Transcript
Welcome to shelter, Primacy from freefloat media. A podcast about activist investing Securities Law, and all the ways, the financial and legal worlds, intersect and Collide in real life. We have returned from the holidays and in me and Lipton is law. Professor University of Colorado, who teaches and research is Securities and business law, she holds up the legal end of our podcast. And that's Mike Levin an activist investor who lives and works in Chicago. He covers the financial side of our podcast. Yes, how was your, did you have a fulfilling and relaxing break? I hope you just researching and creating papers I don't. I was mostly not creating papers yet, but I mostly was just hanging out after a lot of travel, but I did get to see wake up dead man. The new Knives Out movie. I was very oh, wow, it's supposed to be really good. It was it was a lot of fun. I enjoyed. Oh excellent because I don't actually have a Netflix subscription so I had to catch it in the theater before it goes away. Oh, so you actually like you know 30 miles because it's a little very limited release. So it qualifies for Academy Awards. Oh, excellent. Yeah, we just we just had a bunch of people here and we still left over his left. So we're still, we're still, we're still, we're still still kind of waiting for it. Yeah, I think we've mostly processed them but there's a couple things in the fridge for my, for my lunch today. Anyway, so yeah, we missed last week but we're back on something of a schedule at least for the next couple weeks of December until the other holidays kind of kick in. And we wanted to cover today, proxy advisors good old. ISS institutional shareholders services and glass Lewis and maybe Eagan Jones but they usually don't enter in the conversation and there's been some interesting developments with them. And importantly, kind of how those developments will affect activism of many stripes and forms. So we hadn't talked about them for quite a while or at least dedicated a full episode to them. So we thought we'd do that. Yeah, I should know just the obligatory pitch for our email address. If you want to get in touch with us, you can email us at shareholder Primacy one word at freefloat, LLC. Yes. Let's let's hear from everybody about what you think of this episode or what other stuff you want to hear about. So anyway, proxy advisors what we should probably start with some of the Some of the basics about what's some of the most most recent developments have been, I suppose. Yeah, so yeah. There there are a lot of they've been under a lot of legal pressure and whether it's legal and political pressure and political pressure. So they have begun to make some very serious changes in their business models or you know how they go about doing what they do. Right? They I think I would describe with your doing. Is there no longer going to give advice? Well, that's not ISS is but less so and glass Lewis claims not essentially, not at all. Yeah, so like I SS is still going to have its Benchmark policies as I understand it and still themed policies. I think, but they're all going to offer like just a research report like because if you ever read one of these reports, it has recommendations but it has a lot of analysis that backs up the recommendation and they're going to offer just the analysis without the recommendation. Right. Exactly. So I I used to I I tend to think of their businesses, having kind of three parts. And the most. Interesting and potentially controversial part is that with this advice, telling people how to vote on specific matters how to vote on a direct election, how to vote on a shareholder proposal, how to vote on a bylaw Amendment? I'm saying pay what the good people at a proxy advisor think about an issue and how to vote but there's two other parts of it in order to get there. They compile and do all sorts of Analytics. And, you know, put together a whole range of data. I would call the kind of research I as I described it, and then the third part is quite mechanical. Where sometime ago, you know years ago their investor clients basically said, okay? You know, we like your advice but we have too many of these things. Could you just actually do the processing? Here's our control number. Do the actual vote? Yeah, there's a bell. Yeah, right. There's a very, as they say mechanical administratively, rich. Kind of processed to actually record vote because of how the whole screwed up, proxy voting system in the US. Works So those are kind of the three areas research analysis. Yeah. And guys, I mean, they're both the classrooms doesn't cast ballots. I'm pretty, or at least, I think it will. Now, it's my understanding and they don't actually cast the ballots. And part of the reason for that is they're not registered investment advisor currently yes, correct. And we'll get that in a minute anyway. So, um, and it's that middle part that is under a lot of pressure. And where there? I think rethinking a lot of their business approach. And yeah, yes. And that go ahead? Yeah, no. I, I mean, you know, you will talk about it. You and I are both pretty cynical about this. It's not the recommendation. The people don't like, it's the research. They don't like. Oh, yeah. That's right. Right. Right, right. Well, they don't like any of it, they don't want. Yeah. I assess class Lewis doing any of this stuff. But and there's and I have a hypothesis about exactly. You know, what that in files have to do with exact, but we'll talk about that little later. But how does this pertain to this having of Benchmark policies? That's what I was kind of wondering because we see I mean, I kind of have an idea but what's your take about this change in The Benchmark, right? So I mean, well is this is still going to have them. So like what both of them did was that they had a sort of the vanilla, this is what we recommend for, I guess, you know, your average institutional investors, something like that. And then they had thematic policies that, like, if you're an Institutional Investor, because all institutional, that's who have particular, Kinds of priorities, like you are climate focused or your Catholic. Like that's one of the public religious that there's really. Yeah, and so forth. Um then those policies would be similar but not quite identical and those would be sort of once again, sort of like, this is what we recommend and then the third thing is the custom policies were to call them. Voting recommendations is almost a misnomer because they aren't recommendations. They are the client says, this is what I care about. I want you to essentially do the analysis to like determine when a company is or isn't violating this particular thing that I care about. Like, so, if the investor says, I care about overboarding, I care about overboarding more than anything else. In the world is the most important thing in the world. To me, I want you to mechanically identify the companies that have overboarding, according to my criteria overboarding, and they'll just tell you, but they're not really making a recommendation. They're more like effectuating the clients preference. That's an example, that's a great example. So yeah. And right so and all both of them have had all three of these. And now i s s is still going to have as I understand it all three, but they're going to offer a fourth, which is just the research with no recommendations at all, right? Exactly. Because there's a need for these clients to gather this, all the data, and the information. So yeah, all right, and meanwhile and but you know, I think that some of the a lot of the objections of what they do includes the research because like the research includes things like They say this director is independent but we actually think that probably all these ties, make them not independent or things like or they let us actually look at the executive compensation package and see how it compares to the actual peers, rather have what kind of what kind of benchmarks. They were kind of peer group they come up with. So it's worth noting that to a great extent, these policies. Are kind of a reflection of what their clients want, they they're kind of aggregating. Yeah, client preferences, the recommend the Benchmark recommendations. I mean the way they form them is by talking to a lot of investors and other like industry people and getting a sense of what best practices are, right? They well they do a serve. I mean they do a well actually broad survey of hundreds, hundreds of clients and investors and all sorts of people. The survey process is a little opaque. Um, I mean we know they do it and and sort of out pops these this policies which purportedly and probably really do reflect the sentiment that is from the survey. But you know, once a year they ask what it, what's your thought about comp? What's your thought about climate and so forth and the surveys I've taken them they're exhaustive, they take a long and so so in some sense the pressure on the proxy advisors is pressure on the shareholders on the investors because those proxy advisors policies and so forth. Reflect Those. client or shareholders, but I mean, there are good mechanism for aggregating investor preferences which means they, you know, they it's the four, it's the function that you Serve for labor, they help, you know, take disaggregated groups and consolidate them and create a stronger. Creative stronger, stronger voice. Yeah. So, but glass look. So what I assess is doing, I mean, what I assess is doing now is, you know, they're getting they're they're adding this just research thing and glass Lewis is trying to get out of the recommendation Vision business entirely like it's just not gonna recommend it's like trying to transition solely to this custom policy 2028, right? And so part of their Portfolio Services. I think for both particularly glass, Lewis is going to be advising. Clients about how to create a tailored or custom policy. For that particular institution. So, so in addition to supplying analytics and Data and so forth that sort of help you understand how a given company sort of conforms, they will advise you about what your policy. They're not going to tell you, but they should say, here's a way. Here's a, here's a way, here's a process for forming policies. Here's how fast you have to update them, here's what you do and don't need policies and so on and so forth, and they and it'll be very much of a consultative activity to try to help a give an Institutional Investor formulate these policies. Because up until now they hadn't really had to they either said okay we like, what is SS or glass Lewis does and we're just going to just vote, you know we like what you do or for the for the I can't remember where you call them the sector or the individual theatric policy thematic. Yeah. We're Catholic. So do that one. Now people have to think of this on their own. Yes. So I mean they were moving in costume. So my understanding is that more and more of the business side was custom to begin with, but this is the glass. Lewis is basically saying That were pushing all into custom. Exactly. Don't even don't even ask anymore. So so right and and there's there's reasons why. And there's there's yeah I mean like I mean we talked about they said there's the point. Like I don't think companies like the pushback and obviously ESG has become a big political football. So I assess even in ISS isn't getting out of the recommendations business, but they are definitely pulling back from their ESG recommendations. Those have already been publicized that its Benchmark policies are a policy is going to have a lot less ESG focused than in previous. Right years. So so consistent with this is also and we'll talk a little more about some of the regulatory implications because there is a several very interesting and potentially very relevant places where these Trends you know, run head first into some legal and Regulatory issues including like glass Lewis and our but I wanted to mention one of the thing before we get to that which is their view about kind of environmental, social governance, ESG type matters and how they view it. I think they along with a lot of the companies and, you know, the big three institutions so far. They've really started to DMV facciate. Yeah, this in some really Interesting potentially troubling or whatever ways and they've taken some very specific steps. So for example I think it was at ISS that is not. Yeah I think it's a diversity or something. Yeah they yeah a couple of months ago. They announced they're not gonna make diversity part of their standard evaluation of boards in their Benchmark policy anymore. Wow. Okay. So they used to be able, they used to look and they used to have standards say, like, you know, a board needs to be you know making progress toward including more diverse candidates and more women. And we were going to recommend that our clients vote against boards or nominating committee or something like that that are chair. That weren't making that kind of progress or that were, you know, affirmatively resisting, that kind of thing. And that evidently is no longer going to be part of any of their. Well, it's not, I don't know if it'll be, I mean, I might be part of a thematic policy, right? Yeah. Correct. But their core Benchmark policies, not going to go, which is a deal and they changed. Another thing, I didn't even realize they had this, Apparently they had a blanket recommendation to vote in favor of shareholder proposals that wanted more disclosure around diversity and climate change, and they are no longer blanket, Lee recommending in favor of their shareholder proposals. Now they say they're going to do that case by case. Oh, and that was something company said, been pushing for a lot. You know, I was kind of, I was kind of surprised to learn. They had a blanket policy recommending in favor of shareholder proposals at all. I mean, it was only the disclosure oriented ones but that does seem right. That does surprise me a little. Yeah, that would that would I again, I don't you know, there are people who study these Policies. You know, there's proxy advisors and Consultants that really go into, you know, very thorough detail to make sure they understand thoroughly about because they want to predict how i s s in class low as that kind of vote on or recommend vote on certain things. I'm not one of those. So and I'm guessing you aren't, you aren't either? But so there's always things that I learned about their policies, which always surprised me. So yeah well that's what I was reported in like mainstream articles. I don't always trust that mainstream articles are entirely accurate but that's how interesting. All right, so go ahead. Yeah you know you go. All right so the This all takes place. In this, you know, in, in the face of a huge amount of kind of pressure from other constituencies and one thing, another change though and this is just to get that at this one. On the table is glass, Lewis is going to register as a, right? Or going to become a registered investment advisor which they weren't before. And I assess has been an RA. They. Yes. And that's actually worth unpacking really quickly. So here I once called proxy advise a regulatory Lacuna. Devices. It's Important it obviously. Has a lot of influence on how companies behave on how investors behave. But it wasn't clear how you regulated it, and it's unsatisfying to say it's entirely Beyond regulation and glass, Lewis and ISS took different approaches. So issue was that proxy advice that they should be a registered investment advisor. And therefore, have fiduciary duties to their clients. And I think part of the reason for that was in part because ISS as a whole side business Consulting companies, which creates a conflict and I think that, you know, it's possible. They thought that by registering as an investment advisor that would help demonstrate that they were really committed to, you know, managing these conflicts well and so forth. So probably not some other so they registered as an investment advisor glass Lewis's position was, we don't have to register as an investment advisor because investment, advisors legally are only those who give advice on buying and selling and we don't give advice on buying and selling. Therefore, we are not investment advisors and we don't have to register as one that was their position for many years. But at the same time, glass Lewis. Said but that doesn't mean we're on regulable, we are regulated because it does not mean we are on regularly because they sort of implicitly conceded one way or another that when they gave proxy advice that counted as a proxy solicitation and as a proxy solicitation that is subject to SEC regulation. If you are asking someone to vote a certain way, that's a proxy solicitation and the SEC has power to Bar false statements and otherwise regulate proxy solicitations. But I assess this position was, this isn't proxy solicitation, this is just where we're a registered investment advisor so they both agreed that they should be regulated. But for different reasons or in different ways. Yes. And then so it's kind of persistent like this for a while. Until the Trump Administration won passed a bunch of regulations of proxy advice as solicitations they were trying to regulate, the industry, by calling a proxy solicitation and ISS not glass Lewis but I assess challenge that regulation saying. But this isn't proxy solicitation because it's not procs. Comes to you and asks, for your advice, it's only solicitation if you read approaching some, right? There's a very specific meaning to solicitation at that, exactly, that's what their argument was. And the DC's are going to agree with them. So, like right, they want. So now glass Lewis is kind of left. They are not. They are definitely not soliciting advice. If they continue to maintain that, they are not shouldn't be registered investment advisors then implicitly what they're saying is you can't regulate us at all and I think at some point they realize that that's probably an untenable kind of position, right? It's guessing so that they are now finally going to register. And so what happens My understanding is that, you know, I SS has been registered as an Ria very long time. And I don't think they've ever received. Any the SEC has never received a complaint. Oh, there's never been some sort of an enforcement or investigation of ISS in their capacity. As an RA, there was one year ago where somebody Within ISS and play, like, trading on inside information and the guy fired and so forth. Oh yeah, there. Yeah, there been issues with that kind of thing. But yeah. Right. Yeah, but so, when you're an RA, and you may know a little bit about they were bribed for information. Actually, there's something like that for information by proxy solicitors, right? And an IRA basically means you get your subject to periodic exams. They come visit. Yeah, you have to keep records, you have to have policies. You have to certain amount of Public public statement of your policies and you have fiduciary duty of loyalty to your client right. Which you know again both and you know, ISS has needed to navigate this for a long time because of their ISS corporate business, which essentially helps the issue words, try to understand how to get better scores and they're very, I'm persuaded, they're very careful. Yeah, I understand it like it's like Different, physical buildings. Like they seem to be very careful about that and I have no reason to doubt them. Yes. And class Lewis is starting to get into that directly to, they know, they've set up a separate, they've set up a separate campus. Yeah, but I mean, well, one of the statements that they've been putting Italy has Something is bad, and it creates conflicts and maybe that's really bad. So it's possible that part of their response to all of these threats is to pull back from getting into. Consolidating it's possible that those are the public statements. They've been making very recently, right? Yeah. So, so and we did a podcast a while ago about their services to to issue. Yes like you said glass Lewis is trying to at least a more exact comp type Services. Maybe there be changing that. I the public statements have just been sort of vague Consulting is bad, which obviously is a hidden ISS, but I don't know if that means that they plan to change what they do as well. It might. Yeah. All right, so so as an RA there, you know there's there's a few things but it's it shouldn't, it shouldn't represent a huge threat. I don't maybe because if we're about to talk about like they are obviously they've drawn a lot of political and legal, political fire, the legal fires coming from the political fire. So on the one hand, a lot of it is about ESG like how dare you recommend ESG. It's woke, it's whatever. But you know, you what you suspect is that that's not what's motivating. A lot of the attacks that what's motivating? The attacks ESG is the hook, what's motivating? The attacks is the fact that they enable push back against corporate boards which corporate boards don't like and very possibly, the one part of the ESG that it may be, the real fuel is, you know, oil and gas interests not liking climate related. That's possibly it. I think there's another angle to it, which we'll cover a little later related to do exact count. Oh yeah. So there's a whole lot of regulatory pressure. That's coming on them but we should talk about those regulatory pressures after a quick break here, a shareholder Primacy. Cheryl the Primacy is brought to you by free flow analytics.com. The only free database of corporate directors their influence and their performance. If you own a Stocker, retirement plan go to free flow, analytics.com and look up which of your elected directors are performing well and which aren't use your vote in the alternative democracy and get your data at free flow. Analytics.com. Now, back to the show, Cheryl Primacy. I'm Annette here with Mike Levin and we're going to talk more about the regulatory threats to the proxy advisor industry. There's and there's a lot of and we, Talked about one. Which is not really a threat, but it was glass Lewis kind of taking matters and so intense becoming in our yeah there are many others related to the White House and state laws and Anti-Trust officers stuff. Let's go through some of these, shall we? Yeah. So right now, there's as I understand an FTC and I trust investigation and I think this can accommodate from two, I'm not exactly sure how the ftc's going about it, but they're sort of two different Anti-Trust claims or you know, places where I think Regulators are looking one is whether the two of them, essentially dominate the proxy advisor industry, which they do, but that, by that self, that's not necessarily an Anti-Trust problem, they have to show that they Right, that they're unfairly kind of a fairly keeping others out and the other is that whether they're, they're voting advice is trying to influence companies. Like, you know, if we all make directors reduce coal output, then that's a coal industry and I trust problem that kind of interesting. So um, so so that's an investigation by the FTC Florida has also sued them under Florida's antitrust law. Again claiming that they essentially this that they are colluding. I mean just the idea of it is just so ludicrous to me that the glass Lewis and ISS are colluding to force corporate boards to adopt liberal. Dogma is this? Oh wow. I think that's one reason why we why one reason we like federal case? Anti-Trust state claim is and all that they are deceiving their their customers, their their industry, their Institutional Investor clients by lying to them and claiming that they're promoting shareholder value. And in fact they're just promoting liberal Dogma. Like the idea that Issa glass Lewis, these two giant corporations are promoting liberal Dogma personal, the personal. Somebody is just anyway, right? Anything they're just reflecting as we talked about earlier they're reflecting kind of what Ludacris yeah but yeah so there's this Florida and I just lawsuit and then, Also, Federal level. But then before reported that the committee for foreign investment in the US is investigating them. Oh, pretty risk, that we're taking, they used to be American companies. Both of them were taken over by essentially foreign, right? So by Deutsche borse. Yeah. And glasses owned by a Canadian. A Canadian version. So obviously, the national security threat of the Canadians has prompted a sippy is investigation. So it's just tells you how they're looking for anything and then we have Texas's proxy advisor law, which we probably talked about which is you know Texas law that said basically says, if they give any advice at all, it's necessarily non-financial. And therefore, they have to disclose that. They are acting not shareholders best financial interests. And I say, any advice at all because governance advice is treated, is not Financial. For the purposes of this Texas, law Ken PacSun in Texas. The AG is investig Them claiming that they are misleading, institutional investors, and the public and public companies in order to push a quote radical agenda. This is under, is this under the Texas lawyer separate from the separately? So, like, like basically, they sued to block the Texas proxy advisor, law and packs and began an investigation that they are misleading, public companies. So that was well reported that ISS Either ISS and or just as sued in Texas and both of them. That's so enforcement of the laws on hold, I think, unfortunately, lost on hold, but Paxton is doing his own, separate investigation, and then we have, like these reports that the White House is going to try to come up with. That was really interesting. So that was last week or something. Yeah. Okay. We don't know what those would look like, the executive order by itself. Couldn't really change anything, but what it could do, of course, is give marching orders to the FCC and the Department of Labor and they could do anything. I mean like they could start putting more burdens on them as registered investment advisors that make it very difficult for them to give advice or. But what they could also do is you know the reason institutional investors take their advice is because it satisfies institutional investors fiduciary duties to their own clients if they rely on proxy advice. So and that means those institutional investors they have to do Sherry duties to their own clock to their own, you know, beneficiaries and those Fiduciary duties. Come from Securities regulation and Department of Labor regulation because they're often in retirement plans. So they could muck with how the fiduciary duties of institutional, investors are satisfied when they rely. Oh interesting. Okay. So so we we could see Conceivably though, I can't imagine it would be a priority, though. I'll talk about why it might be. An executive order from the White House. Yeah, it says that these are really evil. These are my, you know, I'm directing the SEC to rule. Make something something right, right? Right. Right in the Department of Labor. And you're and and there's Especially I mean you know they could try to do something to ISS and maybe glass Lewis and their capacity is an RA. But there's not much. There are a compliance stuff is fairly straightforward. Yeah. But they have to be they can change it. So that's the thing or they may Go at. Issue in glasses clients. And the client and change the requirement or change. How? Hiring Issa indoor glass Lewis kind of fulfills. Your obligations to discharge your fiduciary duty to your clients if you're a fund, right? So that would, that would be the other angle, you know, because I see the executive order, even the White House sends out rivers of executive orders that, you know, and all sorts of subjects that don't go anywhere. And so, so then when I'm when I'm hearing you say, is that would be then incumbent on a regular likely that, I mean, the Department of Labor, this to do something so far. They have not shown any lack of inclination. To go with the executive order, I mean, like so far. I mean, you know, it's seems like the SEC Paul Atkins is very eager to Trump says we shouldn't have quarterly reporting and Atkins like I'm on it. So I I you know, and it's specially since there's so much of a push. It's so many levels to regulate the industry. It feels like if the White House comes out with these orders, they will. Now the question is whether the changes to the business model are going to be sufficient to either defeat attempts at regulation or placate those who are pushing for it. But I think that a lot of what the objections aren't actually to ESG advice, there are objections to the fact that ISS and glass Lewis critically analyze corporate. words and you know, come up with research the corporate boards don't like since I think that's the actual objection, I don't know that the changes to well we won't recommend in favor of diverse boards anymore is really going to placate anyone know unlikely because the at least in the short term, the Volume. And nature of all the ESG proposals are going to pose much less of a threat. To companies at least like I said in the short term. So there's I mean, you know what, you know, if there are many many fewer of these, there's a lot less for, you know, as in glass lose to do a lot, less for shareholders to vote on. And again, I've always maintained that that there are a lot of Institutions that aren't going to be sorry to see that goal. So there's kind of so once the ESG Proposal business kind of gets a lot quieter. You know, the issue class Lewis. I mean, they'll have a lot less to, you know, to issue policies on and so on and so forth, they might. But I mean again since I think that, you know, they're still going to be doing things like analyzing Independence, overboarding and executive cop. And I think that that's where well, that's that's what I'm driving. Yeah, is that, is that, you know, there's a second area, second subject matter that these The proxy advisors work on a lot, which of course is, you know, proxy, contests and, you know, hardcore activists stuff. And that's not going away. There are, there are You know, there's many fewer of those there's you know two or three dozen in the US in a year where and it ISS glass, Lewis doesn't actually have a name for the group ISS. It's called special situations. and and they're the ones that do the really deep dive analysis into, whether approve a merger or whether you know, whether an activist board, candidates get approved and so forth, they're all, I mean, there's going to be demand for that because most You know, the biggest institutions can form their own opinion about how to vote at a proxy contest. But there's a lot of others that really, really appreciate what iss and glass Lewis do for these so called special situations. Again there's many fewer there, you know, clients companies, don't like what happens there, you know, when I SS I've been involved when ISS recommends against a company, they get very you've seen the news releases that come out. Oh, you know they're full of crap here, whatever. But so that whole area that focuses, especially situations, that's always going to be around this, third area that I started alluding to a brownie exact comp or board Independence. And so forth is still a big deal in my hypothesis is this is the real source of friction between companies and the proxy advisors, and this is why they're, you know, way up into the SEC, to try to regulate them and so on and so forth. And it has more to do with board comb then board. Excuse me, exact comp, then like governance in Port composition in Independence again, most Boards. You know, i s s in class, Lewis recommended in support of most boards. Anyway, occasionally you'll get you know opposition but the real sticking point is in their executive comp recommendations, okay? Again, every Us company. Public company does these days generally an annual say-on-pay vote. Okay. It's it's it's right. Yeah, yeah, it's advisory. Well, it's yeah. The required to under Federal logs. Exactly. It doesn't have to be every year. But yeah. Right. But most of them are there's some that do every three years, but but it's generally annual vote companies, have investors have to vote on it and they have to do some really thorough analysis. About whether to vote in support or oppose Sam pay. and say, I pay votes are all over the place and it's a way for Shareholders to express dissatisfaction with a company. It's not the best way. Yeah. And yeah. That it's a sign of discontent. Yeah, okay, so There is a huge amount of influence influencing that tries to go and that's that this is why companies hire the corporate advisors ISS corporate and the glass Lewis equivalent is so they can try to figure out how to do better on sandpaper vote's. Okay not necessarily on the ESG votes, that's all nice. That's all well and good and so forth because we're talking about stuff that's really near and dear to a company leadership's. Hearts is how the CEO and the NEOS get paid. Okay. And if the, you know, ISS is in the middle of it and they're and it's not necessarily black box. But you know how they come up with the recommendation. Now they come with their peer groups. I come with analysis is something that companies really want to try to try to understand and potentially, you know, ideally influence that they really can't do that. All right, so the sticking point here, they that what? I, my ideas companies want ISS and glass was to kind of get out of the exact Camp advisory business. Okay, they want to force investors shareholders to do all their own work, all their own analysis, all their own consideration of, you know, what peer groups should a company should be in and so forth because, you know, fail and say and pay votes. You know, is sort of like Canary in the Coleman and they start to read to other problems because if a company doesn't respond to fails, then you start to get to more vote nose, then you start to get to proxy contests and so forth. And so The you know the the hypothesis as I said is that this is really why companies are trying to aim all these different sources of regulatory pressure at at the advisors it has to do with really with the exact comp and then again and I don't think that's that's again none of these regulatory thing. I mean they may change some of it. You know, but they wouldn't so that well, that's just tells you that the regulatory pressure isn't going to ease up as long as they're doing the as long as they're doing, you know, exact comp stuff, then right there, even just even without recommendations, even just the research report that says, your peer group is not actually your peer group, it's wrong or something. Exactly. And again, I don't see for all the stuff that's going on at the SEC. We've talked about before we'll talk about again. I don't see them changing the same people that maybe probably consistent gonna pull that. I mean, that's that's required by Statute that exactly or somehow reinterpreted in a way, but so that's happening and as long as there's company, as long as Cheryl is going to be voting on pay, at least in an advisory basis. This this whole situation is going to going to present so and what go ahead. No I was gonna ask you if you think these changes are going to affect activism in a sort of General sense of them. Not not. Here's the thing is ISS and glass Lewis. And Egan Jones or whatever. They've been fighting on this stuff off for a long time. Okay. Um they have you know figured out strategies and tactics to try to, you know, quiet things down. They have a very loyal base of clients and it's in their very lucrative businesses. All right, little less lucrative than they used to be, but it's still they still do quite well. And so, you know, over the years there's been, you know, here's there's been Congressional appearances, there's an all sorts of stuff to try to put pressure on them. And, you know, every time they kind of respond, sort of just enough for whatever, you know, glass Lewis becoming an IRA, all right there, you know, kind of suing in Texas to try to make this stuff. So they are able to kind of maintain a little bit of a distance from some of this. so, you know the pressures on I mean, this may make life a little harder for some Investors not just reactive us you know activists activists I hang around with her all used to working with special situations and making her pitch about our board or you know whether emerging needs to be approved. Um, that's not going to change at all. You know, there's there's potentially going to be a little bit of change I suppose and some of the ESG stuff but you know the the regulatory changes are going to take a while you know it's not as easy to try to regulate these folks know. I mean they'll fight it and so forth, but I mean it's if they change, you know, if they're glass Lewis is not doing recommendations at all. And, you know, like whether that sort of a facts I mean, they're agile, they kind of respond to what's going on and they've already responded to what's going on with the marketplace. You know, the big institutions just use them mostly for analytics anyway, yeah, I know I think that isss. This thing will just send you. The research is smart, giving that has to be. That seems to be what I my understanding was the biggest institutions were using for anyone, right? And and a lot of smaller funds. Also use it for the for the processing, you know. You get a, you get actually cast about. Yeah. I mean, we forget a lot of you know, there's a lot. We think of Pension funds, writ large as being, you know, Calpers and calstrs. And so, on a lot of Pension funds, a lot of clients of ISS and glass Lewis is like some local Carpenters, pension fund with like four retirees and administrators and they own several hundred stocks and they need to know how to know how to vote they for them. ISS is very indispensable and and you know, once they get organized they're going to, you know, they'll they'll manage to a post, some of these regulatory moves too. So anyway, right. So all right well this was this was very thorough. We'll have to see some of these regulatory changes and maybe revisit this in a few months and sort of see what what's happening, maybe sometimes. After the proxy season as we call it. Yeah. All right, let's wrap up instead. All right. Okay. This is your holder Primacy hosted by and lifted and me Mike Levin. I'm an independent activist investor and advisor to investors about their activist situations and is Professor of Law and Lawrence W music chair of business. At the University of Colorado law school, you can find me Mike at the activist investor.com and Anne at colorado.edu, our podcast is produced and distributed by free flow media. Thanks for listening. We will talk again soon.