Proxy Advisors Likely Part of SEC Proxy Process Roundtable

August 03, 2018

The Association’s Center On Executive Compensation urged the Securities and Exchange Commission to include proxy advisory firms and shareholder proposal issues as agenda items for a fall SEC roundtable on the proxy process announced this week by Chairman Jay Clayton.

In the announcement, Chairman Clayton cited five topics of potential discussion, including both proxy advisory firms and the process for submitting and voting on shareholder proposals, each with a set of detailed questions for consideration.

On proxy advisory firms, Mr. Clayton posed multiple questions that “warrant additional consideration,” such as “[w]hether there are conflicts of interest, including with respect to related consulting services provided by proxy advisory firms, and, if so, whether those conflicts are adequately disclosed and mitigated.”

The roundtable will provide SEC Commissioners and the staff an opportunity to hear from stakeholder groups on proxy process issues to determine whether official action, including potential rulemaking, is needed.  In 2013, the SEC held a roundtable on proxy advisory firms in 2013 and the SEC Staff issued Staff Guidance focusing on the responsibilities of investors which utilize proxy advisor services.

Roundtable details, including the date, speakers, and agenda have yet to be announced.  Given Clayton’s highly focused commentary, inclusion of proxy advisory firms and shareholder proposals on the agenda appears very likely. 

The Association’s Center On Executive Compensation submitted a letter supporting the thorough examination of proxy advisory firms and shareholder proposals as part of the roundtable agenda.  The Center plans to submit comprehensive comments in the coming months and engage the SEC as part of the roundtable process.