In Focus

Bipartisan Senate Group Introduces Compromise Proxy Advisor Bill

A bipartisan group of senators introduced legislation November 14 that requires all major proxy advisory firms to register with the SEC, and directs the agency to periodically review the firms’ policies on conflicts of interest and determine whether any made false statements knowingly to clients. The bill, the Corporate Governance Fairness Act, offers a milder approach to regulating proxy advisory firms than the heavy handed regulatory scheme spelled out in H.R. 4015, legislation that passed the House in 2017 but has not found support in the Senate. Institutional Shareholder Services (ISS), the leading proxy advisory firm, is already registered with the SEC under the Investment Advisers Act. Rival Glass Lewis is not registered. The New York Stock Exchange, the Society for Corporate Governance, the Consumer Federation of America and SEC Investor Advisory Committee Member John Coates support the bill. CII is reviewing the legislation.

CII Urges SEC to Require Confirmation of Proxy Votes, Universal Proxies

In a comment letter submitted ahead of the SEC’s November 15 roundtable on the proxy system, CII urged the agency both to make key fixes in the short-term and fundamental changes in the long-term to improve the accuracy and reliability of proxy voting. CII asked the SEC to require intermediaries that process proxy votes to cooperate to provide investors with confirmation that their votes were counted fully and as intended. The SEC should also finalize its 2016 proposal to require universal proxy cards in proxy contests for board seats so that shareholders voting by proxy can “split their ticket” to vote for whichever combination of nominees they believe best serves their interest. In the long-term, CII said, the SEC should explore the use of distributed ledger technology to streamline the current complicated and layered shareholding system.

CII-REF Publishes Analysis of Shareholder Proposal Resubmission Thresholds

To provide a basis for informed discussion on the shareholder proposal process, the CII Research and Education Fund (CII-REF) published a report, Clearing the Bar: Shareholder Proposals and Resubmission Thresholds, analyzing more than 3,600 shareholder proposals voted at Russell 3000 companies between 2011 and 2018. The report outlines the history of resubmission thresholds; provides data on the impact of the current thresholds; and analyzes the impact of proposals for higher thresholds. The report and its supporting data are available on the CII-REF website.