October 05, 2020


WASHINGTON, D.C. - The U.S. Chamber of Commerce’s Center for Capital Markets Competitiveness (CCMC) in conjunction with Nasdaq today released its annual proxy season survey, intended to help policymakers and the general public understand the relationship between public companies and proxy advisory firms.

The findings from the 2020 Proxy Season Survey show public companies are prepared to participate in the new SEC process, specifically welcoming the ability to “review and comment” on draft proxy advisory firm recommendations and confirming it would not cause delays or confusion. The new SEC rule takes on more importance given the survey also found that responsiveness and transparency of proxy advisory firms continues to decline and conflicts of interest still largely exist.

“Proxy voting should enhance the long-term performance of public companies. However, the unregulated proxy advisory industry has operated for years with a number of serious deficiencies including lack of transparency and conflicts of interest,” said U.S. Chamber Center for Capital Markets Competitiveness Executive Vice President Tom Quaadman. “Recent reforms implemented by the SEC and proposed by DOL will help enhance transparency within the proxy advisory industry and ensure that proxy voting is tied to economic returns and strengthens investor protection. We will continue working with policymakers to push for further reform where needed so that the proxy advisory system is improved.”

Public companies are engaged and are ready to participate in the proxy advisory firm process. According to the survey, an overwhelming majority (97%) of companies said they would support and make themselves available to “review and comment” on draft proxy advisory firm recommendations, and 85% said that such a mechanism would not create any unnecessary delays or confusion in the proxy voting process.

As previous surveys have found however, the ability for public companies to communicate with proxy advisory firms remains a significant challenge. Fewer issuers (7%) are requesting previews of vote recommendations, continuing a declining trend from 2019. Additionally, for companies who asked to meet with proxy advisory firms on matters subject to a shareholder vote, their request was denied 69% of the time.

Many companies also believe that proxy advice is not developed with the most recent and accurate data available, with only 44% of the companies surveyed believing that proxy advisory firms carefully research and consider all relevant aspects of an issue on which it provides advice. The recent SEC actions should reverse these trends.

“As a public company, and on behalf of thousands of public companies on our market, Nasdaq believes the SEC’s proposed reforms would facilitate a more effective and transparent process, based on the absolute bedrock of accuracy, for investors and companies as they utilize the services of proxy advisory firms,” said Ed Knight, Vice Chairman, Nasdaq. “The strength of the U.S. public markets is vital to economic resilience, and we look forward to continuing our work with issuers and regulators to best serve shareholders, while ensuring greater protection and access of all investors.”

In July 2020, the SEC finalized a rulemaking that will make the proxy advisory industry more transparent and enhance the quality of vote recommendations received by institutional investors. The U.S. Chamber and Nasdaq have long supported changes to the regulatory framework that applies to the proxy advisory industry and believe reforms are necessary to improve the public company model in the U.S. and help stem the drastic decline in public companies that has occurred over the last two decades.

The full survey can be found here.