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PR Newswire

July 24, 2008

PROXY Governance Announces Support for Recommendations in Millstein Center Study
Calls for Policymakers and Regulators to Review Proxy Advisory and Voting Practices

VIENNA, Va., July 24, 2008 /PRNewswire via COMTEX/ -- PROXY Governance, Inc. (PGI), a leading independent proxy advisory and voting company, today announced its support for the recommendations set forth in a working draft study issued by the Yale School of Management's Millstein Center for Corporate Governance and Performance. In addition, PGI strongly criticized the conventional wisdom followed by many that good corporate governance can be reduced to a "one-size-fits-all" set of best practices.

The report, "Voting Integrity: Practices for Investors and the Proxy Industry" ("Working Draft") identifies several key threats to the integrity of the proxy voting process, including lack of transparency surrounding proxy voting policies and conflicts of interest at both investing institutions and proxy advisory firms.

PGI believes the recommendations put forth in the Working Draft are a necessary first step in addressing these problems and, most notably, supports the recommendations:
-- that proxy advisors appoint an external policy advisory board;
-- that proxy advisors adopt a code of professional ethics; and
-- that the Securities and Exchange Commission ("SEC") convene a blue ribbon panel to modernize the proxy voting system.

PGI further recommends that the Millstein Center expand the scope of the proposal for a blue ribbon panel to include three critical problems in the proxy advisory business:
-- Refuting the notion that "one-size-fits-all" corporate governance can be reduced to a common set of "best practices;"
-- Addressing the monopolistic power of RiskMetrics/ISS that has resulted in it wielding SEC-like rule-making authority over corporate governance practices without appropriate checks and balances; and
-- Eliminating conflicts of interest that result from selling to institutional investors corporate governance ratings on companies while at the same time selling consulting services to those same companies about how to improve their corporate governance ratings.

"It is a dangerous misperception to conclude that effective corporate governance can be reduced to a simple set of 'best practices' that can be universally applied and then be used to rate the quality of companies," stated PGI President & COO Michael J. Ryan, Jr. "This risk is exacerbated by the inherent conflict that occurs when proxy advisors sell corporate governance ratings to institutional investors and then turn around and sell consulting services to the very same companies covered by the ratings about ways to improve their scores."

"An oversimplified approach to corporate governance runs the risk of repeating the mistakes of the past," concurred PGI Chairman James Melican. "A recent draft study by The Rock Center for Corporate Governance at Stanford University suggests that a variety of corporate governance ratings services, including the Corporate Governance Quotient or 'CGQ' scores widely promoted by RiskMetrics, have little or no predictive value in identifying subsequent company performance or future undesirable events associated with governance-related breakdowns."

PROXY Governance, Inc., (http://www.proxygovernance.com) is an independent and conflict-free proxy advisory firm that helps build long-term shareholder value by providing various proxy advisory services to institutional investors, including mutual funds, public and private pension funds, insurance companies' investment divisions, and investment banks. PGI's services include high-quality research, independent voting recommendations and a state-of-the-art proxy voting platform, known as PROXY Advantage.

Also appeared in MarketWatch.