In Focus

CII Rebuts Wall Street Journal Editorial on Proxy Advisors

CII issued a statement detailing factual errors in a Wall Street Journal editorial that asserts that proxy advisory firms have too much influence over shareholder votes. Investor independence is clear in voting statistics, CII points out. Although leading proxy advisor Institutional Shareholder Services Inc. (ISS) recommended voting against say-on-pay proposals at 11.8% of Russell 3000 companies in 2017, just 1.4% of those proposals received less than majority support from shareholders. CII also noted that proxy advisors’ voting  recommendations generally align with management’s. ISS endorsed management’s proposals on 89% of the more than 21,000 ballots cast in the first half  of 2018 in director elections, auditor ratifications, say-on-pay votes, and on employee and director equity plans at Russell 3000 companies. The Journal editorial attacks proxy advisory firms unfairly for doing the work that institutional investors willingly pay them to do, CII Executive Director Ken Bertsch said in the statement. CII plans to submit a letter to the editor expressing its concerns.

CII Staff Discusses Governance Issues on Capitol Hill

With Congress quiet during the August recess, CII staffers are meeting with key Congressional aides to discuss several priority corporate governance issues. CII General Counsel Jeff Mahoney and legal intern Brendan Tyler met recently with aides to eight members of the House Financial Services Committee-the committee with direct jurisdiction over capital market issues and oversight of the SEC. They provided information and shared CII’s perspectives on issues including: potential regulation of proxy advisory firms, shareholder proposals, universal proxies, dual class stock, Rule 10b5-1 trading plans and quarterly earnings guidance and reporting.

Asian Investor Group Issues Review of Corporate Governance in China

A new report by the Asian Corporate Governance Association (ACGA) examines the emerging system of corporate governance in China. The review, “Awakening Governance,” explains the evolution of Chinese corporate governance practices and the relevance of global best practices to companies listed on Chinese exchanges and to Chinese institutional investors. The report also includes recommendations for regulators, companies and investors. Topics covered in the report include the role of Chinese Communist Party organizations; governance similarities between state-owned and privately owned enterprises; and reporting on environmental, social and governance factors. The findings are based in part on two surveys ACGA conducted in 2017 of foreign institutional investors and companies listed on Chinese exchanges.