HR Policy Association in conjunction with the Center On Executive Compensation believe that proxy advisory firms serve a necessary role for institutional investors by synthesizing pay and governance information from proxy statements and providing analyses and voting recommendations. These analyses and recommendations have given proxy advisory firms an undue level of influence over the pay practices of companies. The Center is particularly concerned that proxy advisory firms have significant conflicts of interest in their business models that raise questions about the independence of their analyses. In addition, there is a concern in certain cases that inaccuracies in final advisory firm reports may have a material impact over the outcome of proxy votes. Proxy advisory firms owe their institutional investor clients a fiduciary duty in analyzing company proxies and making recommendations, and the institutional investors have a fiduciary duty in monitoring the recommendations they receive from proxy advisory firms. We believe that the U.S. Securities and Exchange Commission should issue guidance resulting in more careful oversight of the advisors’ operations and requiring institutional investors to be more diligent in monitoring proxy advisory firms.