White House Executive Order Targets Proxy Advisory Firms – Potential Implications for Companies and Investors

On December 11, 2025, the White House issued an Executive Order entitled Protecting American Investors from Foreign-Owned and Politically-Motivated Proxy Advisors (the “Order”). The Order directs several federal agencies, including the Securities and Exchange Commission (SEC), the Federal Trade Commission (FTC) and the Department of Labor (DOL), to review existing regulatory frameworks applicable to proxy advisory firms and to consider whether additional oversight, enforcement or rulemaking is warranted. While the Order itself does not change existing law, it signals a significant expansion of federal scrutiny on the role that proxy advisory firms play in U.S. capital markets and could have meaningful downstream effects for public companies, private companies with institutional ownership, investment advisers and fiduciaries.

Proxy advisory firms have existed for more than 40 years, but their influence became particularly impactful over the past 15–20 years. Institutional Shareholder Services (ISS) and Glass Lewis control roughly 90% of the U.S. proxy advisory market and are deeply embedded in the domestic and foreign corporate governance ecosystem, providing research and voting recommendations on director elections, executive compensation, shareholder proposals and other matters submitted for approval by shareholders. The Order reflects the current administration’s perspective that proxy advisors exercise outsized influence over institutional voting outcomes and that they operate with insufficient transparency regarding conflicts of interest and ownership structures. Additionally, the Order suggests that proxy advisory firms regularly seek to advance voting positions that are perceived as politically, rather than economically, focused, such as in relation to diversity, equity and inclusion (DEI) and environmental, social and governance (ESG) matters. Against this backdrop, the Order instructs federal agencies to reassess whether current regulatory oversight structures adequately protect investors and market integrity.

At the center of the Order is a directive to the SEC to conduct a comprehensive review of its rules, guidance and enforcement posture relating to proxy advisory firms. This review expressly directs the chairman of the SEC to:

• enforce federal securities laws’ anti-fraud provisions with respect to material misstatements or omissions set forth in voting recommendations made by the proxy advisory firms;
• assess whether to require proxy advisors to register as Registered Investment Advisers under the Investment Advisers Act of 1940, including the rules promulgated thereunder;
• consider requiring proxy advisory firms to provide enhanced disclosures and transparency regarding their recommendations, methodologies and conflicts of interest, particularly regarding DEI and ESG matters;
• analyze whether, and under what circumstances, a proxy advisor serves as a vehicle for investment advisers to coordinate and augment their voting decisions with respect to a company’s securities and, through such coordination and augmentation, form a group for purposes of Sections 13(d)(3) and 13(g)(3) of the Securities Exchange Act of 1934 (Exchange Act); and
• directs SEC staff to evaluate whether Registered Investment Advisers are satisfying their fiduciary duties when they engage proxy advisory firms to provide advice on non-pecuniary factors when investing, including in relation to DEI and ESG matters.

The Executive Order further raises questions under the Exchange Act, particularly with respect to the federal proxy rules. The Order’s directive to the SEC Chairman to revisit Rule 14a-8 and related guidance suggests the potential for renewed debate around the procedural and substantive standards governing shareholder proposals and the role proxy advisors play in shaping voting results. Any changes in this area could directly affect how companies prepare proxy statements, engage with shareholders and respond to governance-related proposals. It is noteworthy that the SEC recently has been particularly focused on the manner in which the agency and registrants handle shareholder proposals, including precatory (i.e., non-binding) proposals.

The FTC is instructed, in consultation with the U.S. Attorney General, to evaluate whether proxy advisory firms engage in unfair, deceptive or anti-competitive practices. In particular, these officials are directed to investigate, among other things, whether the proxy advisory firms conspire or collude to diminish the value of consumer investments; fail to adequately disclose conflicts of interest; and undermine the ability of consumers to make informed decisions. Given the concentrated nature of players in the proxy advisory market, any antitrust-focused inquiry could have implications not only for proxy advisors themselves but also for institutional investors and issuers that rely on their analyses. While the Order does not prejudge outcomes, it underscores the possibility that competition law considerations could become a more prominent feature of the proxy advisory regulatory landscape.

In addition to the SEC and FTC, the Order assigns a significant role to the DOL, which is directed to review the fiduciary obligations applicable to proxy voting and voting advice under the Employee Retirement Income Security Act of 1974 (ERISA). Specifically, the DOL is directed to consider whether proxy advisors, and those who rely on them, are acting solely in the financial interests of retirement plan participants when casting votes or formulating voting policies. In addition, the Secretary of Labor is instructed to take all appropriate actions to strengthen the fiduciary standards of ERISA plans. This review may intersect with longstanding debates over the extent to which fiduciaries may consider non-pecuniary factors in proxy voting decisions and could result in additional guidance or enforcement activity affecting plan sponsors, asset managers and advisers.

For public companies, the Order does not require immediate changes to proxy disclosures or shareholder engagement practices, which is noteworthy as we head into the upcoming proxy season. Nevertheless, it does signal the likelihood of regulatory developments that could alter the influence, methodologies or obligations of proxy advisory firms over time. Companies preparing for upcoming annual meetings should be mindful that proxy advisors may adjust their policies or disclosures in anticipation of increased scrutiny. Issuers also may wish to reassess how they engage with proxy advisors and institutional investors, particularly where voting recommendations have historically driven outcomes on governance or compensation matters. Private companies with institutional ownership, as well as portfolio companies of private equity and other investment funds, may also be affected. Institutional investors subject to ERISA or other fiduciary regimes may revisit how they use proxy advisory recommendations across their portfolios, including in contexts beyond public company annual meetings.

As federal agencies begin the review processes contemplated by the Order, companies and investors should expect a period of regulatory uncertainty rather than immediate rule changes. Nevertheless, developments in this area warrant close attention, particularly for issuers preparing for the 2026 proxy season and beyond. Companies should review governance practices, especially around ESG, DEI and board elections, reassess reliance on proxy advisors and proactively communicate and engage with investors. Monitoring regulatory developments and engaging legal or governance advisors will be key to navigating potential scrutiny. Overall, preparation and transparency are important risk mitigation tools in the current environment.

We will continue to monitor agency actions and guidance arising from the Order and assess their implications for corporate governance, shareholder engagement and fiduciary compliance.