Egan-Jones Corporate Governance Commentary: The Importance of Being Earnest (and Independent)

NEW YORK, Jan. 29, 2026 /PRNewswire/ -- Egan-Jones notes that over the past several quarters, proxy advisors have come under heightened scrutiny. Public comments from JPMorgan CEO Jamie Dimon reflect frustrations shared by many market participants. These concerns have been amplified by a recent Executive Order and by moves from some large asset managers away from some of the major proxy advisors.

What is driving this unease and, more importantly, what is the best path forward? From our perspective, recent developments are ultimately healthy. With thoughtful regulatory reform, the corporate governance ecosystem can emerge stronger and more aligned with shareholder interests.

The Angst

The typically measured tone of Wall Street was notably disrupted when Mr. Dimon stated at a conference that major proxy advisory firms were "incompetent" and "should be gone and dead and done with." His criticism echoes a broader concern: that leading proxy advisors face severe conflicts of interest by deriving significant revenues from corporate issuers while simultaneously advising shareholders on those same issuers.

The Benefit

While such frustrations are understandable, proxy advisors serve a practical purpose. Investment managers face an overwhelming volume of corporate matters requiring votes, many of which are advisory in nature. At the same time, boards and management teams require meaningful oversight, and proxy voting remains the most effective mechanism to provide it.

The Ghost of Teddy

A related development over the past decade has been the rapid growth of index funds. These products have delivered enormous benefits through low costs and broad market access. However, they have also concentrated voting power in the hands of a few large asset managers. One proposed solution has been pass-through voting, allowing investors to select voting policies that reflect their own priorities rather than those of the fund manager.

A Model for Reform

Corporate governance would benefit from reforms that clearly separate roles and preserve independence. Regulators could look to the structure of securities markets for guidance, where conflicts are mitigated through role separation. Clearing houses do not trade securities or manage money, and investment managers generally do not act as brokers.

By contrast, today's proxy landscape is muddled. Two of the largest U.S. proxy advisory firms (both foreign-owned) advise corporate issuers on governance matters while simultaneously making voting recommendations to shareholders on those same issues. In fact, both firms have more corporate consulting clients than proxy advisory clients. This represents an unmanageable conflict of interest that serves neither shareholders nor issuers and is widely viewed as a shakedown.

Similarly, one firm that controls more than 90% of proxy material distribution also issues proxy voting recommendations and provides issuer consulting services, further compounding these conflicts.

Conclusion

The proxy voting infrastructure is highly concentrated and riddled with conflicts of interest. This structure does not serve shareholders, capital markets, or the public interest. As in other areas of financial regulation, reform is needed to separate roles and reduce conflicts. In the meantime, asset managers can mitigate these risks by choosing proxy advisors that are truly independent.

About Egan-Jones Proxy Services

Founded in 2002, Egan-Jones Proxy Services provides independent, objective, and accurate proxy voting advice. Egan-Jones is the only major independent proxy advisor in the United States and is recognized for offering voting recommendations aligned with clients' own priorities rather than conflicted or misaligned benchmark policies.

Media Contact: 
[email protected] 
+1 212 425 0460 

SOURCE Egan-Jones Ratings Co.