In Focus

CII Comments on Federal Reserve Board’s Proposal on Supervisory Expectation for Boards of Directors

CII sent a letter November 16 to the Federal Reserve Board generally supporting the Board’s proposed guidance to “refocus supervisory expectations for boards on a board’s core responsibilities.” The letter, however, suggests a number of enhancements to the proposed guidance, including in the areas of board independence, skill sets & experience, leadership of independent directors, outside commitments, and diversity.

Stitch Fix IPO Highlights Emerging Sunsets in Dual-Class IPOs

Stitch Fix’s initial public offering (IPO), expected November 17, is problematic given its proposed dual-class share structure, but the clothing subscription company’s plans for a “sunset” provision terminating the dual-class structure in 10 years are encouraging. To date, 24 of 108 companies (22%) that went public on U.S. exchanges in 2017 have dual-class structures with differential voting rights that weaken board oversight of management and give public investors little influence. The silver lining: A small but growing number of dual-class companies are adopting provisions that provide for automatic conversion to one share, one vote after a period of time. If Stitch Fix proceeds with its IPO, it will be the sixth dual-class company to IPO with a “clean” (non-contingent) time-based sunset this year, a record (see table here).

CII, 45 Investors & Investor Groups Oppose Proxy Advisor Bills

CII and 45 CII members, other investors and investor organizations sent a letter November 9 to the leadership and members of the House Financial Services Committee strongly opposing two bills that would set stringent regulations on proxy advisory firms. The legislation would "weaken corporate governance, undercut proxy advisory firms' ability to uphold their fiduciary obligation to their investor clients and reorient any surviving firms to serve companies rather than investors," the letter states. 

Paper Rebuts Chamber's Push to Revamp Shareholder Proposal Rule

A new paper written by Ceres, the Interfaith Center on Corporate Responsibility and U.S. SIF: the Forum for Sustainable and Responsible Investment, refutes the U.S Chamber of Commerce's proposals to revamp Rule 14a-8, the shareholder proposal rule. CII co-signed a cover letter that was sent with the paper to the SEC on November 9. The changes are unnecessary and counterproductive to well-functioning capital markets and the interests of long-term investors, the paper says. 

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CII Priorities

Fair Financial RulesSensible, effective rules safeguard investors and strengthen markets.

Dual-Class StockEach share of a public company's common stock should have one vote.

Majority Voting for DirectorsIn uncontested elections, directors should be elected by majority vote.

Universal ProxyIn contests, investors should be free to vote for the nominees they prefer.

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