I think the moment now is about kind of assessing where this is going to go. The SEC most likely will action. Although, in terms of rule makings, they lot on their plate. As we all know, they are focusing on crypto. They're focusing on public company disclosures. There's nothing specific to proxy advisers. Current reg flex agenda, which is the SEC identified as near term will be in priority. That said, they have shown an increasing willingness to issue in items. For example, they put out a number of closure interpretation, DNDIs, that have been fairly impactful. So I think there is a path to potentially using existing rules to kind of move this move this regulatory incentive forward without starting at notice comment rulemaking. Okay. I'll, pause there. there's yes. Yes. There's been a lot of change. Thank you for walking us through all of that. So with change comes some noise, and so I would love to hear from the panelists around, Mhmm. you know, what components of the regulatory framework are actually remaining stable versus, you know, some of the uncertain pieces. Yeah. I I can jump in just doing this quick sound check, Foli. You can hear me okay? Yes, Martha. Okay, good. So I'll jump in and then let Laura tag on too is, I think from a regulatory standpoint, and Sara articulated the laundry list of things that are going on, some of which have not yet played out, such as the big SEC review called out by the executive order. Some have played out to some extent, like the 13 gs, 13 gs guidance and the no action process that's out there in terms of pause. But regulation can be ephemeral. So we could see regulations come in and, you know, in three years' time, we have another administration and all of a sudden things flip again. But to us, what the bit one of the big changes is in technology, and that is AI. It's a game changer. Because if we think about where the proxy advisors were when when ISS first started in 1985, it was started under the premise that there was an ERISA, an implied ERISA duty for for for fiduciaries to create voting as a plan asset. And that was Bob Monks who founded ISS, which is fundamental premise that you have to keep voting as a plan asset. And in that regard, a lot of institutions didn't really have the wherewithal or the resources to do that on a fund wide basis. And so that became the genesis for ISS, and they provided data and and research and voting recommendations on that. It would have been difficult all those years ago without AI for, like, JPMorgan and Wells Fargo to step in and say, we're gonna develop a new system because it it would just be untenable given their holdings. So, you know, what we have here is the culmination of regulatory change, technology change with AI. We also have investor sentiment changing. For a long time, investors have really started to look at a way to kind of free themselves to some extent from the ISS, the last lowest of the world. And then there's also stakeholder driven change as well with, for example, if social proposals go away, and ESG proposals are no longer an option, you might start seeing, other stakeholders do things like social media campaigns, vote no, and change tactics. So it is that paradigm shift fully that you talked about, which is there's all these changes coming at companies at once. Right? And quite frankly, I've been doing this an awful long time, is quite unprecedented. It sure is. So I love the fact that you brought up AI and technology, the role that that plays. And so I'd love to hear what compliance issues or process considerations should companies monitor when you think about these AI assisted recommendations. You know, I I think for companies with AI, we need to be able to be sure we understand what it is our investors and other stakeholders are seeing with AI as well. So how can we be on top of it to see either like if we're in proxy season, what are the voting trends? And then how can we assess? So it just creates greater uncertainty for us. We'll have our own AI tools. Then our different stakeholders will have their AI tools and where that leads in terms of perspectives could be create just greater uncertainty through the process. Mhmm. Yeah. I think there's a significant. need too for companies to think about in the in an AI driven world, right, the way that you frame the information that you're putting out there becomes increasingly important. Yes. You know, how accessible is it? How searchable is it? You know, is it what algorithm is it gonna turn up in and how is that algorithm going to interpret the information? So the sort of disclosure controls that companies are using around their disclosures, I think, are of increasing importance in an AI driven world where there may not be a human taking the first cut or there there probably won't be a human taking the first cut and understanding the the disclosure that has been put out there by the company. It's probably gonna be picked up by some large language model that's gonna be then crunching that data and spitting something out. So the comparability across company oh, sorry. Yeah. Across companies and across industries, I think, is important. The consistency within your own disclosures is data standardization is important, and any steps that companies can take to strengthen their disclosure controls in this regard can be helpful. Yeah. I think the other thing is and we talked about this last week going when we did our prep call is that not all investors are alike. So not all investors are gonna be like JPM and Wells Fargo that have the resources and the wherewithal to really effectuate a major transition, and it is a major transition. There's a lot of guts and infrastructure that goes into proxy voting and gathering data and creating an analysis and having a policy framework that overlays on top of that to come up with a recommendation. And then you have to execute on that recommendation and create a vote, and then you have to, you know, keep track of your vote and disclose your vote on your NPXs and so on. So there's a there's a lot of infrastructure going on here. And as you go down the food chain from big to smaller institutional investors, how many of them are going to be able to absorb those transactional costs to be able to convert away from proxy advisors? Maybe the maybe the contention is over time they all will. That's possible. It hasn't played out yet. But then there's a difference between passives and actives. Actives have more of a stake and they have more internal resources. Citizenship teams that are going need to be built up. And then less we forget, global. Global is whole other canvassing. There is no broad ridge in many markets globally. You know, probably with the exception of of the large annual markets, we don't have the kind of infrastructure determine when a meeting date is, when a record date is, what are the ballot items that are on there, what are the valid voting options and so on. Those things are harder to come by globally. So it might be the case that some institutions can jettison proxy advisors U. S. But ex U. S. Laura, do you have anything to to add just as you think about the complexities that more companies have to contend with? I love how Martha took us through a few different scenarios based on size of company and resources. Anything more to add around how you're seeing these changes impacts the the companies? Yes. And Martha and Sara have already been giving good examples of how companies will be impacted. We've started talking about increased government complexity, how things may change, etcetera. And then for us, what you know, that means is that we need to really understand choices we make as companies in an evolving regulatory framework and how our different stakeholders may view actions we may take in light of regulatory changes. And so be very thoughtful in the midst of complexity to try to make sure we continue to have the balanced view that represents our shareholders best and think through the implications of several lenses. There's also before us just an increased complexity that Martha spoke of, of just tracking investors' perspectives and policies. So with a shift towards more bespoke voting policies, companies have to keep track hopefully they already are, but keep track even more of who. are their top investors, what are their guidelines and expectations. And all of this requires engagement or feedback to understand your investors' perspectives because it's going to lead to voting fragmentation risk. It's gonna be harder to predict outcomes. And so which will also in itself will have implications. So there's just a lot going on for companies where even if we already have very Mhmm. resources focused on how we engage with investors and make the positions and decisions and narratives and disclosures we have and controls, it's going to be even more required going forward. Yeah. Let's let's talk a little bit more about what companies are up against. I know that proxy season obviously happened around a certain time of year. And so how do you see proxy season changing just based on all the developments in the industry? Well, I can start out. We already feel like we have a long proxy season because my company's had a long standing investor engagement program where we engage with, we reach out to over half of our investors twice a year. And so we almost have year round conversations as it goes already, one during proxy season and one during off season to try to just have a good dialogue, share our progress and priorities, and try to understand our investors' priorities and viewpoints. So I think that, you know, as as we have all of this increased complexity, we're gonna need to spend even more time making sure we understand perspectives and that companies make the decisions that are are best for their shareholders. Mhmm. So we, talked about how yes. I'm sorry? think that I was just wanting to jump in on Laura's. comment about, you know, trying to understand complexities. The extent that one can be successful at doing that is quite dependent on the extent to which investors are going to be very transparent about what they're doing, which you have you Laura said we've moved from a world of simplicity to complexity. You know, we have like it or not, the proxy advisers are super transparent about their policies and their frameworks, and they do surveys, and they go out and they, you know, they test their opinions and they take in criticisms. They're, like them or not, they're super transparent. So the extent to which Laura and others can really go out and understand is partly dependent upon how forthcoming these institutional investors are going to be with their in house AI models. I think that's a really good point. And I think also some of the investors that you reach out to, there's some balkanization of influences on investor voting. Right? So there's the the owning influence of the proxy advisers. Coupled with that, there is a rise amongst initial investors and asset managers, not just of AI inspired recommendations and voting, but also of client driven voting. So even within one institutional holder, you may not know that's holding beneficial shares on behalf of retail investors. You may not know how all of those shares are going to be voted and the sort of preferences or policies of the the asset manager, for example, may not be entirely driving where every share that they are responsible for ends up being voted. So I think to your point, you it's critical to really understand your share to understand as it evolve, to understand the voting mechanisms deployed by, you know, your large shareholders or enough of your shareholders to comprise, you know, hopefully, a majority at least of outstanding shares because they're not all gonna be doing it the same way, and they're not all going to have the same views on different on different issues. Yeah, no, that's great insight. Thank you so much for framing that. I'd love to kinda switch gears and talk about the board's responsibility in all of this, and so I'd love to hear from from our panelists on that front. Where do. we begin? You want to start? You want to start, Martha? Okay. So the board is going to I mean, typically, our line of work, we're we're a global CEO advisory firm, we we also advise boards. And typically, when we advise around proxy voting, there's an issue on the table. We do work in season with boards, particularly if something's contentious. But oftentimes when there's engagement outside of proxy season, typically in fall for most US companies, it tends to be led by management. Infrequently, board members hop in on that exercise. So my view is that boards are going to have to lean in more on a broader, more calendarized basis to make sure that there's an understanding of how fluid the situation is because, again, not everything's played out yet. Mhmm. But also how how the investor sentiment is, what the voting patterns are. Voting patterns, for example, are typically less able to be predicted by the solicitors that are hired by every major company to read the tea leaves. Reading the tea leaves will become more difficult to exercise and so on. So I think boards, Laura and Sara can certainly comment on this, you know, our boards will be looking for more frequent updates at their board meetings because they can stay in touch with the changes and the transition and the fluidity of ours. Yeah, I very much agree, Martha. I think boards are going to expect management and advisors to surface earlier and more proactively as investor voting becomes more fragmented and AI driven. Some of the things that we'll need to do from a management perspective is make sure the board's aware of emerging policy changes. Martha mentioned how important it is to be tracking and aware of your large investors and their policies and trying to propose where they might land on various proposals or other matters. And now it's going to be even more incumbent on us to be tracking that and sharing that with the board and flagging implications for our votes and just even flagging the uncertainty where there aren't guidelines or the voting history might not give a good sense of things. We talked about AI voting trends, and I think that's an area where the board would expect management to keep them updated on how the tools are being used and whether they create new risks. And again, it would be a case where our outside advisors really can provide helpful insights. And I think just early warnings on proposals because the shareholder proposal area is evolving a lot with the SEC more hands off approach this season. And so I think boards expect management to really be able to report on shareholder proposal trends and potential activist activities so companies can be proactive in shaping disclosure. And as Sara said, what's their engagement strategy and how it's better to develop kind of substantive responses on questions or issues sooner rather than later. And I think there's also the possibility based on different steps taken that it could lead to potential negative government attention or potential negative stakeholder attention. And so I think the board expects to make sure there's a very thoughtful approach that balances these things and helps them make the right decisions, considering all aspects of where decisions could lead them. I think that's right. And I I think there are some practical steps boards can be thinking about now. And I think we're gonna talk a little bit later about the role other roles within the company, like the corporate secretary. But and these these steps will be taken in conjunction with management, obviously. But in its oversight role, you know, one of the things that the board typically does through a committee, often non gov committee, would be oversight of the company's policies. So I think, you know, that typical, you know, sort of annual cadence of review of the company's policies is something where the board would be considering whether investor feedback has been taken into account. And this all plays together with with shareholder proposals as well, which we, you know, we can talk about the influence of that too. But there's been a rise in recent years of DEI and ESG shareholder proposals both for and against. Those have been increasing, and companies have often responded in at times by changing some of their internal policies, for example. I I don't know process is going to play out through shareholder proposals necessarily as much going forward given the current SEC's antipathy to shareholder proposals. However, the sort of ongoing year round shareholder engagement that Martha and Laura have been talking about should be informing that process and, you know, should be informing the contents of the policies and the changes to the policies that the board considers adopting. So it's just another sort of reason that the company needs to do a really good job aggregating data about its investors and their policy preferences and their voting habits and their voting preferences and communicating then in sort of a clear and actionable way to the board so that the board can make those types of governance decision on behalf of the company as to, you know, what what it includes in its policies and how it responds to those of investor preferences. Okay. So let's take a moment to look at how issuers and corporate secretaries, you mentioned, Sara, may also need to adapt, you know, as the landscape shifts and especially if more large institutions transition to in house voting models. And, Laura, let's start with you. As as investors like JPMorgan move toward bespoke internally generated voting decisions instead of standardized adviser frameworks, how is your team's role becoming even more complex? You're juggling a lot there. So would love to hear how the how you feel the corporate secretary role is evolving. Sure. Fully, it's a great question and what I think a lot about. The role is becoming more critical with these shifts that we're talking about because the corporate secretary is the fulcrum. There's a variety of internal and external constituents and voices that have to be balanced, as we've been discussing. And the corporate secretary is at the center of it, sitting between or the fulcrum, not the center. The board's the center. But sitting between the board, the investors, and operations. And so for the corporate secretary role, there's more pressures to deal with that comes with the job, but also a greater need to build a consensus that works for the company. So for example, we've talked about how as investors develop their own bespoke policies, Mhmm. there's going to be an increased premium on shareholder engagement and the corporate secretaries at the center of coordinating that engagement, who attends, who preps, what can be said. And engagement starts much earlier than when you have meetings with investors because as Sara mentioned earlier, it's critical to make sure our disclosures in the proxy statement and website and in filings and in our policies are conveying the messages the company wants to relay to shareholders. So during and before proxy season and even before big engagement pushes start, the corporate secretary coordinates with so many parts of the company different functions, investor relations, compensation, sustainability, legal, to provide kind of and pull together this unified view of investor touch points. And so it's really important that investor relations and the stewardship and governance materials are consistent and that we partner so closely together. And so it's something that has always been important. With these shifts and uncertainty, it's going be even more important than ever before. We take the work that we do and we constantly update either committees, whether it's the governance committee on governance related. And if they're the committee that oversees ESG and sustainability matters, the compensation committee on compensation matters and the full board on what investors are thinking. Sara said, then the corporate secretary will work together with the board or its committees you know, as it keeps evolving and receives the feedback from investors. So it's an important job and it's becoming even more important as time passes. Absolutely. I'd love to ask the panelists I'm. sorry. I was just I was just gonna quickly just ask the panelists if there are any other stakeholders that they deem as increasingly important in these times that we're in. Oh, yes. Many. So the in a the corporate secretary is so key as Laura well outlined. Other stakeholders within a company would certainly be the corporate comms group. Yep. What's really fascinating actually about this whole technology shift is thinking about the kinds of corporate narratives that we have worked with companies to create, and I know Laura and Sara sure certainly have been involved in this, are narratives that appeal to humans. Mhmm. So how now would you create a narrative that appeals to a machine and that appeals to AI, which is AI is is, you know, sucking in data and putting an overlay on top of it to spit out an answer. And does your narrative have to change in order to do that? So I think it's a really important question for the public comms people in these organizations. I think that's right. And the audience that you're speaking to is, you know, to your point, Martha, it it is AI. It's also still humans. And I think the types of humans that you're speaking to in the disclosure are evolving a little bit. I think as the sort of as the SEC takes a step back, especially when it comes to things like shareholder proposals and perhaps the pathway there narrows to get proposals into the proxy statement and directly in front of voters. There are other paths that proponents will pursue instead. You know, they will pursue more engagement with the company. They may pursue lawsuit. They the SEC does have on its red hot agenda shareholder proposal modernization. So I do expect to see concrete changes to that process by coming year. And we thought that a little bit this proxy season with shareholder proposals and the 14 a eight j that says the companies were submitting. You know, previously, companies were making an argument to the SEC staff. That was the target audience. They were setting forth a legal argument based on precedent for why the proposal should be excluded. This year, that shifted a little bit and the target audience was the proponents. It was the public. It was other shareholder. So I think that process is going to play out kind of across public company closures as they have to speak to more and more stakeholders more directly, again, due to the sort of balkanization of influences that we've been discussing on this panel. And it's gonna be how you manage to appeal to everyone from, you know, chat GBT to the retail investor. So we already have some great questions from our audience. I'm gonna kind of weave some in as we go here. Here's one. Who is ultimately accountable for planning, monitoring, and execution under the proxy playbook, management or the board, or both? I would say, you know, primarily management. The board does review the proxy statement. They are not drafting the proxy statement. They are not going to the different stakeholders within the company to gather the data. You know, they're not talking directly to finance, to IR, to the governance team, to the business folks, to gather the data that goes into the proxy statement. So the management is responsible and often through the corporate secretary and or the general counsel and whatever outside advisers the company is using for gathering and aggregating that data and presenting a unified story in the form of its disclosures in the proxy statement. The board, you know, performs its oversight role. It will they every board I know, obviously, does review the proxy statement usually very closely. And the board is full for adding feedback with respect to, you know, insights they have in terms of shareholder engagement and in terms of the company policy direction. But I'd I'd love to hear Martha and Laura too if they have all. views. Who has accountability here? I think accountability, though, at the end of the day is with the board in terms of the policies and the positions and the substantive content, recognizing that the execution is done by management. But it should be, as Sara said, a close relationship between both management and the board, with the board feeling that the work of management represents its views. Yeah. I would agree. I think at the end of the day, when you look at proxy voting, directors are elected by shareholders. The the management team, say, for probably the CEO and and once in a while another executive on the board, they're not elected by shareholders. So the, you know, the the board definitely has a has skin in the game on this one. And oftentimes management definitely needs this exercise. But when we get in situations where board member reputations and or jobs are on the line, they're they're very much engaged in the whole process. Okay. Something that we we we didn't touch on earlier that I think is incredibly important is the concept of shareholder activism. And so just in understanding how that might shift in the way that all the regulatory framework is evolving, I wonder if you feel like activists could become more empowered. Do you feel that investor engagement needs to be done on a more consistent basis to make sure that that narrative is intact and there's clarity to the market on these key issues. I think that all companies should have a really robust shareholder activism preparedness because as you said Foli, fragmented voting and the influence of AI tools, there may be there's always a need for a fast response and strategy and plans in case an activist investor surfaces. But trying to assess it in this time of additional inputs, it's just really important to be prepared. Mhmm. Yeah. I I would agree. I think shareholder activists are gonna have the same dilemmas across the landscape as companies have as well, not knowing what the regulatory changes are going to be, not being able to read the tea leaves as well with ISS and Glass Lewis, and so on. So you're going to have to sort of walk their way through the same morass of changes that everybody else is. That said, I think that they can employ different tactics. Yeah. So they if they if they have the avenue of referral proposals shut off, then they can go to social media, they can go to vote no campaigns, they can go to proxy access. There are avenues for them. But they're going to have just as hard a time rearing the tea leaves as everybody else's. I Yeah. couldn't agree, more. really, like, a willingness to engage more this year too. And, you know, when it I had some situations I was involved with where a shareholder proposal was submitted by any you know, sort a a of a quasi activist investor, and they were very willing to engage with the companies. I think because they also don't know what the outcome is gonna be. You know, Martha said they're subject to the same painting structure of this whole process that public companies are and that other stakeholders are. So I think in terms of moving their policy objectives forward, they're going to use every tool that they have. And one of those tools is going to be engagement with the company. You know, just trying to talk to IR, talk to management, and make incremental, you know, influence them to make incremental changes in the direction that the investor want. And I think for companies both through the corporate secretary and investor relations, we already should be doing this, but even more so today, being on the lookout for warnings of unhappiness, whether it's in governance or other key areas so that you know, it's better to address something when it's still a smaller problem than when it becomes a big problem. And you need to be monitoring and have that look out so you can partner with the board on how best to address issues as they arise that we. may need to add to this. And I think the other thing is that the whole calendar can potentially change. And again, activists, companies, everybody's got the same thing. So there's this sort of cadence that happens with a company engaging. If there's an activist, talk to them. They engage with ISS. The proxy gets filed. They might go back to ISS. They wait, let's call it three weeks ahead of a meeting. ISS comes out with a report. Last list comes out with their report. Are they here or against, and so on. So there's this whole, like, calendar aspect to what's been developed over the years that could potentially just sort of go up in the air If we diminish the influence of proxy advisors, if there's a kibosh on shareholder proposals, which are a form of engagement, we could be looking at a whole different kind of cadence to proxy season. So where do you think we might see the biggest impacts, say on pay, director election, sustainability related proposals? All of the above. I'll start. Yeah, How would look at that? contested elections, A big risk of unreliable voting outcomes will be felt in contested elections where margins are often razor thin. So it could lead to bigger issues. But I think on the broader topic of director elections, universal proxy has already increased scrutiny of individual directors. And when you add in the fragmented voting policies and boards, you may see more variability in individual director support. It's TBD. So if there are directors who have governance or independence or overboarding concerns, it's possible they could receive more targeted opposition from specific investors even without an activist campaign. So it means for companies really scrutinizing new directors and new board roles or employment for current directors even more closely. And then you mentioned say on pay. As Martha said, historically, proxy advisor recommendations have been really influential on. say outcomes. And so as investors do their own internal analysis, companies may see different investors having very different reactions to the same pay practices. And even within investors now, as was said earlier, they've got different groups voting. So even investors could have different groups take different positions within the same investor group. And so it just really increases the importance of clear, tailored compensation disclosure that. explains why the compensation committee and the board made the decisions it's made in the philosophy. And then ESG related proposals is also unpredictable Mhmm. because we're seeing a lot of shift. In the past, it might have been automatic support. Now it might be principled opposition and it can really vary whether it's a US investor or UK or European EU investor. So I think companies just really understanding our investors philosophy helps ensure that the company is making really thoughtful decisions on the positions it takes. So lots to read and think. about. I I would agree wholeheartedly with what Laura said. I'll just put an emphasis on say on pay. There's so much modeling that goes on behind the scenes for the proxy advisers to create a say on pay vote. There's a lot of ingestion of of multiple years of time series data around pay. There's, you know, a a chunk of work that has to be done just to read through a CDNA disclosure. And there was modeling pay for performance, alignment or misalignment, how a CEO paid compared to the meeting, how they're paid compared to their other executives, are there any stoppers in the in the design of the program, etcetera, etcetera. The list goes on of stuff that gets penalized and say I'm paying. And so now we go to private ordering. So everybody's got their own potentially nontransparent model for how to manage whether or not the pay is appropriate. That's a toughie. I think that's gonna take some time to really sort out. Do one area for, you know, where there'll be more of an impact is anything requiring a super majority vote simply. because if when you need every vote and you need to under then you really need to understand where each investor is coming from. So, you know, for example, certain types of charter amendments for some companies require a super majority vote or some percentage of outstanding shares, not just, you know, votes cast at the meeting or votes present at the meeting. So it's those areas, I think, especially where companies need to go up and make sure that their IR team and their proxy and their, you know, the firms that they've hired to help with this truly understand where the votes are and the purse perspectives of those investors and how would we get as many in the door as possible. Yeah. That's a really interesting one, Sara. Could be an interesting dilemma for risk changes, and then companies can potentially have a struggle just getting warm. Yeah. Absolutely. So we do have some questions coming in from the audience. So we spent some time talking about institutional investors, and so there there are members of the audience that are wondering about the smaller retail shareholders and, you know, how all of these changes will impact them. Will it dilute, you know, their rights or remove their rights? Will there be kind of, new rules that govern the way that they can actually have an impact? I I don't think it will dilute their rights. I think if anything, there's a desire among asset managers and other record holders to encourage pass through voting. I think they, you know, they certainly, they have the right to do that now, and they will retain that right. Mhmm. That's pretty I think it's a matter of corporate law in every jurisdiction and also under SEC rules. The SEC also historically has aimed its disclosure obligations at the retail investor. Right? Like, Mhmm. the the rules continue to be structured in a way that they are meant to be accessible to retail investors. Okay. So I think I think they've actually become individually more influential, although, you know, on the margin, I'm not sure how much of a difference that makes. Mhmm. Yeah. There's also a retail product that's been developed sort of for the same reason, which is retail can become more important as the proxy advisor influence gets diluted and and companies aren't sure where the votes are coming from, there there is a retail product out there that can can help kinda get out the retail vote, which has historically been difficult to to get retail to come to the voting booth. there are some more questions coming in on AI, not surprisingly. So, Martha, earlier in the conversation, you had talked about the importance of shaping the narrative and taking into consideration the role of AI. Uh-huh. And so there's a question we're getting around what exam do you have examples of how narratives would need to be adjusted for potential AI interpretations? I know that's a challenging one, but figured I'd. throw it out there. I'm gonna have to do an analogy, which is years ago, you know, I I was global head of research at ISS. Years ago and probably still, ISS was accused of having this check the box governance mentality. You just kind of run through a list of data items and the director's independent, they're not independent, whatever, whatever. So sort of this check the box mentality and that ISS didn't have more of a human side to really stop and analyze the fact pattern and discuss it with the directors and the management. So and that puts in some silly stuff. But I think it kind of goes in the be careful what you wish for bucket. Because will we not get to a point where it's back to the future and the AI systems have to become a check the box mentality based upon a set of data and criteria in an overlay of a policy framework that fits on the answer? And they too not be accused of the government's check the box? Any other perspectives? Yeah. think it's a brave frontier that we need to understand because as investors deploy these AI tools to generate voting decisions and analyze proxies and other company disclosures, we need to monitor and report and understand how these tools are being used and what kinds of new risks are they creating. So there going to be pattern based negative votes on certain disclosure practices? Because the AI large language models of investors are going to have to be trained and what kind of bias are they going to have. And then how can we try to assess that bias and address it through our disclosures to get our narrative out if we're coming from an issuer perspective. So I think it's just going to be need to learn as we grow and monitor it closely and try to breed the tea leaves the best we can. But there are going to be, I think, some pattern based voting results that right now aren't understood, but we need to understand them better. So looking ahead, I'd love for you to share with the audience what are some of the key regulatory developments you'll be watching, you know, over the next twelve to twenty four months that could reshape proxy voting, disclosure, engagement. I I think looking at shareholder proposal modernization will be illustrative because changes that the SEC makes there, you know, stakeholders in the investor base will need to react to those, and they will react to them by finding different ways to engage with companies. We spoke about this a little bit earlier. Mhmm. But we know that that's on the rule making agenda for the SEC. We know that that change is coming. Chairman Atkins has said for many decades that he thinks that there's not a lot of value added that comes from shareholder proposals. And the general consensus is that he's going to scale back the ability to include shareholder proposals in a company's proxy statement. So that is one development where I expect to see, you know, the regulatory development will be in the shareholder proposal space, but the reaction to it in the market is what I think will be really interesting in how companies approach their policy objectives without that tool in their toolkit. I. think? a risk is a sleeper hit. If a risk or guidance gets changed such that institutional investors don't feel compelled to vote or vote on every single ballot item, that can change a whole landscape that's been in place for really forty years. Yeah, I wouldn't point to one. I agree with Sara and Martha's comments. I think putting it all together, what does it mean and then who's going to challenge decisions that issuers make based on SEC guidance if voluntary guidance that the issuer can decide to follow or not. And then also to see other regulators who may not agree with a federal government position taking what obligations they create as well. So it just requires kind of a thoughtful multi lens perspective approach to make the right decisions for, know, in my case, companies. It looks like we might be able to squeeze in maybe a couple more questions here. So one is, do you see ISS and Glass Lewis coming back with an AI SaaS type product. Maybe, Martha, let's start with you just given. your background. Yes. Categorically, yes. Okay. Okay. In order to survive. They. They have, and in particular because ISS was around longer than Glass Lewis was, Mhmm. has arguably the best time series database of corporate governance data points globally of anybody. And they would be very smart if they capitalized on that and ensured that they used it to the best of their ability given the landscape changes. Any other thoughts from our panelists on any products that might come to market? Okay. All right. I think that brings us to the end of our conversation today. There is just so much to discuss on the topic. I want to thank Martha, Laura, and Sara for carving out time to share some of the practicalities around board oversight. We talked a lot about what companies are up against. We talk a lot about all the different stakeholders that have to work together in the changing environment, and so I appreciate all that you shared with us. We will be sharing a recording, you know, of today's session and materials after session. On behalf of Nasdaq and our panelists, thank you so much for joining us today. Thank you very much. Very much. And thanks to you Foli. Thank you very much. Great being with you Martha and Sara and Foli and everyone. Thank you.