In Focus

ISS, CII Launch Website Against Chokehold Regulation for Proxy Advisors

Institutional Shareholder Services (ISS) and CII today launched an educational website opposing proposed federal legislation H.R. 4015 that would undermine the independence and business of proxy advisory firms that provide reports to institutional investors on matters that are to be voted on at public company annual meetings. The website, protectshareholders.org, explains that H.R. 4015 would give companies the right to review proxy advisors’ research reports before they go to investor clients, giving investors less time to review them and potentially skewing the reports in favor of management. “While proponents of H.R. 4015 have created the illusion of problems in proxy advising that need fixing by Congress, what they really seek to do is minimize the voice of shareholders and investors on matters like CEO pay,” said CII Executive Director Ken Bertsch. See Bertsch’s interview on CNBC here. Additional CNBC discussion, including commentary from Mike Mayo of Wells Fargo Securities, is here.

Universal Proxies, Blockchain Technology are Keys to Proxy Voting Reform, CII Executive Director Tells SEC Committee

The current proxy plumbing regime needs to be reformed to create a proxy voting system that is timely, accurate, transparent (including routine end-to-end vote confirmation) and efficient, CII Executive Director Ken Bertsch told the SEC’s Investor Advisory Committee at a September 13 meeting. “The current system of proxy voting is fraught with inefficiencies and a too-large margin for error,” he said. Bertsch urged the commission to move forward on its 2016 proposal to allow the use of universal proxies in contested director elections and to look seriously at using private blockchains, system-wide, operated by trusted third parties, to improve reliability and transparency. He explained that universal proxy cards would allow shareowners to “split their tickets” and vote for the combination of shareowner and management nominees that they believe best serve their economic interests. Bertsch encouraged the SEC to explore the use of a blockchain-based voting system to improve the timeliness, accessibility, accuracy, certainty and cost-effectiveness of proxy voting.