Exclusive: Proxy adviser research head to leave ISS
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Cristiano Guerra, the influential head of special situations research at Institutional Shareholder Services, is leaving the proxy adviser and is expected to join an advisory group within FGS Global, Axios has learned.
Why it matters: The research team that Guerra led since 2017 holds significant sway in shareholder decisions involving proxy fights, CEO ousters, hostile takeovers, and other corporate battles.
Zoom in: There are a few firms that provide proxy advisory services —including Glass Lewis — but ISS is the largest, with the biggest market share.
- Having led the group since 2017, Guerra oversaw critical decisions by shareholders on whether to support existing management teams, or to back activist hedge funds or hostile acquirers.
- Andrew Borek, an ISS associate director who has worked at the proxy adviser since 2012, will be taking over for Guerra, according to people familiar with the matter. Borek did not immediately respond to a request for comment.
How it works: Investors pay ISS to provide research and recommendations on how to vote on shareholder proposals at annual or special meetings.
- Large investors that have the in-house capability to do this kind of research still subscribe to ISS, and many mutual funds and other investors effectively outsource proxy voting to ISS or other proxy advisers.
ISS' special situations team steps into the juiciest of corporate fights. When a company is embroiled in a hostile takeover or an activist investor fight, all efforts aim at resolving the issue before an annual or special shareholder meeting.
- If negotiations fail, and the matter moves to a shareholder vote, all eyes turn to ISS' recommendation on whether to vote for the company, the dissident investor, or some kind of combination.
- Advisers on both sides of corporate battles will say that success of their efforts will often depend on an ISS recommendation.
Case in point: When the famous corporate raider Carl Icahn attacked health care group Illumina in 2023, the CEO's fate as well as the future of the $32 billion company rested in hands of shareholders voting at the annual meeting.
- ISS recommended that shareholders vote for eight of Illumina's director candidates and against the company's chairman. A few weeks later, shareholders did exactly that.
Yes, but: Shareholders don't always follow ISS. Last year, the firm recommended Disney shareholders vote for activist investor Nelson Peltz to join the company's board — a nod investors rejected.
Between the lines: Guerra's special situations role at ISS requires absorbing the cases being made by executives, advisers, and investors, while trying to judge what's best for shareholders.
- Politicians have targeted ISS and other proxy advisers for their influence over key corporate decisions.
- Guerra, 52, is the third person to hold the role. Chris Young, now at Jefferies, left the ISS research head spot for Credit Suisse in 2010. Chris Cernich left the role in the fall of 2016, to be a co-founder of Strategic Governance Advisors (SGA), a division of FGS global, the strategic advisory group and communications consultant.
What's next: Guerra is expected to join Cernich at SGA, the sources said.
- Guerra did not return a request for comment. FGS declined to comment.
- SGA helps the boards of public companies that have, or expect to have, conflict with their shareholders. Since the 2017 launch, it has worked on Disney's fight with Peltz, HP's battle with Icahn, and Huntsman's war with Starboard Value.
- Examples of SGA's takeover advisory include advising Bristol Myers Squibb in its contested acquisition of Celgene, and Magellan Midstream Partners LP's purchase by ONEOK.
This story has been updated to include Guerra's successor at ISS.
