ISS, founded in 1985, grew to be the largest firm in the field of corporate governance. The field traces its roots to the 1970s, when social activists organized to prod universities and foundations into selling or avoiding the shares of companies that did business in South Africa. They formed the Investor Responsibility Research Center in Washington, and began pursuing a broader agenda of opening up the governance of public corporations in the name of openness and "shareholder democracy."
ISS was founded by one of the early corporate governance advocates, Robert AG Monks. And both Jamie Heard, its current chief executive, and McGurn, vice president and director of corporate programs, worked at the Investor Responsibility Research Center.
While there are many corporate governance consultants, Institutional Shareholder Services is the leading proxy adviser, making recommendations on thousands of proxy initiatives. Last year, it merged with its largest rival, Proxy Monitor, so the combined firm has even more power and 270 employees.
Team of analysts
Kumar, a 32-year-old lawyer, is the lead analyst on the Hewlett-Compaq deal. He is working with a team that, in addition to McGurn, includes Shirley Westcott, Steve Sears, Edward Seaton, Bemal Patel and Vittorio Lara, all analysts.
The decision-making process at ISS is consensual. "But Ram is honchoing the project and his name will appear on the report," McGurn said.
The report, Kumar said, will probably run more than 20 pages. In contested mergers, he said, ISS examines broad sets of issues. First is the governance issue of how the board decided to pursue the merger. Was the board thorough and careful in weighing the deal and the alternatives? Was there open debate?
In this case, Kumar said, there seem to be no contentions that the process by which the decision was made was flawed. Instead, he said, Hewlett and other opponents of the merger say the economics do not make sense. "That's the crux of the issue here," he said.
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