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Leading Investor Group Applauds SEC Proposal to Tighten Insider Trading Rules Leading Investor Group Hails SEC Rule Requiring Universal Proxy Cards in Contests for Board Seats CII Virtual Fall Conference, September 22-24 CII Elects Board Members for 2021-2022 CII Virtual Spring Conference, March 8-10 SEC Muzzles the Voice of Investors by Raising the Bar on Shareholder Proposals Leading Investor Group Seeks Strengthened Sustainability Reporting CII Virtual Fall Conference, September 17-22 Leading Investor Group Dismayed by SEC Proxy Advice Rules Leading Investor Group Calls for Action on Racism Amy Borrus to Become Executive Director of the
Council of Institutional Investors on July 1
CII Statement on Virtual Shareholder Meetings During Public Health Emergency CII Elects Board Members for 2020-2021, Approves Three Policies CII Spring Conference, March 9-11, Washington, D.C. Leading Investor Group Blasts SEC’s Proposed Rules for Proxy Advice and Shareholder Proposals CII Announces Advisory Council Members for 2020 Leading Investor Group Rebukes SEC for Proposed Rules That Undercut Critical Shareholder Rights Leading Investor Group Urges Companies to Commit to Long-Term Executive Compensation Council of Institutional Investors Board Appoints Amy Borrus to Succeed Ken Bertsch as Executive Director Media Advisory: CII Fall Conference, September 16-18, Minneapolis Council of Institutional Investors Responds to Business
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Leading Investor Group Calls Out Directors Responsible for
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Leading Investor Group Petitions SEC to Require Clear Disclosure on CEO Pay Targets Council of Institutional Investors Says Lyft’s Planned Dual-Class Structure is Harmful to Investors Media Advisory
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Guide to Disclosure of Board Evaluation Processes
Investor Group Applauds CommonSense Principles 2.0 CII Fall Conference, October 23-25, New York City Leading Investor Group Responds to President’s Tweet on Quarterly Financial Reporting Investor Group Responds to Wall Street Journal Editorial CII Applauds Shareholder Protections in House Bill CII Elects New Board, Names Florida SBA Executive
Director & CIO Ashbel Williams Chair
New Report Details Practical Steps Corporate Boards Can Take to Combat Sexual Harassment CII Applauds SEC Commissioner Jackson's Call for Listing Standards to Require Sunsets on Dual-Class Stock CII Spring Conference, March 12-14, Washington. D.C. CII Announces Advisory Council Members for 2018 CII Report Highlights Risks Associated with a Common Chinese Corporate Structure Institutional Investors Oppose Stitch Fix Dual-Class Structure but Welcome Sunset Provision Uber’s Governance — Investor Response Do Not Disadvantage US Investors on Research,
CII Asks SEC
CII Fall Conference, September 13-15, San Diego CII Welcomes S&P Dow Jones’ Decision to Ban New Multi-Class Companies from Key Stock Indexes CII Applauds FTSE Russell Decision to Set Voting Rights
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Investor Group Urges Blue Apron to Ditch No-Vote Shares Institutional Investors Dismayed by House Passage of
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CII, Institutional Investors with $4+ Trillion in Assets Oppose
Anti-Shareholder Provisions of the CHOICE Act
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Leading Investor Group Rebukes SEC for Proposed Rules That Undercut Critical Shareholder Rights
Washington, D.C., November 5, 2019 — The Council of Institutional Investors (CII) today criticized the Securities and Exchange Commission (SEC) for proposing rules that undercut important shareholder rights and appear intended to limit shareholders’ voice at public companies in which they invest.
Of particular concern is the heavy-handed regulatory structure the SEC today proposed for proxy advisory firms that provide institutional investors with independent research on the fairness of CEO compensation and other matters on company ballots at annual shareholder meetings. If adopted, the proposed rules would pressure proxy advisory firms to take a more management-friendly approach in their reports and vote recommendations, and could even jeopardize the viability of their business.
CII also objects to SEC proposals that would limit a critical channel for shareholders to express their views on company governance and other issues. Specifically, the SEC would raise the ownership and resubmission thresholds for shareholders to place their own resolutions on company ballots. This will restrict the ability of retail investors to submit shareholder proposals and impede future new social and environmental proposals, since those generally take time to gain traction.
“CEOs do not like public challenges to how and how much they are paid, or to be second-guessed by shareholders on a range of environmental, social and governance matters,” said Ken Bertsch, CII’s executive director. “That is what is driving the concerted effort by lobbyists for CEOs to prod the SEC to shackle proxy advisory firms and limit shareholder proposals. The rules are an unnecessary interference in the free market, and would impede investors’ voice on critical matters at U.S. public companies.”
“The goal of the coordinated, corporate-funded campaign to promote proxy advisor regulation is not to protect investors or even promote capital formation,” Bertsch explained. “Rather, it is to make it harder and more expensive for institutional investors to get the expert advice they need to hold executives accountable and, in turn, to make it less likely that investors vote against management or even vote at all.”
The proposed onerous regulation of proxy advisory firms would provide no clear benefit to investors while creating new barriers to entry in what has historically been a low-margin industry with few competitors.
CII believes that there is no compelling need for the federal government to rein in proxy advisory firms. The business community’s claim that the firms’ reports are strewn with errors is not supported by the facts. Nor is there any merit to charges that proxy advisory firms exert undue influence over how institutional investors vote. Just as unwarranted is the SEC’s controversial requirement that proxy advisory firms grant companies the right to review advisor reports before they are sent to investors, the firms’ paying clients.
“The SEC should regulate based on evidence, not pressure from CEOs who want more control of the voting process,” Bertsch said.
See the fact sheet here for a detailed rebuttal of the SEC’s proposed rules.
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Click for PDF version. For media inquiries, please contact CII Editor Rosemary Lally.