November 21, 2019


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 that found rising concern among public companies about inaccurate information and conflicts of interest within proxy advisory firms.

According to the survey, companies are becoming increasingly aware of conflicts of interest that exist within the two largest proxy advisory firms, who control 97% of the market. Nearly twice as many companies identified significant conflicts of interest at proxy advisory firms since last year.

Additionally, many companies believe that proxy advice is not developed with the most recent and accurate data available, with only 39% of companies believing that proxy advisory firms carefully researched and took into account all relevant aspects of an issue on which it provided advice. The fifth annual proxy season survey is intended to help policymakers and the general public understand the relationship between public companies and proxy advisory firms.The full survey is available to downloadhere.

“Proxy advisory firms have been able to operate without oversight or transparency for too long. We believe this has degraded the quality of information investors need to make informed voting decisions,” said U.S. Chamber Center for Capital Markets Competitiveness Executive Vice President Tom Quaadman. “Proxy advisory firms’ conflicted recommendations have been a contributing factor to the decline in the number of public companies in the U.S., which limits financial investment opportunities for everyday investors. This year’s survey will help inform ongoing reform efforts at the SEC. We look forward to working with the SEC and policymakers to improve transparency, accuracy and relevancy of proxy advisory recommendations.”

Another notable finding from the survey, reflecting continued frustration with a lack of communication, fewer issuers (17%) are requesting previews of vote recommendations. Additionally, only 21% of companies surveyed asked for opportunities to meet with proxy advisory firms on matters subject to a shareholder vote. At the same time, proxy advisory firms are less likely than in previous years to grant such requests, and survey results find that several companies believe that any attempt to correct factual errors or engage in substantive dialogue with proxy advisory firms is futile.

“Maintaining a viable public company model is of the upmost importance for companies that need capital, but also for Main Street investors and the overall economy,” said Ed Knight, Vice Chairman at Nasdaq. “However, an increasingly expensive distraction for public companies for over a decade has been proxy battles. A transparent, accurate and verifiable proxy system that is oriented toward long-term value creation is vital to constructive shareholder engagement and the successful operation of public companies.”

The release of this year’s survey occurs against the backdrop of recent actions by the Securities and Exchange Commission (SEC) to promote more accountability and transparency in the proxy advice industry. Rule proposals issued by the SEC earlier this month would require greater disclosure by proxy advisory firms regarding conflicts of interest and allow issuers the opportunity to provide input on vote recommendations. The Chamber and Nasdaq have long supported SEC rulemaking in this area, which will help improve the quality of proxy voting advice received by institutional investors.