This is the fourth of a four-part series from Prospr Aligned’s head of corporate engagement and proxy voting expert, Jerry Bowyer.
One of the more revealing sections of ISS’s 2026 Benchmark Survey concerns corporate redomiciling. The timing is hard to miss. Tesla and Exxon have both moved from Delaware to Texas, and the survey repeatedly asks respondents to focus on whether such moves weaken shareholder rights. It highlights concerns about shareholder lawsuits, derivative actions, and shareholder proposal rights and asks how heavily those concerns should weigh in evaluating a move.
The problem is not that ISS asks the question. The problem is the assumption built into it.
Throughout the section, the survey largely treats limits on litigation, proposal access, or activist mechanisms as potential harms to shareholders that may outweigh the benefits of relocating. But many investors increasingly reject the idea that more lawsuits, more activism, and more procedural leverage automatically translate into better shareholder outcomes.
Texas advocates argue the opposite. They contend that a more predictable legal environment, stronger respect for board authority, and reduced litigation costs can benefit long-term owners. Whether that view is right or wrong, it is now a major corporate-governance debate.
Yet the survey gives remarkably little attention to the possibility that some so-called shareholder rights have become tools of activism rather than tools of ownership. ISS asks whether companies are weakening shareholder rights. It spends far less time asking whether the existing system may have given activists too much power in the first place.
The same pattern appears in the survey’s discussion of “perpetual withhold” recommendations, where directors can continue to face adverse voting recommendations indefinitely for governance provisions ISS views as problematic. Again, the underlying assumption is that restrictions on activist mechanisms are governance failures rather than potentially legitimate efforts to protect long-term shareholder value.
The broader issue is not Texas versus Delaware. It is whether proxy advisors are willing to seriously consider the possibility that the governance establishment’s preferred model is no longer the only reasonable one.
On that question, the survey appears far more interested in defending the old consensus than examining why companies are increasingly looking for alternatives.