Here’s something Meredith wrote yesterday on The Proxy Season Blog: Last week, Dave shared that Glass Lewis is taking legal action following the enactment of Senate Bill 2337, which he blogged about back in June. We now know that ISS filed a lawsuit the same day. This alert from Meridian Compensation Partners has more on the challenges:

Glass Lewis and ISS allege the Texas law is unconstitutional by violating their First Amendment right to advise clients even if the state does not agree with the advice.

In addition, both proxy advisors claim that the Texas law will (i) impose significant costs on their business and (ii) require the firms to provide misleading warnings to their clients that their proxy advice was against their clients’ financial interests. Glass Lewis further claims that the law exposes its clients to the risk of unwarranted litigation by private parties and the Texas Attorney General. Moreover, ISS alleges the law is designed to protect corporate directors and will harm shareholders whose votes are an “important check and balance” against boards.

Meridian expects the Texas court will rule on the cases before the law takes effect in September.

– Liz Dunshee