This week, ExxonMobil’s shareholders voted overwhelmingly to redomicile the company to Texas, bucking the opposition of the foreign-owned proxy advisor duopoly of ISS and Glass Lewis. It is a watershed moment for our capital markets in the United States, with a growing number of public companies representing trillions of dollars in market capitalization now poised to follow Exxon’s lead to Texas. The more important story is what made the vote possible, and the opportunity we see at the Texas Stock Exchange to take it mainstream.
The proxy advisor firms routinely leverage their 97% market share to push undisclosed agendas that can undermine shareholder value, including recommending against Texas redomiciles despite the clear legal and financial benefits. The retail participation gap has been a key part of their strategy. Exxon is roughly 40% retail owned. Using Broadridge’s 2025 ProxyPulse data showing a retail voting participation rate of 28.0%, approximately 72% of that retail base — or nearly 29% of all outstanding shares — may remain unvoted in a typical year. Exxon broke the pattern by securing no-action relief from the SEC in fall 2025 for an innovative standing voting instruction program, letting retail shareholders pre-commit their votes to align with the board and management. The shareholders showed up and the proxy advisor firms lost.
Most Americans hold shares in “street name” through firms such as Schwab, Fidelity or Robinhood. When investors give voting instructions, their shares are voted accordingly. When they do not, legacy exchange rules increasingly leave those shares unvoted on substantive matters, as fewer proposals are now treated as routine. Broker non-votes and absent shares can create quorum risk, raise approval thresholds and function as practical opposition. Proposals fail not because shareholders opposed them, but because too many never responded. That is governance by friction.
Retail shareholders invest their own money and expect a system that honors that commitment. Instead, existing exchange rules and proxy advisory firms dampen their voice, their governance rights, and ultimately their financial interests.
Exxon’s win was real, but it was a single-issuer fix to a market-wide problem. Not every public company has the will or resources to do what Exxon did, and companies breaking the proxy firms’ grip one at a time, however laudable, will only get the market so far. Exchanges can address the same problem at the level of market structure, which is where it actually sits.
At the Texas Stock Exchange, we are proposing what would be the first exchange-level reform of its kind to begin doing just that, subject to SEC review. The approach is straightforward: brokers should vote uninstructed retail shares in proportion to the instructions they receive from shareholders who do participate. If 60% of voting shareholders support a proposal and 40% oppose it, uninstructed shares would follow the same distribution. This is not broker discretion. It is math. It does not take away anyone’s vote, and it does not entrench management. It restores a basic principle: participation confers influence; silence should not distort the outcome.
Under Chairman Paul Atkins, the SEC’s no-action relief for Exxon’s retail voting program established that standing voting instructions are no longer theoretical. The growing scrutiny of the proxy advisor firms reflects a broader recognition that too much voting authority has migrated away from investors themselves.
The same dysfunction repeats at the institutional level. Investment advisers have a fiduciary duty to vote proxies in the best interest of their clients, but in practice many rely on the proxy advisory firms — ISS, majority-owned by Deutsche Börse, and Glass Lewis, owned by Ontario Teachers’ Pension Plan — whose recommendations have become the de facto outcome for a substantial portion of institutional votes — leaving teachers, firefighters, retirees and families with little practical say over the voting policies applied in their name. The institutional layer will require its own reckoning, but exchanges can move now on what falls within their authority.
The stakes extend beyond proxy mechanics. Governance friction is one reason being public has become more unpredictable, expensive and legally treacherous, helping push the number of U.S. public companies down sharply — from roughly 8,000 in the late 1990s to approximately 4,300 today — over the past generation while private markets have expanded.
The answer is not to abandon public markets; it is to make them work again. At the Texas Stock Exchange, our central organizing principle is setting the conditions under which companies want to be public. Taking the unprecedented step of constraining proxy advisor influence through exchange-level rules is a key part of that mission.
Exchanges should not merely process the dysfunction of the existing system — they should help fix it on behalf of their listed companies. That is issuer alignment in practice. Meanwhile, neither NYSE nor Nasdaq has advanced comparable structural proposals on proxy reform.
Exxon’s shareholders showed what is possible when retail’s voice is restored and the proxy firms are held in check. Exchanges can provide that relief at scale, making where companies choose to list all the more consequential. On this and other areas of issuer alignment, the Texas Stock Exchange is leading the way.
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